With so many complicated issues to wade through during the divorce process, it’s easy to get caught up in the most obvious ones—the division of property, custody, spousal/child support—and forget about more peripheral concerns, such as insurance policies. The end of your marriage will likely have severe ramifications for your health insurance coverage—it’s crucial to learn the specifics of your policy, understand the impact of divorce, and plan. Preparing for health insurance changes right from the beginning of your separation can help you minimize gaps in coverage and avoid extra costs.
Here are some basic guidelines regarding divorce and health insurance.
Who is insured? It’s very common for one spouse to carry the family’s health insurance policy, usually through their employer. After divorce, the other spouse is no longer legally considered a family member or qualified dependent and therefore becomes ineligible for coverage under that policy.
During the Divorce Process. Divorce is a difficult, emotional, and often contentious time—and the looming loss of health insurance can be a significant additional stressor. Fortunately, California law makes specific provisions to ensure that you can keep your coverage during this challenging transition. One spouse cannot remove the other from their insurance policy during the divorce process—only once the divorce is final. If for some reason, you believe there is reasonable cause to remove your spouse from your policy before the divorce is finalized, you must get your spouse’s consent or petition the court for permission. As soon as the divorce petition is filed, Automatic Temporary Restraining Orders (ATRO) go into effect, which prevents spouses from canceling a policy or changing beneficiaries. Though it’s understandable to want to disentangle from your ex as quickly and completely as possible, protections like these help prevent rash or spiteful decisions that would be harmful and costly.
Legal Separation. Many insurance companies treat a judgment of legal separation the same as divorce, so it’s critical to understand the nuances of your particular plan. For example, in some instances, such as when there are significant health concerns, it may seem desirable to keep a former spouse on your employer’s affordable insurance plan. Couples may wonder if they can do so through separation instead of divorce—but this can result in cancellation of the policy or even allegations of insurance fraud. The only way to know for certain if you can be covered under your spouse’s insurance if you are legally separated but not divorced is to call the insurance company and ask. If the person you speak with seems the least bit unsure, ask to speak with a supervisor.
Bifurcated Divorce / Early Termination of Marital Status. California law allows couples to divide their divorce into two phases, one which terminates marital status and the other which deals with all other issues, including custody, property division, support, and so forth. If the marital status is terminated in the first phase, a spouse may be removed from an insurance policy before final judgment on the other issues. A spouse is usually eligible to remain covered through the insured spouse’s employer’s plan as long as they are legally married.
Children. Fortunately, except in rare cases, your children will still be covered under the policy after divorce, irrespective of custody arrangements.
New Insurance. The uninsured spouse will need new health insurance as soon as the divorce is final. There are several options:
- Employer. Companies with 50+ employees are required by law to provide group insurance benefits, and over half of small businesses do. If the uninsured spouse works outside the home, they should speak with the benefits manager about getting on their employer’s plan.
- ACA. Under the Affordable Care Act, you can get insurance through the federal or state exchange or a private marketplace. Once your divorce is final, you’ll qualify for a Special Enrollment Period, which gives you 60 days to review plans and make a selection. Enrolling should be a top priority because otherwise, you’ll have to wait for the annual end-of-year Open Enrollment Period.
- COBRA. The Consolidated Omnibus Budget Reconciliation Act “requires continuation coverage to be offered to covered employees, their spouses, former spouses, and dependent children when group health coverage would otherwise be lost due to certain specific events.” Typically, the uninsured spouse may stay on the group plan offered by their ex’s employer for up to 36 months after divorce. However, COBRA can be a costly option! You’ll have to pay the entire premium—the employer’s share as well as your own. In some cases, mainly if you are the custodial parent, you may ask the court to order the insured spouse to pay or contribute toward the premium.
Divorce is a vulnerable time concerning health insurance. In some situations, a coverage gap is almost inevitable. Any lapse is especially risky for individuals with health conditions and can be financially devastating in the event of a medical crisis. Begin exploring your health insurance options as soon as you file for divorce.
The knowledgeable and experienced family law attorneys at SFLG can help you understand and navigate the broad range of complex issues—including health insurance—involved in dissolving your marriage and getting started in your new life.
By Debra Schoenberg