What do you do if you’re a single mom with an adult child who has no healthcare insurance? Especially if that child has a pre-existing condition?
If you are a single parent, or about to become one, you probably want health insurance coverage for your children for as long as legally possible. If you have been divorced for a while, you may not have a clause in your divorce regarding coverage for young adult children. If you are going through a divorce now, the issue is the same: how can you get your ex to pay for any of it after the kids turn 18?
Here are 8 things you need to know adult kids, health insurance and resolving the problem.
The law has changed.
Recent changes in the law due to the Affordable Care Act (ACA or Obamacare) have introduced a new and vital topic to the conversation between divorcing parents: health insurance coverage for young adult children. With the passage of the ACA, kids can stay on a parent’s health insurance plan to the age of 26. When a couple divorces and both have employer-provided health coverage, they will need to make important decisions on behalf of their children’s ongoing healthcare insurance coverage. The changes brought by Obamacare also affect parents who divorced prior to the passage of the law while their children were still minors. As their children approach adulthood, the parents will need to decide what to do about the extra years of insurance coverage for which they had no provisions in their divorce.
There is a solution. You do not need to go to Court to solve this problem.
Divorcing (and divorced) couples usually have a common interest in working together to provide for their children’s health insurance. Because of this, mediation is usually the most effective method for getting clear and legally enforceable agreements regarding coverage for adult children.
It is doubtful that either party can force the ex-spouse to pay for medical coverage for adult children. Hiring a lawyer as an advocate is not likely to be helpful because only cooperation by both parents can solve this problem.
Family Court Judges generally lose the power to make rulings over children of divorced couples when the child is emancipated (usually when the child both graduates from High School and reaches the age of 18). Consequently, I have never seen a Family Court Judge order divorced or divorcing parents to pay for and provide health insurance coverage for emancipated minors.
On the other hand, since the passage of the Affordable Care Act, almost every divorce mediation session I have conducted involving children results in an agreement between the parents to provide health insurance coverage for young adult children
While it seems doubtful that the Court can order divorcing couples to provide young adult children with health care insurance coverage, divorcing parents, often use private mediation to accomplish this because they realize the importance of good coverage for their children. There are many detailed and personal aspects to this conversation leading to the best choice for both of the parents and their children.
Once you and your ex come to a complete accord through mediation, we submit a “Stipulation and Order” to the Family Law Judge.
Now, on to the specifics of choosing an insurance plan and dividing the associated costs. Few people enjoy reading about health insurance plans and comparing them. It can be tedious, frustrating, and complicated. There are many variables to consider. Trying to understand the financial consequences of various health insurance plans can be overwhelming. These choices become even more complicated in divorce or after a divorce. However, as a conscientious parent, you must dive in and grasp the specifics of each plan. Whether you are already divorced or in the process of divorcing, there are five main topics to resolve regarding coverage for children. (These issues are relevant to minor children as well as young adults.)
- choosing the healthcare insurance plan
- dividing premium costs
- addressing the deductible allocations
- sharing co-pay costs
- dealing with uninsured healthcare services
You will need to consider new factors in choosing your healthcare insurance plan.
When you were married and both of you had employer-provided family healthcare insurance, you worked together as a married couple to sort out which plan best met your needs in insuring your family. The factors in your choice of health plan included a) the provider network, b) medical services covered in the plan, c) your out-of-pocket share of the monthly premium, d) total annual deductibles, e) co-pays for services and meds you expected to use and perhaps other items. If you were like most couples, it was a complicated choice.
When going through a divorce the same factors are involved. However, you and your ex will need to evaluate the two employer-provided health insurance plans to see which is most economical from the vantage of two single parents rather than a married family unit. To accomplish this, you will need to compare the monthly premium for an unmarried employee with the premium for a single parent. Then you will compare the annual deductible for a single person vs. the annual deductible when children are included in the coverage (family plans).
The challenge often arises when one parent’s employer health insurance plan has almost no addition to the employee’s monthly insurance premium for a family when compared to an unmarried employee but has a higher annual deductible. In contrast, the other parent’s employer health insurance plan has a large increase in monthly premium when children are included in the plan but the annual deductible for a single person and family are about the same.
Based on my experience in my mediation practice, this is a common situation. It is not an easy comparison to work up. Many divorcing or divorced couples need the help of a mediator just to talk through the question of which health insurance plan is best as they go forward as two single parents instead of one married family unit.
You will need to divide up premium costs.
When both parents are working, the norm seems to be to have each party pay their own employee premium as if they were an unmarried person. Then they are left with how to divide the additional premium required in order to obtain health insurance for their adult children. Many couples simply divide the cost in half and have each parent pay 50%. This works best when their respective incomes are approximately equal. When there is a disparity in income between the parties, they often will apportion the monthly premiums according to the ratio of their gross incomes.
You will need to allocate the annual deductible.
