It is common in many marriages for one spouse to maintain the medical insurance for the entire family. In many instances, one spouse just has cheaper or higher quality coverage. But what about the matter of divorce and health insurance?
In some situations, there is a spouse that does not work or has employment that does not provide health insurance benefits. No matter the reason, the matter of health insurance must be dealt with as a part of any divorce.
Myths About Divorce and Health Insurance:
Employer-Group Coverage Doesn’t Cover an Ex-Spouse
Many people across the United States are covered by employer coverage or their spouse’s group plan. For many employer plans, health insurance is provided to eligible dependents of the subscriber. The health insurance company will establish who meets the definition of an eligible dependent.
Once a Judgment of Divorce is entered, the non-subscribing spouse will no longer qualify as an eligible dependent and can’t remain on their former spouse’s policy. Children who are eligible can remain on the insurance policy post-divorce.
For individuals who do not have access to medical insurance through an employer, they will need to obtain an individual policy, this can be an expensive bill for many people.
Another possibility would be to accept COBRA benefits that allow you to remain on the ex-spouse’s policy; this option would only be temporary, and it would be costly.
If the dependent spouse can acquire their own health insurance through their employer, that would be the best option. A former spouse will not be required to automatically fund a new medical insurance policy regardless of the employment status of either party unless otherwise negotiated in the settlement agreement.
There are other mechanisms to specifically address the health insurance issue, such as:
- Choosing legal separation over divorce.
- This would not be considered a divorce; the parties could live separate and resolve certain issues. Proceeding with this option would mean the dependent spouse could remain on the subscriber’s health insurance plan.
- There are pros and cons to this decision, talking with an attorney that has experience addressing family law issues is a good idea.
- A complaint for limited divorce.
- This would resolve their issues similar to a regular divorce, but neither could re-marry unless they applied to have this converted to a judgment of divorce.
- There are an increasing number of insurance providers who are considering limited divorces in the same category as a judgment of divorce. You will need to check with your medical insurance provider before going with this option.
No matter what option you go with, you will want to be prepared. Communicating with your former spouse, your attorney, and the health insurance providers will make decisions easier for you.
Affordable Care Act Health Insurance and Divorce
The American Psychological Association states that between 40 and 50 percent of married couples in the United States get a divorce. Fortunately, the Affordable Care Act has you covered.
The Affordable Care Act was a comprehensive health care reform law that went into effect in March 2010. This law provides people with subsidies that lower health care costs for households. This coverage is sometimes referred to as ACA or “Obamacare”.
For those that have a chronic illness, it is illegal for companies to refuse coverage based on pre-existing health conditions. This is great for people who would have been denied coverage in the past after leaving a spouse’s plan.
You will qualify for a special enrollment period if you have experienced a qualifying life event, such as a divorce, marriage or the birth of a child. The Affordable Care Act offers an alternative to COBRA insurance and is more cost effective.
Under the affordable care act, divorcing may save money for both parties through subsidies on their Obamacare policy. In 2017 (applies to coverage in 2018), an individual making up to $48,240 a year will qualify for a subsidy.
If they are a couple with no children, they cannot make more than $64,960 to qualify for the same subsidy. Meaning the burden of cost is heavier on a two-person family than on two single people.
If each married spouse had an income of $40,000 per year, they would have a joint income of $80,000 which is too high for a married couple that needs to qualify for a subsidy. As a result, there is a financial benefit to getting a divorce or never getting married.
The spouse responsible for paying alimony may save money by arguing that alimony should be lower since the receiving spouse’s monthly expenses are lower with a subsidy on their insurance.
Medicare and Divorce
Medical coverage from a spouse can sometimes last way beyond the length of the marriage itself. A former marriage may help you obtain government-sponsored Medicare if you are divorced and approaching the age where you qualify. It is important to understand Medicare after a Divorce.
Medicare is a health insurance plan that is offered by the federal government for people over 65, or for some younger individuals who have certain disabilities.
- Medicare Part A (Hospital Insurance) is free, if 40 quarter have been worked.
- Medicare Part B (Medical Insurance) costs an extra monthly premium based on income.
- Part C is also known as a Medicare Advantage plan, these can cover doctors and prescription drugs.
- Medicare Part D is a Prescription Drug Plan and these plans have a monthly premium
A person will generally qualify for Medicare at the age of 65 if they worked for the equivalent of 10 years and qualify for Social Security. If you do not have 10 years of work history but you were married for at least 10 years to someone who does qualify for Medicare, you may still qualify through your former spouse’s benefits. There are some conditions that will need to be met for qualification:
- You must be unmarried
- If you were not married for at least 10 years, you will need to have been married for at least 1 year before the date of your spouse’s death
- You need to be 62 years old or older
- Your former spouse must be entitled to Social Security retirement or Disability Benefits
- Your entitled benefit is less than that of your former spouse’s benefit.
Medicare Supplement policies will fill the gaps in coverage that Medicare doesn’t cover. These plans charge premiums. Medigap policies are individual plans; if a couple divorced, they would not necessarily need to change coverage.
It is not unheard of for seniors to divorce so that a sick spouse can have zero income and qualify for more affordable coverage. Medicaid and Medicare can be used together when a person qualifies for both. It is best to contact your state Medicaid program to see if you would be eligible to receive benefits.
If you receive more than Medicare Part A, you are likely being charged monthly premiums. If you have divorced and had an income decrease, you may qualify for a lower premium. You can request a new decision based on a life-changing event, just provide proof of your life-changing event to qualify.
Divorce and Health Insurance
There are going to be pros and cons to any decision, we just must choose what is best for us as individuals. Whether you are on the fence about divorce or indecisive on which insurance policy will be best for you, the only person with those answers is you.
If you have questions regarding divorce or insurance, contacting a licensed insurance agent in your state or talking with an experienced family law attorney can help you make the decision that will benefit you the most.
Lindsay Engle is the Editor at MedicareFAQ, a learning resource center for senior healthcare. Lindsay loves working in the senior healthcare industry. She has a great passion for animals and loves boating. In her spare time, she enjoys snuggling on the couch with her pets as well as fishing with her boyfriend. www.medicarefaq.com