Health insurance may be a bland topic but taking care of this area before divorce and utilizing the right resources is so important.
This week, Karen Covy joins the podcast again to discuss the best ways to handle health insurance and divorce and, almost more importantly, what not to do. Karen describes herself as a recovering divorce attorney. These days Karen spends most of her time working with people all over the world as a divorce coach and consultant.
In This Episode
If you’re the spouse who provides coverage through your employer, what do you need to do?
You do need to tell your employer – HR, benefits department, employer – when you get divorced or legally separated. Usually, the insurer will take care of removing your ex from the coverage.
What happens if you don’t notify your employer?
This is a crime called insurance fraud. It’s a really bad idea.
What about children?
Health insurance for a spouse or ex is different than health insurance for children. If one parent is covered through their employer and the children are too, normally it will remain that way after divorce.
Most insurance policies allow you to maintain coverage for your children after divorce.
Almost no insurance policies allow your spouse to remain covered.
A note on divorce, legal separation, and separation:
There used to be a trend where couples would be legally separated but not divorced in order to maintain health insurance, however, companies have wised up and don’t allow this anymore.
Note, however, that there is a difference between a legal separation and a separation. In this case, your spouse can continue to be covered.
If you currently have coverage through your spouse, where in the divorce process do you start looking into coverage for yourself?
Health insurance should be one of the things you think about from the very beginning. Start researching as soon as the divorce is on the table.
There may be a legal situation where you very rapidly find yourself divorced and without insurance coverage which is not ideal.
There are special health insurance advisors/brokers that can help you find the best plan for you, your family, and your budget. These services are free but do your research on which companies they work with before choosing one.
Some Important Deadlines:
Insurance companies will drop the spouse within 30 days after the divorce or legal separation.
You need to demonstrate to your new carrier continuous coverage if you want to avoid underwriting.
Open enrollment is normally at the end of the year. You can revisit your choice of carrier each year.
Situation to Avoid: If you get divorced or legally separated in February and don’t find a new carrier within 60 days, you are at risk of not being able to get insurance coverage (lack of continuous coverage) and will need to wait until open enrollment begins, usually in November. That means you could be without insurance for quite a bit of time. If this could happen to you, find some sort of coverage to cover you until that open enrollment period begins.
What about COBRA?
What is COBRA – A very complicated federal law that basically says that if you are the spouse who is covered by the other spouse’s insurance through their employer, that carrier needs to offer you the same policy for the same price. However, that spouse will ultimately end up paying a much higher fee because they will pay their own share of the fee as well as what the employer paid.
COBRA ends up being the most expensive option.
Not all employers have to offer COBRA.
It could be a good stop-gap measure in a situation where you need immediate coverage.
Availability – 36 months following divorce
How do you find health insurance?
Ask around in your area – if you are self-employed, this is especially relevant. Ask other people who are self-employed.
Your state’s health insurance exchange – This varies state by state and can be complicated so make sure to do your research before you’re divorced.
Before you start shopping for health insurance – This varies state by state and can be complicated so make sure to do your research before you’re divorced.
Go back over say last three years and figure out what doctor’s visits you’ve had, what they were for, any tests, procedures, and of course, prescription medications. And then figure out how much you paid for all of these out of pocket plus the cost of the health insurance.
Then when you’re looking at plans, you can look at your maximum out-of-pocket and the premium compares it against what you’ve been spending and that’s going to inform your choice.
Medicare – insurance for people 65+. If you have an individual policy (not through your employer), this is canceled after 65 and you are moved over to Medicare.
You shouldn’t try to navigate Medicare alone. Use a professional.
Final words from Karen – get help and don’t wait until it’s too late!
Visit KarenCovy.com to take her quiz to know how ready you are for divorce.
Karen Covey is a Divorce Coach, Lawyer, Mediator, Arbitrator, and Collaborative Divorce Professional. She provides divorce and decision coaching to busy professionals and business owners who want to make clear, confident decisions during one of the toughest yet most sensitive times in their life. For those clients who decide to divorce, Karen helps them navigate through the divorce process with less conflict, expense, and damage to themselves and their children. Karen is the author of When Happily Ever After Ends: How to Survive Your Divorce Emotionally, Financially, and Legally. She is also the creator of the online divorce program, The Divorce Road Map 2.0.
Mandy Walker is a divorce mediator and Certified Divorce Financial Analyst® based in Boulder, Colorado. She works with individuals and couples helping them to end their relationships with dignity and respect, creating an understanding of the process and their options so they can feel confident in the decisions they’re making.