Paul Sanchez
Divorce is a challenging transition, and one of the many decisions you need to navigate is what to do about your health insurance. After a divorce, shared health insurance ends, and you will need to find a new plan. It is important to stay on top of your health insurance coverage and figure out what type of health insurance fits your needs and what you can afford. You will have 60 days after your divorce to get coverage during a special enrollment period. There are several options to consider, including COBRA, Medicaid, and short-term insurance.
| Characteristics | Values |
|---|---|
| Shared health insurance | Ends after divorce |
| Options for coverage | COBRA, Medicaid, Medicare, CHIP, ACA Marketplace plans, private insurance company |
| Medicaid | Need-based federal program administered at the state level that provides health coverage for low-income families |
| Children's coverage | Both parents are responsible for obtaining health insurance for their children if it is available at no cost or a reasonable cost |
| Special Enrollment Period | You are eligible for a Special Enrollment Period for 60 days after your divorce |
| Short-term insurance | Temporary coverage until you figure out your long-term health insurance plan |
| Insurance for ex-spouses | Spouse Equity, Temporary Continuation of Coverage (TCC), or conversion to an individual policy with the same carrier |
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What You'll Learn
Understanding your health insurance options
Health insurance is a crucial aspect to consider during a divorce. Here are some options to help you understand your choices:
COBRA
COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to continue your existing health coverage for a certain period after a divorce. You can buy into your former spouse's group policy, but you will need to pay 100% of the premium cost. Most plans require eligible individuals to make their COBRA election within 60 days of receiving notice.
Medicaid
Medicaid is a need-based federal program administered at the state level that provides free or low-cost health care coverage for low-income individuals and families. It covers pre-existing conditions and has no dollar limits on essential health benefits. Eligibility and income requirements vary by state, so be sure to check with your state's Medicaid program to see if you qualify.
Children's Health Insurance Program (CHIP)
If your income is too high to qualify for Medicaid but too low to afford private coverage, you can consider CHIP for your children's health insurance. CHIP is a joint federal and state-run program that provides health coverage for uninsured children. Income eligibility levels range from 170% to 400% of the federal poverty level (FPL) and can vary by state.
Private Insurance
If you don't qualify for Medicaid or CHIP, you can consider purchasing a plan from a private insurance company. Be cautious, as many private plans have coverage limitations, such as pre-existing conditions or wellness services that may not be covered. It is recommended to work with an experienced broker or agent who can help you find a plan that fits your needs and budget.
Employer-Sponsored Plans
If you or your spouse has access to an employer-sponsored health plan, you may be able to special enroll in that plan after a divorce. Speak to your employer about how to enrol and consider the cost, coverage, and whether you can add dependents to the plan.
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Negotiating health insurance in your divorce settlement
Understanding Your Current Coverage:
First, it's important to understand your current health insurance coverage and how it may be impacted by the divorce. If you or your spouse has employer-sponsored coverage, know that this is the most common type of health insurance and that a divorce will almost certainly require one or both of you to seek new coverage. Check if your employer's plan has a designated Open Enrollment Period, which allows changes to your plan. In the case of divorce, you may qualify for a Special Enrollment Period (SEP) to enrol in a new plan once the divorce is finalised.
Continuation Options:
If you or your spouse are currently covered under your spouse's employer-sponsored plan, you may be able to continue this coverage temporarily through options like the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows individuals to maintain their group health plan for a period, typically up to 3 years, but it may be costly as you'll need to pay the full cost of the premium plus a 2% administration fee.
Exploring New Coverage:
If continuing coverage under your spouse's plan is not feasible or desired, you'll need to explore new coverage options. You can consider purchasing a plan from a private insurance company, but be cautious of coverage limitations, especially regarding pre-existing conditions. If you have children, you may need to decide whose insurance will cover them. If you cannot come to a mutual decision, a court may determine which parent is responsible for providing health insurance for the children.
Affordability and Government Programs:
If affordability is a concern, you may qualify for government-sponsored programs like Medicaid, which provides free or low-cost healthcare coverage for low-income individuals. The Children's Health Insurance Program (CHIP) is another option for families who do not qualify for Medicaid but cannot afford private coverage.
Negotiating the Settlement:
When negotiating the divorce settlement, you and your spouse may agree to simply pay for your own health insurance moving forward. However, if one spouse has been out of the workforce, you may negotiate for the policyholder spouse to pay for the other's coverage for a set time, or the non-policyholder spouse may seek a lump-sum payment to cover future insurance costs.
Remember, health insurance is a crucial aspect of your divorce settlement, and it's important to seek professional guidance from a divorce lawyer or mediator to ensure you and your children's health and financial needs are adequately addressed.
