The list of things affected by your divorce goes on and on; one thing you don’t want to let pass you by is health insurance for you and your children. While health insurance is not top of mind for many divorces, the ramifications of not being insured could have a dramatic affect on your future financial situation.
Once your divorce is final most likely you will not be able to stay on your soon-to-be-ex’s health insurance plan, so obtaining coverage as soon as possible should be a priority. Here are a few things to consider.
Continue with COBRA for now…
The federal law COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act of 1985, is the same one that requires employers to continue group coverage for former employees and their dependents after they leave a job. COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end, such as divorce.
If your STBX covered you under their plan and worked for an employer that had a sponsored group health plan, you qualify for COBRA coverage. Sounds great, right? There is a catch… you have to pay out of pocket for it and in most cases it is not cheap. You may be required to pay the entire premium for coverage up to 102 percent of the cost of the plan. Yikes!
Pros: Guaranteed coverage for up to 36 months.
Cons: Expensive, Short-term, lose it if you re-marry.
Since COBRA benefits can be expensive and are only meant to be for the short-term it is important to begin looking for other coverage of your own.
Working? Get your own Employer Sponsored Plan
If you are gainfully employed with an employer offering group coverage your best bet is to pick up insurance there. If you are dropped from your ex’s plan you automatically qualify and are eligible for coverage through your employer without having to wait until open enrollment; divorce is considered a “special circumstance”.
Pros: Guaranteed if your employer has group plans available, less expensive than COBRA, no time limit (unless you lose your job).
Cons: If you aren’t working you aren’t eligible.
So then what can you do?
Buy Individual Health Insurance
Depending on your divorce settlement and custody arrangements you may or may not be covering your children. If the kids will be covered by your ex all you need to worry about is you.
- Private health insurance. If you are not working or your employer doesn’t offer a group insurance plan, you may be forced to purchase a private plan. Insurance is quite competitive these days and most companies offer a wide range of plans including low premium and co pay plans.
- State-funded healthcare plans. Many states have low-premium plans that provide basic coverage for single parents and children, and these plans are available to anyone whose income meets the required levels. Unlike Medicaid, these plans allow you to earn far more income and still qualify for the plan benefits. You can find out about low-cost health insurance plans in your state by visiting your state’s Department of Human Resources website.
- Major medical insurance. Major medical is the least expensive option but only covers catastrophic illness and hospitalization. There is no coverage for doctor’s visits or prescriptions. If money is tight and you can’t afford any of the other options this will protect you against a major medical emergency that could land you in need of serious debt relief.
The bottom line is that you and your children need health insurance coverage. You never know what life will bring—being unprepared is the worst thing you can do when faced with a life challenge such as a divorce. Make health insurance a priority after your divorce—your finances will thank you in the event of the unexpected.
The Divorce Coach Says
Unlike you, your children will be able to stay on your STBX’s insurance and you should discuss this possibility. You’ll also need to discuss how the cost of health coverage for the children is allocated between you. Just because you agree to keep the children on your STBX’s policy doesn’t mean that he has to cover the cost one hundred percent.
A word of caution … if you are on your spouse’s plan make sure you have access to the plan’s website and monitor it. Pay attention to any correspondence from the insurer to make sure you have not been removed from the plan. If you do find your STBX has dropped your coverage, then contact your attorney a.s.a.p.
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