Divorce and Health Insurance Benefits

Divorce has a significant effect upon the availability of health insurance benefits. Find out how to maximize the health insurance benefits available to you after divorce.

Divorce causes major issues with health insurance benefits. Many families have employer provided and/or paid for health insurance benefits that cover the entire family. It is not uncommon to see situations where the other spouse is a stay at home parent. This spouse can have absolutely no access to health insurance benefits. They are employed at a job with no available health insurance benefits. Alternatively, the benefits are available but at a high cost. After a divorce, the spouse with the family health insurance coverage can no longer cover the other parent. They are no longer “family” members who can take advantage of one health insurance policy. How to then guarantee that everyone stays insured does become an issue for negotiation and/or divorce litigation.

If both parties do not have health insurance benefits available, costs can become prohibitive after a divorce. Continuing benefits without extra cost is possible. That way is to enter into a separation agreement, but delay the divorce. The parties actually do stay married. They can stay on the same health insurance plan even though they are separated. The parties can consent to waiting for one, two or more years before either one files for a divorce. While the parties will stay married, their property, custody, and support issues will be addressed in their separation agreement. Under some circumstances, this is an optimal resolution. For example, what if both parties want one spouse to stay at home with young children for several more years? They still want to separate and divorce. This choice works for them. They can separate and agree upon getting a divorce. They can agree on all of the terms. However, they delay the final divorce to keep cost-effective health insurance benefits in place.

The above example can provide some difficulties that must be discusses in detail with your divorce attorney. For example, if you separate but do not divorce, your federal tax filing status is affected. Also, in some states, it is not as easy as in other states to enforce a separation agreement. Or, in yet other states, one spouse can take advantage of the agreement for a year or two. After that, they can go to court and seek entirely different forms of financial relief in a divorce action. Only a divorce attorney licensed to practice in your state can advise you on these issues.

Another option for couples divorce is COBRA coverage. COBRA is a federal law which mandates that a person covered under a health insurance policy be given the right to continue that coverage, at their own cost, for a set time period if certain requirements exist. For example, if you obtain a divorce and your spouse had family health insurance coverage through his employer, the employer would have to supply COBRA coverage for you after the divorce. That COBRA coverage would require that you have the same health insurance policy, although your coverage would now be individual and not family. You would have to pay the employer’s cost for that individual policy.

A stay at home spouse, or one with less income or employment options, can obtain COBRA coverage. It is common to negotiate that their spouse pay for that coverage for a specified time period after the divorce. In doing so, this gives the spouse who did not have coverage available some time to either obtain employment with coverage or become financially settled and able to afford their own coverage.

Learn More about your options