A Guide to Health Insurance After Divorce
Here’s How to Find and Get Health Insurance After Your Divorce
So many things change during a divorce that it can be difficult to keep track of it all. One important thing you can’t afford to let fall through the cracks is your health insurance coverage. If you are listed as a dependent on your spouse’s policy, then you will lose your coverage when the divorce is finalized.
Don’t let this happen! Without health insurance, you’ll be on the hook for all your medical costs, including your current prescriptions, medical appointments, and any emergencies that arise. Even a minor medical emergency, like a broken arm that requires surgery, will cost an average of $16,000. If you are losing coverage, here’s what you need to know about how to find and get new health insurance coverage.
Dates and Deadlines
Most health insurance plans have a specific enrollment period each year. However, these plans often include exceptions for major life changes, including divorce. That means you should be able to enroll in a new plan at any time of the year after a divorce, but always double-check with the insurer.
Your Health Insurance Options After Divorce
Nearly half of Americans receive health insurance through their employer. If you are currently on your spouse’s health insurance plan offered through their employer, you will not be able to remain on their plan after your divorce. Your children, however, can stay on your spouse’s plan. That means you’ll only need to find health insurance for yourself. Here are some of the most common options for health insurance after divorce.
If your spouse works for a company with over 20 people, their employer must offer COBRA benefits (named for the Consolidated Omnibus Budget Reconciliation Act) to you after your divorce. COBRA allows you to stay on your current insurance policy for up to 36 months. This can be a great option if you are in current treatment and want to stay with your provider and doctors, or if you simply don’t have the time to search for new insurance right after your divorce.
However, there are some big drawbacks to COBRA. First, you must switch to COBRA within 60 days of your divorce. You’ll need to work with the health plan administrator at your spouse’s company to make the change. Next, after 36 months your coverage will expire and you’ll need to find your own policy. Finally, when you switch to COBRA, you will need to cover the full cost of the health insurance plan on your own. That includes monthly premiums, co-pays, and deductibles. For many, this can represent a burdensome new cost. If you are in good health, you can likely save money by purchasing a plan on the healthcare exchange.
Your first stop in looking for health insurance after divorce should be your own employer. If your company employs 50 people or more, they are required by the Affordable Care Act (ACA) to offer “affordable” health insurance to their employees and employees’ dependents. Some smaller employers also choose to offer these benefits to their employees. In a bid to attract and keep high-quality employees, many companies pay all or most of the health insurance premiums for their employees. Other companies operating on tighter budgets may only contribute a little or not at all. Schedule a sit-down with your company’s health insurance administrator or human resources representative to learn about what healthcare options your company offers.
Health Care Exchange
If you work for a small company that doesn’t offer health insurance or if you work for yourself, you’ll need to go elsewhere for your coverage. A great place to start is the public health insurance exchange established through the Affordable Care Act in 2010. The ACA does not offer its own policies. Instead, these exchanges list available, ACA-compliant insurance policies in your area and provide subsidies for individuals who earn between 100 and 400 percent of the federal poverty level.
Exchange plans can be a little complicated, because the ACA gives states the option to create their own exchanges, create a hybrid model with the federal exchange, or simply use the federal exchange. As of 2020, 12 states and the District of Columbia run their own health insurance exchanges (example: Covered California) and 38 states use the federal system, HealthCare.gov in some form.
To search for ACA plans, check whether your state uses its own exchange or relies on the federal exchange through HealthCare.gov. You can then input your information to learn what policies are available in your state and whether you qualify for subsidies.
Another option is to buy a private health insurance plan directly from an insurer or with the help of an insurance broker without going through the health insurance exchange. Honestly, there aren’t too many reasons to go this route. All health insurance plans must meet ACA standards, so in most cases, you’ll see virtually the same plans off the health care exchange as on it. The only difference is that if you buy health insurance off the exchange, you won’t be eligible for subsidies (i.e. saving money on your monthly premiums).
Many insurance companies sell healthcare products that aren’t exactly full-scale health insurance. These plans are exempt from the ACA standards and offer a level of protection. However, this coverage falls below what a typical insurance plan covers. These healthcare products include things like dental insurance, vision insurance, short-term health insurance, accident insurance, and plans with limited benefits.
While these plans and supplements are often cheaper than a standard health insurance plan, they don’t offer full coverage, which means you could face hefty bills if your illness or injury isn’t covered by the policy.