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Applying for Medicaid
To apply for Medicaid, you will need to submit an application, which will be reviewed by a caseworker who will determine your eligibility for benefits. The caseworker will look at the value of your assets, including any marital assets if you are still married. After a divorce, your eligibility will be based on your assets alone but will be subject to anything you receive in your marital settlement agreement. It's important to note that not all assets are considered "countable" under Medicaid eligibility. For example, the value of many personal assets, such as your home and car, is not counted toward eligibility.
Each state has its own Medicaid program, so eligibility criteria can vary. You can find your state's specific laws and requirements on their website. In general, to qualify for Medicaid, you must demonstrate significant financial need. This is calculated by looking at your income and assets, with limits varying by state. As a rule of thumb, the income limit for a single applicant requiring long-term care is 300% of the Federal Benefit Rate, or $2,901 per month, and the asset limit is $2,000.
If you are considering a "Medicaid divorce," it is important to understand the implications. A Medicaid divorce occurs when one spouse requires expensive long-term medical care that the couple cannot afford, and the healthy spouse wants to protect their joint assets. By divorcing, the couple's assets and income are separated, allowing the spouse requiring care to qualify for Medicaid without spending their shared assets. However, it is a complex legal process that should be undertaken with the help of an experienced attorney. Additionally, the agency will look back at transfers of assets during the "Look-Back Period," which is typically 60 months but varies by state. If it appears that assets were transferred to gain access to Medicaid, the applicant may become ineligible for a penalty period.
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Purchasing a private insurance plan
If you are looking for short-term insurance, private insurance companies offer plans that can be applied for at any time. You can typically enrol in a plan for 4 months (3 months plus a 1-month extension) in a 12-month period. Short-term insurance does require you to go through medical underwriting, which means sharing information about your health with the insurance company.
If you are looking for long-term insurance, the Marketplace offers four categories of health insurance: Bronze, Silver, Gold, and Platinum, with varying degrees of coverage, deductible amounts, and premiums. You may qualify for tax credits or extra savings depending on your expected annual income. Health insurance companies cannot refuse to cover you or charge you more because you have a pre-existing condition.
If you have children, they can remain on the existing insurance plan as dependents without any disruption. It is also possible for a child to switch to the other parent's insurance or to be on both plans. This can be helpful if the primary health care insurance doesn't fully cover the child's medical care.
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Enrolling in your employer's insurance plan
Enrolling in an employer-sponsored health plan is a popular option for those who are divorced or are in the process of getting a divorce. If you are already enrolled in your employer's health plan and your spouse is listed as your "+1", you must remove them from your enrollment as soon as your divorce is finalized.
If you are currently covered by your spouse's employer-sponsored health plan, you will likely need to find new health insurance. Talk to your employer about how to enroll in the company's health plan. There is usually a designated Open Enrollment Period during which employees can join or change their plan. However, in the case of a divorce that causes you to lose your health insurance, you will qualify for a Special Enrollment Period (SEP) and may be able to enroll once your divorce is finalized.
If you don't currently work but plan on finding a job, you might want to look for one that provides health insurance. Ask for details on cost, coverage, and whether you can add dependents to the plan. You'll want to take all of that into consideration when negotiating a job offer.
It's important to note that most short-term plans are medically underwritten, meaning that people with health conditions may be denied or charged higher premiums. The availability of these plans and their maximum term limits can vary from state to state, and some states don't offer short-term plans at all. Be sure to read the fine print and understand the coverage limitations before enrolling in a short-term plan.
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Frequently asked questions
Typically, each spouse will pay for their own medical insurance coverage after a divorce. If you were previously covered under your spouse’s employer policy, you will no longer be extended this coverage. You can explore the following options:
- COBRA: This allows you to buy into the group policy for a period of time after divorce, but you will need to pay 100% of the premium cost.
- Special Enrollment Period (SEP): You may qualify for a SEP for 60 days after your divorce, allowing you to enroll in a new plan.
- Medicaid: If you can't afford health care, you may qualify for Medicaid, a government insurance program that provides free or low-cost coverage to low-income individuals and families.
- Short-term insurance: If you only need temporary coverage while figuring out a long-term plan, you can consider short-term insurance offered by private insurance companies.
- Employer-sponsored insurance: If your employer offers health insurance, you can enroll in their plan during the Open Enrollment Period.
- Individual & Family plans: You can explore affordable and reliable coverage options offered by insurance providers, such as UnitedHealthcare Individual & Family ACA Marketplace plans.
The laws regarding health insurance for children after a divorce vary by state and country. In some cases, a court may determine which parent is responsible for providing health insurance coverage for the children. Both parents should ensure that their children have access to health insurance, either through their own policies or through the policy of the other parent. The specific arrangements will depend on the financial situation and the best interests of the children.
Typically, once the divorce is finalized, your ex-spouse will lose coverage under your policy. However, in some cases, your ex-spouse may be eligible for continued coverage under specific circumstances, such as through Spouse Equity or Temporary Continuation of Coverage (TCC). It is best to review the terms of your insurance plan and consult relevant laws or legal professionals to understand the options available to your ex-spouse.
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