Divorce’s Impact on Health Insurance
Divorce can have an impact on many aspects of your life, including your health insurance coverage. This may not be the first thing on your mind as you get divorced, but it is an issue that must be addressed during the court action. Will you lose coverage? Is your spouse required to keep you on their policy, or vice versa? Will your children remain covered? Can coverage be addressed in your settlement agreement?
Automatic Orders in NY Divorce
Once a divorce case in New York State is filed, a set of rules goes into effect. These rules, called Automatic Orders, outline how each party is to treat financial accounts, property, and life or health insurance policies during the course of the matrimonial action. The Automatic Orders forbid one party from removing their spouse or children from a preexisting health insurance policy until it is agreed otherwise, and help to ensure that the status quo is maintained.
The Automatic Orders can be modified or dissolved, but only if both parties can reach an agreement addressing all issues outlined in the original order. The new agreement must be in writing, and executed by both parties in front of a notary public. Once signed, the agreement can be submitted to the court. Parties will be bound by the stipulations in their new agreement, until their divorce is concluded.
The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, is a piece of federal legislation that allows a recently divorced person to remain on their ex’s health insurance for up to 3 years after the divorce is granted. If both spouses are covered under the health insurance policy provided by one person’s employer while married, then the qualifying party must contact the insurance provider within 60 days of a Judgment of Divorce being ordered if they want to remain on the insurance plan. If they fail to do so, they will lose their coverage. COBRA was enacted to help provide a buffer for divorcees while they seek another kind of health insurance.
While COBRA is great because it helps to ensure that a person does not lose their health care coverage, it does not come cheap. Under the Act, individuals can be charged up to 100% of the cost of the plan’s coverage, with an additional 2% administration fee. If the person fails to pay the astronomical premium fees, coverage can be terminated. The insurance coverage can also be lost if the ex-spouse’s employer goes out of business or decides to stop offering health care coverage through their company.
Given the high cost and the risk of losing coverage, it is always recommended that a divorcing person enrolls in their own health insurance plan that is separate from the coverage they had while married. This can be via their place of employment, or purchased and paid for through the NY State of Health website.
Guaranteed Coverage for Kids
Children will never lose their health insurance coverage as a result of their parent’s divorce. Minor children will remain eligible to receive coverage under either parent’s plan since they are considered to be dependents. They will not have the option to receive health insurance benefits under COBRA, even if one of their parents proceeds forward with this kind of coverage.
New York courts will usually order that the children remain on the same insurance plan that they were enrolled in prior to the divorce. However, if both parents have their own coverage, then a judge will determine which party is to provide coverage based on the cost of each plan, and what services are included. In a situation where neither parent has health care coverage, the custodial parent will often be ordered to obtain insurance plans for their children. Costs associated with the children’s health insurance will usually be split between parties, and factored into child support obligations.
Legal Separation and Health Insurance
Couples who wish to leave their marriage, but still retain some of the benefits of being married, should consider obtaining a legal separation instead of a divorce. Married, but legally separated, couples are eligible to remain on their current health insurance plan, since the provider will still consider the pair to be married.
In order to become legally separated, parties must reach a settlement agreement that addresses property, debt, child custody and support, insurance, and even spousal support. A Separation Agreement would be prepared much like a Stipulation of Settlement in divorce. There are benefits to filing for a legal separation over divorce, but it also has its disadvantages. It is best to speak with an attorney for a clearer idea of whether or not obtaining a legal separation in order to keep health insurance coverage.
We’re here for you
There are a number of life changes that come with divorce, some more important than others. Remaining covered under a health insurance policy is one of them. The law firm of Brian D. Perksin & Associates P.C. is well versed in New York divorce and family law, and provides their clients with thorough and comprehensive representation. For more information on the implications divorce may have on your health care coverage, contact Brian or a member of his team to schedule a free consultation.