Many employer-provided health insurance plans have vastly different deductibles for single employees compared to employees with family plans. This higher deductible on family plans brings up questions of fairness when a couple considers simply splitting the annual deductible. To address this problem most divorced couples with adult children split the annual family deductible into two categories: the employee portion (calculated as if the employee were single) and the balance (treated as the family portion). The parent with the employee portion pays his or her own deductible and both parents split the balance. The parents can either base the split on relative income or simply divide it 50/50.
There is an additional level of complexity because deductible charges accrue on a first-served basis. This can create a situation where the parent without the children on his or her health insurance plan ends up paying half of the ex-spouse’s deductible along with the portion of the deductible add-on for the family coverage. To resolve this issue, I advise divorced couples who come to me for mediation to agree to an annual “true-up” where they review the deductible payments at the end of each year. In the true-up they allocate the employee share of each employer-plan deductible and the family share of the deductible regardless of the order in which they incurred services.
You need the arrangement to share co-pay costs.
Co-pays are the small-dollar fees paid to the doctor for in-office services or prescriptions covered by insurance. The method divorced parents choose for sharing these costs tends to evolve over time. At first, when children are young, it is common for parents to begin with one parent reimbursing the other on a monthly basis. Eventually, many of these divorced parents switch to one annual calculation and reimbursement in order to avoid the monthly transactions.
Once the children become young adults, many divorced parents discover that what worked well when the children were minors is no longer practical. Tracking the co-pay expenses frequently becomes more of a challenge. Once their kids are no longer minors, parents are usually happy that their young adult children can go to the doctor, or pick up a prescription, without a parent present. However, many of these same parents report getting caught up in an undesirable cycle: The child pays the co-pay but fails to bring home a receipt; the child nags the parent they see next for reimbursement; the parent who reimbursed the child request reimbursement from the ex-spouse without a receipt. This pattern creates a lot of friction.
In order to escape this friction-causing cycle, many couples decide to have their adult children pay the co-pay out of their own pockets and avoid the reimbursement issues entirely. This approach eliminates the problems with lost receipts and the frequent small-dollar transaction difficulties.
You will need a plan for dealing with uninsured healthcare costs.
Uninsured healthcare costs are complicated. Because of the wide variance in healthcare insurance plans, there is no one-size-fits-all solution for divorced parents. There are generally four types of uninsured medical expenses:
- Semi Routine – Many employer-provided health-coverage plans exclude certain common medical treatments such as dental, vision, psychotherapy, chiropractic treatments and so forth.
- Dollar Limits on Coverage – There are dollar limits or percentage limits on coverage related to certain services. For example, a plan may only cover 80% of surgery costs. (Some plans refer to these expenses as co-payments but for the purpose of this article, I am considering them uninsured expenses.) This category also includes the significant portion of the cost policyholders incur when they receive out-of-network emergency services.
- Medical Devices Not Covered – Plans differ as to which medical devices, equipment, and supplies they cover.
- Elective Treatment- This includes such things are elective surgery (cosmetic surgery) or certain types of “alternative treatments” such as acupuncture.
Most divorcing couples I have worked with easily agree to share the cost of uninsured medical expenses incurred for routine services and for medical devices. They usually agree to split the cost of out-of-network emergency services but some set a dollar limit. I know of one case where the young adult child went to the public hospital for care because the cost of out-of-network emergency care was over $20,000 and one parent refused to pay half.
For elective surgery or for normal services provided out-of-network, the majority of divorcing parents want prior notice and an opportunity to discuss before they agree to pay for the services.
You will need a plan to resolve future disputes.
It is impossible to foresee all the issues that might arise regarding healthcare for adult children. There are just too many variables. For example, remarriage of one spouse or the other might change the calculation on which health plan to use. Therefore, I suggest a clause in your agreement that provides for prompt mediation of any difficulties related to healthcare for adult children.
Here is a recent instance where a mediation clause helped an estranged divorced couple who had separated many years before to resolve an unexpected problem. Their agreement had been to split the cost of uninsured medical and their policy did not include vision care. This couple’s young adult child bought her contact lenses each month from the optometrist because it was convenient. She paid full retail rather than comparison shop. The parents were obligated to pay the retail list price and were not happy about it. They realized they could save a lot of money buying the same brand of contact lenses in three-month increments from an online supplier.
We resolved this problem by the ex-spouses modifying their agreement by setting limits on the money they would spend. Their daughter could continue to purchase the lenses from the optometrist and pay the difference out of her pocket or she could switch to a more affordable supplier.
Only through a private agreement with the cooperation of your ex can you achieve a solution to health coverage for adult children. If you are divorced or divorcing, mediation is an effective tool to help you sort out the complexity of post-divorce healthcare insurance for adult children. Once you reach an equitable solution you can experience the peace of mind which comes from knowing that your divorce has not impacted the health insurance needs of your young adult children.