Table of Contents
Introduction
One of the more critical issues in a divorce is the question of Health Insurance After Divorce. In many marriages, one spouse gets family health insurance coverage for the entire family. On divorce, spouses can no longer cover each other with employer-based health insurance. Unfortunately, this is federal law and a requirement of many employer-based health insurance plans.
Understanding Health Insurance After Divorce
Divorce significantly alters your financial and legal obligations, directly impacting your insurance needs. Whether it’s life insurance policies that need beneficiary updates or health insurance plans requiring reevaluation, it’s crucial to assess your post-divorce insurance requirements.
In divorce, health insurance is an important topic. When children under 21 are involved, the Courts will require health insurance coverage. However, the court is less concerned about the former spouse losing coverage. This isn’t because the courts are insensitive, but due to the limitations of the law.
Health Insurance and Children
As part of any Judgment of Divorce, the court will order the minor children to be covered with health insurance. Generally, the parties will put this into the divorce settlement.
One party will cover the children under his/her health insurance policy. The parties would then agree to split the unreimbursed medical expenses, such as co-pays and deductibles. I often like to include in my divorce agreements that the parties will share the cost of the family plan. Coverage for a single person is a lot lower than the family plan. It is fairer if both parents contribute to the difference between the cost of the family plan over the single plan.
Something else which is a “best practice” for the agreement is to use timetables. I’ve seen cases where the custodial parents save up medical bills for a year or more and then demand immediate payment. This generally winds up in court. The judges don’t particularly like this and I’ve seen many impose a cap. If the bills are too old, the judge will not order the noncustodial parent to pay them.
What I do is write that the party paying the bills must give them to the other parent in 30 days and then that parent must pay the bill in 2 weeks.
I also like to put in my agreements that out-of-network doctors would not be used unless consented to by both parents or on the advice of a medical health provider.
Health Insurance After Divorce: Children Over 21
A New York Divorce Court cannot order a parent to supply health insurance to a child over 21. However, the parties in their divorce settlement can agree to do just that. If they place this requirement in their divorce settlement, a Judge can enforce it.
Under the Affordable Care Act (“ObamaCare”) employers and insurance companies, if asked, are required to keep children of the employer on the Family Health Plan under age 26. The advantage to this is obvious that employer-provided health coverage is relatively inexpensive.
New York has an add-on. Under the Age 29 law, employer-based health insurance can cover a child up to age 29. This is not as great as it sounds. First, and most importantly, the child over 26 is NOT covered by the family plan. Instead, the cost of the premium will be the single plan and can be very costly.
Not everyone over 26 is eligible for age 29. First, one of the parents must be in a group policy that has family coverage. Second, the insurance must be issued by a New York State company or the insurance company is subject to New York State laws. Third, the child must be unmarried but can have a child. The grandchild is not eligible for insurance coverage. Fourth, the child cannot be eligible for insurance from their employer. Fifth, they must live work, or reside in New York.
There was a recent court decision where the divorce agreement stated that the father shall be responsible for health insurance “until each Child is no longer allowed by law to be covered under a parent’s insurance.” If I were to guess everyone was thinking about the age 26 limit under ObamaCare, and no one knew about the Age 29 law.
The father argued to the court that he should only be responsible up to age 26. The appellate court disagreed and said the language of the agreement was clear, and since the law went up to age 29, he was stuck for the 3 extra years. The cost for this was $1,300 a year.
The lesson here is to be careful in what is drafted in your agreement and don’t be vague.
Health Insurance After Divorce: The Spouse
As I mentioned above upon divorce, neither spouse can remain on the other’s health insurance policy. There is a COBRA option.
COBRA (“Consolidated Omnibus Budget Reconciliation Act”) allows someone who loses their employer-provided health insurance to continue on the policy for between 18 to 36 months. Employers with 20 or more employees are mandated to provide COBRA.
COBRA is not cheap. It does not fall under the Family Plan, and so has a much higher premium.
I have rarely seen a judge order one spouse to pay for the COBRA of the other. But, it does happen. The court will look at the ages of the parties, the health of the parents, the length of the marriage, the ability for employment, and the incomes of the parties.
For example, let’s assume a 30-year marriage, one spouse didn’t work and is in poor health. The working spouse is making over 6 figures and is in good health. In this situation, a court might well order payment for COBRA.
Health Insurance After Divorce: Not Getting Divorce?
The best way to ensure the continuation of Health Insurance After Divorce is not to get divorced. If parties remain married, then there is no issue of maintaining health insurance after divorce.
In these cases, it makes more sense to get a separation agreement and not to get divorced. For the party with the insurance, this may make a great deal of financial sense. I’ve had cases where the nonworking spouse has cancer. I have little doubt that the judge will order COBRA in this circumstance. As I said above, COBRA is expensive. In this situation, it is cheaper to keep the spouse on the family plan and not be ordered to pay COBRA.
The advantage to the nonworking spouse is clear, the continuation of health insurance.
Life Insurance After Divorce
Life insurance often plays a pivotal role in divorce settlements, particularly if child support or alimony is involved. It’s essential to review your policy, considering whether you need to maintain coverage to secure alimony or support payments. Updating beneficiaries on your life insurance is also a crucial step post-divorce to reflect your current wishes.
Generally, a court will order life insurance coverage if there is Child Support or Post Divorce Maintenance.
Health Insurance after Divorce: Conclusion
On divorce, the parties can no longer cover each other on their employer-provided health insurance policies. Children may be covered up until age 29. You need to be conscious of the law, and your needs. Consult with a lawyer before making any irrevocable decision.
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