Besides being very emotionally taxing, divorce also brings a myriad of ways in which you must untangle your life from your partner’s. Some of the ways in which your lives become enmeshed throughout a marriage may not even occur to you right away. For example, a friend told me of how her aunt was pulled over by a police officer and narrowly avoided being arrested for driving without auto insurance. She hadn’t realized that her recent divorce meant she would immediately be booted from her husband’s auto insurance plan.
But while it’s relatively painless to purchase your own auto insurance, finding yourself suddenly kicked off your spouse’s employer-sponsored health insurance is another story. After all, it’s not always simple or affordable to strike out on your own in the world of health insurance, particularly if you’ve been out of the workforce for a while as a homemaker, if you’re self-employed, or suffering from a chronic illness or pre-existing condition.
It is for this reason that many unhappy couples choose to become separated rather than divorce just so they can both maintain coverage. However, separation is not without its own legal implications, particularly when it comes to taxes.
If divorce is unavoidable, you want to ensure that there’s no gap in your health coverage. If your employer offers health insurance, that would be the most affordable and more long-term option. Otherwise, you can either apply for COBRA or purchase coverage through a private insurance plan. Both of these routes have their advantages and drawbacks.
COBRA is a federal law requiring that a person who loses his health insurance be given the option to maintain the same coverage at his own expense for a certain period of time. So, if you’re on your wife’s employer-sponsored health insurance and you get divorced, her employer is required to allow you to continue the same benefits under an individual rather than family plan at the employer’s group rate (provided you apply within 60 days of your divorce being finalized). You would be responsible for paying the full cost of that plan, and you’re only entitled to this coverage for 36 months.
Before your COBRA expires, you’ll want to have either found a job that offers health insurance or joined a private plan. The risk, however, is that you could develop a health condition during your time on COBRA that would make you ineligible for many private plans when the time comes to make the transition.
If you’re already uninsurable at the time of your divorce, COBRA is your only option for maintaining coverage. If not, it may be worth the additional cost of immediately enrolling in a private plan that would be more permanent whether you develop a chronic condition or not.
Before deciding, look at the costs, benefits, and drawbacks of each plan to decide what fits your personal situation best.
Have you ever lost your health coverage due to a divorce? What did you do about it?
Sources: echealthinsurance.com and wife.org