Divorce is stressful, and even in the simplest of situations, there can be complex issues to deal with. The question of who pays for health insurance after a divorce is part of the negotiation.
Finding a new cover might seem daunting, but you have a few options. Take the time to weigh the costs and benefits of your options to navigate this new phase of your life.
Can you continue to have health insurance after divorce?
In a perfect world, after the divorce, your future ex would pay for your health insurance for a period of time to protect your health. In reality, however, if your settlement agreement doesn’t include these provisions, you’re out of luck because your spouse’s company will exclude you from their health insurance once the divorce is finalized.
So it’s best to research your options and take control of your health insurance as soon as possible. Here are some options for post-divorce health coverage you may have.
ACA/Obamacare health plan
Even if you have employer health insurance, you may be eligible for Obamacare health coverage either on a state exchange (operated by your state or the federal government) or outside an exchange. However, if you have employer insurance, you may not receive a grant to offset the cost of an individual market plan. Within 60 days of your divorce, you can get coverage during what’s called a special enrollment period. After the 60 days are up, you must wait until the normal open enrollment period begins to purchase health insurance. Regular admissions are usually at the end of the year.
Deciding to buy health insurance on your own for the first time can be overwhelming, but by keeping these 5 factors in mind when researching your health insurance options, you can make a more informed choice.
Metal Levels – Obamacare health insurance plans are structured by metal level: Bronze, Silver, Gold or Platinum. Tiers do not determine the quality of care, but how you and your plan split the cost. Bronze plans are the cheapest and typically have low premiums, high deductibles, and/or a small doctor network, but most routine treatments are out-of-pocket in the Bronze plan.
As the plan progresses, benefits (including routine care) increase, deductibles decrease, and the plan’s monthly cost increases. For example, a Platinum plan covers approximately 90% of average medical expenses, while a Bronze plan covers 60% of average medical expenses. No matter which tier you choose, you may be eligible for an income-based premium tax credit, which will lower your premiums.
Networks – If you have commitments with your doctor or a specific health care provider, make sure they are covered by the health insurance network you are most interested in. Calling your health insurance company’s customer service department will let you know if your doctor is in their provider network.
Deductible – A health insurance deductible is the amount you must pay before a health insurance company will pay for your medical expenses. Review your policy deductibles and make sure you have enough funds to cover gaps in coverage should unexpected medical expenses arise. If not, you can purchase supplemental health insurance that pays cash to cover your deductible in the event of accident and illness.
Price – Your monthly budget should not be the only deciding factor when choosing a plan, but you must be able to afford the monthly cost or your health plan will be terminated.
Fines – In some states, you can be fined if you don’t have health insurance at all. Not having insurance can hurt you during tax season when health insurance is required by law. That’s because when you pay income tax, you owe the government either a flat fee or a percentage of your income, whichever is greater. The statewide statute expired in most states in 2019.
Most Americans qualify for some form of premium tax credit, a financial subsidy that helps lower the cost of their health insurance plans. When you start shopping for health insurance, calculate your Obamacare tax credit before purchasing a health insurance plan.
Cobra
In the event of a divorce, your spouse’s company health insurance may no longer apply. However, you are entitled to COBRA health coverage for up to 18 or 36 months, as the case may be, just like employees who lose coverage. To qualify for COBRA, your predecessor must have worked for a company with 20 or more employees. However, most states offer a “mini COBRA” (Continuation of State) opportunity for small businesses with fewer than 20 employees.
Once your current health insurance ends, you must apply for COBRA coverage within 60 days of your divorce to maintain coverage under your current plan, but separate from your ex-spouse. Under COBRA, you must pay the full cost of your health insurance and will not collect any premiums from your former employer as in the past.
COBRA sounds tempting when you’ve accumulated a lot of medical bills because you don’t have to buy a new plan and pay for the new policy out of pocket. However, COBRA can be the most expensive health insurance option, which is why it’s important to evaluate health insurance at the store rather than go down that route without doing your research.
Employer health insurance
If you purchased health insurance through your employer, discuss your options with your human resources department. This can be more cost-effective than COBRA and keeps you out of your predecessor’s corporate program. While you typically have to wait until a certain time of year to enroll in your employer’s health plan, losing your previous coverage due to divorce will begin a special enrollment period for you to enroll in your employer’s plan.