Medicaid is a health insurance program provided by the U.S. government to cover low-income Americans and those with disabilities. It’s actually the largest healthcare provider in the country, offering healthcare to over 72 million Americans! As part of the Affordable Care Act, many (but not all) states have expanded their Medicaid coverage to provide health coverage to a greater portion of their residents.
If your spouse was the main breadwinner in your household, you may have not needed to work, or you may have had the financial comfort to pursue a passion that didn’t earn much income. After the divorce, if you are surviving a low income or struggle to rejoin the workforce, you should definitely research whether you qualify for Medicaid.
Medicaid qualification is closely linked to the federal poverty level. If your state has expanded its Medicaid coverage under the ACA, you may be able to qualify if you earn up to 133% of the federal poverty level. Additionally, you can also qualify for Medicaid if you can prove to the government that you are disabled and cannot work. To learn if you qualify, visit Medicaid.gov.
If you are approaching the age of 65, then you might not need to pay for a standard health insurance policy for long. If you have worked for at least 10 years in Medicare-covered employment, you will qualify for Medicare, the government-sponsored health insurance plan for older Americans. Medicare Part A is fully covered by the government, while Medicare Part B charges premiums based on your annual income. Medicare Part D also includes a monthly premium. Though Medicare isn’t entirely free, it is much cheaper than owning a standard health insurance policy.
What if you didn’t have to work because your spouse was the breadwinner? You may still be eligible for Medicare if you meet the following standards:
You were married to your spouse for at least 10 years
Your spouse worked for 10 years in Medicare-covered employment
You remain unmarried
If your 65th birthday is just around the corner, you’ll want to start researching your Medicare options at Medicare.gov. You should also start researching your Social Security benefits if you haven’t taken them early.
Non-Traditional Ways to Get or Keep Health Insurance
Health insurance can represent a big monthly expense even if you are in relatively good health. If you worry about whether you can afford a policy on your own, it might be time to think outside the box. There are a few unconventional options that may help you afford your health insurance as long as your spouse is willing to play along.
Negotiate for Health Insurance in Your Divorce Settlement
When it comes time to propose a divorce settlement with your spouse, you can put almost anything on the negotiating table, including your health insurance costs. If you are going to lose your coverage as a result of the divorce, it may be reasonable to ask your spouse to cover the cost of your new policy, especially if they are the breadwinner in the relationship. If your spouse resists, consider offering them something they want. For example, if both of your names are on the deed of your spouse’s prized car, that means you own half of it. You can offer your spouse your ownership stake in exchange for health insurance coverage. Another option is to negotiate health insurance premiums instead of spousal support, (also known as alimony) for a certain length of time (maybe until you turn 65 and qualify for Medicare.) An experienced divorce attorney can help you design an advantageous settlement proposal that includes health insurance coverage if that is important to you.
Legal Separation Instead of a Divorce
One final option to get health insurance is to never lose it in the first place. You can always choose to stay on your spouse’s policy as long as you don’t get divorced. Wait, isn’t that missing the entire point?
Instead of getting a divorce, you can seek a legal separation. The beauty of a legal separation is that it gives you almost all the same legal rights as a divorce, but you and your spouse will still legally be married. With a legal separation, you and your spouse can live apart, divide your assets, and decide child custody. You can even negotiate for spousal support and/or child support.
In this way, you and your spouse can be divorced in spirit, while, according to the law, you are still married. The law is what counts when it comes to keeping your health insurance. By staying married, you may be able to stay on our spouse’s health insurance policy. Notice that we used the word “may.” That’s because not every health insurance company will allow legally separated spouses to stay on a policy. It’s best to contact your insurance provider and ask them about the rules regarding your policy. Keep in mind that insurance companies will look for any reason to deny a big claim. You don’t want to find out that your policy was invalidated by your legal separation after you incur a major health expense!
Another important thing to keep in mind is that while you are legally separated, neither you nor your spouse can remarry.
How to Get More Information on Health Insurance After Divorce
Health insurance is a complex subject, and we’ve only managed to scratch the surface of it in this article. Your best option for getting health insurance after your divorce will depend on your individual circumstances as well as the health insurance options in your state. A knowledgeable divorce attorney or insurance broker in your area can be a good resource if you have specific questions.
This article is reprinted with permission from the Women’s Institute for Financial Education (WIFE.org), creator of the Second Saturday Divorce Workshops. Founded in 1988, WIFE is a non-profit organization dedicated to providing financial education for women. Copyright 2019
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