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Health Insurance in Divorce: The Role of Brokers, Lawyers, Employers and COBRA Coverage

For many separating couples, ensuring continued health insurance is one of their top concerns. Divorce is not just a significant emotional journey but also a complex logistical one. Employers and specific regulations like COBRA (Consolidated Omnibus Budget Reconciliation Act,) which can be mandatory based on business size, play vital roles in this transition, offering necessary support during a potentially turbulent time. This article will share everything you need to know along with giving you insight to our most recent interview with Attorney Adam Berner about divorce and its legal complications with regard to insurance.

 

The Challenge of Health Insurance in Divorce

During a divorce, discussions about health insurance coverage are vital, especially when one spouse depends on the other’s employment benefits. The process sometimes presents complications, ranging from coverage loss to the high costs associated with individual plans. Health insurance is often one of the largest household expenses, and managing this cost post-divorce is a common struggle for many.

In situations where children are involved, the non-custodial parent may be required by the court to provide health insurance as part of child support. This requirement can be particularly stringent if the children were previously covered under a family plan prior to the divorce.

Attorney Adam Berner specializes in mediation and collaborative divorce, which he elaborates on in our interview. These options are supposed to offer a solution that is “best for the kids” and can “lead to better resolutions for the families” since it is a non-adversarial approach and is more of a common agreement of what is best for both parties.

 

Managing Health Insurance Costs Post-Divorce: Obligations and Options

The obligation to provide health insurance is determined during the divorce proceedings and outlined in the divorce decree or settlement agreement. However, there are no universal laws requiring one ex-spouse to cover the other indefinitely; rather, these

decisions are often subject to negotiations between the parties involved based on factors like children and income, which are guided by legal counsel.

 

Options for Health Insurance Coverage Post-Divorce Can Vary

  1. COBRA Coverage: COBRA is a mandatory requirement of some businesses, allowing employees and family members who have qualifying events such as divorce to continue coverage under that specific employer-sponsored plan. When acquiring COBRA while the ex-spouse is responsible for paying the premium, this option can provide temporary relief (generally up to 36 months post-divorce) until alternative coverage is found. However, COBRA can be expensive since the insurer can charge up to 102% of the plan costs.
  2. Private Health Insurance: An ex-spouse may choose to purchase private health insurance from the marketplace. If the employer contributed to the family or even at group rates without contribution, there is the chance that private plans are more expensive – but not always. They also allow for more control over the plan selection based on individual or familial needs.
  3. Employer-Sponsored Health Insurance: If the ex-spouse is employed and their employer offers health insurance, they can switch to their own workplace’s plan. This is often the most cost-effective solution unless you are eligible for state health programs. Divorce is considered a qualifying life event that allows one to enroll in these plans outside of the typical open enrollment period.
  4. State Health Programs: Depending on their income and the state in which they reside, an ex-spouse might qualify for state-sponsored health programs like Medicaid or Get Covered, as divorce is considered a qualifying event for the individual market.

Ultimately, it is essential for both parties to discuss their health insurance needs and possibilities as part of their divorce negotiations. Ideally, the assistance of attorneys or a mediator should be used to ensure that the agreement reached is fair both ethically and legally, and sustainable for both parties and any children involved.

 

Legal and Practical Considerations of COBRA

Legally, COBRA coverage must be offered, and failing to provide it can result in severe penalties. Employers need to ensure they comply with these laws promptly to avoid complicating an already challenging situation for their employees. Practically, employers can facilitate smoother
transitions by maintaining open lines of communication and possibly offering the advice of an insurance broker who can advise on the best course of action for maintaining or transferring coverage.

 

Employers’ Support Beyond COBRA

Employers can aid their employees in navigating these transitions by providing information and support about health insurance options post-divorce. This support could include educating employees about COBRA and its costs and benefits, offering information about alternative insurance options (such as state health insurance marketplaces) and providing personalized support through human resources for employees undergoing significant life changes like divorce.

 

Difference Between Divorce And Legal Separations

When comparing the effects of legal separation and divorce on health insurance, the consequences can differ significantly. In a legal separation, spouses might still be eligible to remain on each other’s health insurance plans because marriage is not involved. As mentioned earlier, during a divorce, eligibility for continued health insurance under a spouse’s plan usually ends, prompting the need for alternative arrangements such as COBRA to be able to continue coverage. Understanding the specific terms of your insurance policy, laws in your state or consulting with an insurance broker and lawyer can be crucial when navigating changes in marital status. According to Berner, depending on which state, however, separation could be a trigger for coverage, which is why it is important to check in with a broker and legal expert to see where changes might be necessary. In New Jersey, separation has no legal status so there would be no trigger for end of coverage.

Navigating health insurance in the wake of a divorce can be complicated but it is resolvable. For separating couples, understanding and managing health insurance coverage is crucial, not only to ensure continuity of care but also to mitigate the financial impacts associated with losing shared benefits. Through their support systems, employers’ provisions of COBRA and legal counsel play instrumental roles in smoothing this transition and maintaining coverage.


Mark Herschlag, founder and CEO of Cosmo Insurance Agency, brings a wealth of knowledge in creating customized insurance solutions. Based in Ocean County, Cosmo Insurance Agency specializes in health, life, dental, long-term car, and disability insurance, tailored to individual and business needs.

 

To view the full interview, use this link to our youtube channel

(https://youtu.be/lulEcCO9pxc?si=zpNnsAh76IwIBu7V) and for more information, contact Mark Herschlag from Cosmo Insurance Agency to discuss insurance post-divorce, or Attorney Adam Berner from Berner Law and Mediation Group to discuss any legal changes. Please note that this article is for informational purposes only and does not provide legal or insurance counsel.

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