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COBRA is a federal labor act that ensures the employees and their spouse get continued health insurance coverage, even when the spouse becomes ineligible to participate in the employer’s group health insurance plan for reasons like divorce. Any person, who was covered under the employer’s group health plan of his /her spouse, will be eligible for insurance coverage even after divorce. However, the only change here would be that the divorced partner will be required to pay all the future premiums from his/her own pocket.
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Basic Facts about Continued COBRA Health Insurance Coverage after Divorce
- As per COBRA after divorce you will be eligible for health insurance coverage provided by your spouse's employer’s health plan only if your spouse works for a business that has 20 or more employees.
- COBRA requires that the divorced spouse informs the health insurance plan administrator, within 60 days of the divorce to be eligible for continued coverage. The insurance administrators are required to notify and ask the divorced partner – if they want continued health insurance coverage under COBRA, within 14 days of receiving the divorce notification.
- This continued health insurance coverage can be availed for a maximum of 36 months after divorce. In certain special cases this period can be extended for 18 more months. At the end of this term the divorced spouse will be required to obtain a new personal health insurance, at his/her own expense.
- After the divorce, the employer of the employed partner is no longer required to pay the health insurance premium for the divorced spouse. The divorced partner is completely responsible to make entire payments towards the premium, which is likely to be a percent or two higher than the group premium rate being paid by the employer.
- COBRA insurance coverage ends if the divorced spouse remarries or gets health insurance coverage through his or her own employer. Or even if the spouse buys any other personal health insurance plan, COBRA insurance will no longer be available.
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Health Insurance Options after a Divorce
After getting a divorce, the spouse who does not have a direct employer’s health plan coverage is left with namely four options to get continued health insurance coverage.
Get COBRA Insurance Coverage Through Ex-spouses’ Employer’s Health Plan
COBRA act offers health insurance coverage protection to the spouse of an employee up to 36 months after the divorce, if the spouse is willing to pay for the insurance premium. However, this way of extending coverage doesn’t go well in each as every case as the spouse may not be able to afford the expensive premium. In such cases, these people should explore, the other three options discussed here.
Getting Health Insurance Cover through One’s Own Employer
The divorced spouse can get health insurance coverage under his/her employer’s health plan, if he/she is employed and the employer offers a free or a discounted health insurance plan. This course may be practical only if the employer’s health insurance premium is well below the COBRA insurance coverage costs.
Get a New Health Insurance Plan
There is always the option to forgo the COBRA health insurance divorce benefits, if the divorced spouse can find some cheaper health insurance plan which offers an equally good coverage. However, here absolute caution and thorough research are needed because more often than not, cheaper insurance plans impose a lot of constraints.
Delaying the Divorce with a Separation Agreement
When it’s difficult for the dependent spouse to pay the premium towards COBRA coverage, and the employed partner is willing to help, the couple can enter into a separation agreement and delay the divorce. This way the dependent partner continues to enjoy the employed partner's employer’s health plan coverage, without paying the complete insurance premiums until the time the actual divorce takes place.
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In conclusion, the dependent partner must explore all the health insurance options before either applying for or giving up coverage under COBRA health insurance divorce benefits.