Veralynn Morris, a certified divorce financial analyst in Frederick, answers:
Thanks to the Consolidated Omnibus Budget Reconciliation Act of 1986, known as COBRA, if your spouse works for an employer with 20 or more employees you have the right to extend coverage for yourself and dependents for a period of 36 months after legal separation or divorce. COBRA was expanded by HIPPA of 1996.
But you must take action! When the “qualifying event” occurs, you have to notify the employer and they will provide you with the paperwork to continue coverage under your ex-spouse’s plan.
You will need to pay premium back to the effective date of your request and the employer will charge you 102% of the premium. Once you are insured under COBRA you remain eligible for 36 months unless the plan itself terminates, you are insured by another plan, or you remarry.
It is recommended that you should apply for benefits under COBRA especially if you or your dependents have any pre-existing conditions. The benefits under the Plan will not change. However, at Open Enrollment, you will be able to amend your coverage, for instance from a PPO to an HMO. The change in plans will affect your premium costs, up or down. You are also able to keep dental and vision as part of your plan.
COBRA is costly but it is a way to guarantee that you and your family will have health insurance coverage. However, there are some alternatives:
If you are employed and your plan offers coverage that you might have declined since you were under your spouse’s plan, divorce is a ‘qualifying event’ and you might be able to enroll in your plan mid-year, prior to ‘Open Enrollment” the time when your employer group renews. Your employer may make a contribution to your premium and at the very least you will not have to pay the extra 2% administrative cost from your ex-spouse’s employer.
Another alternative, if you are young and relatively healthy is to look for individual plans offered by insurance companies in your area. Most group insurers will offer individual insurance. Typically, if you are young and healthy you might save significant insurance premium costs.
However, you will have to ‘qualify’ medically and provide disclosure of your medical conditions. You may be subject to pre-existing limitations, usually for one year. You can be turned down for coverage.
Be diligent and check out the plans well in advance to find if you qualify for acceptance and the plan’s cost before the deadline where you must apply for COBRA under your ex-spouse’s employer.