It’s common in marriages for one spouse to obtain coverage for the entire family through their employer. Because one employer offers more attractive premiums or benefits, it makes sense to consolidate under one policy. After a divorce, children remain eligible for coverage as dependents, but the spouse no longer meets requirements to stay on the insurance plan.
If you’ve found yourself in the lurch as a result of a divorce, take heart. Adding the complication of finding health insurance during an already difficult time can seem overwhelming, but it’s critical your coverage doesn’t lapse. The stress of divorce can present many health complications and you’ll want to feel confident you can get the care you need.
Before detailing health insurance options, let’s cover a few standard terms so you’ll have a better understanding of how to compare plans and premiums.
What you need to know about health insurance after divorce
If this is your first foray into shopping for health insurance, there are a few terms you’ll need to know. Your ability to compare plans and make the best choice for you relies upon your understanding of industry terminology.
Premiums: Whether you use the coverage provided or not, this is the amount you pay every month or every pay period to retain health insurance coverage. If you have insurance through your employer, they likely subsidize this amount so your premiums may appear artificially lower.
Out-of-pocket: This is the cost you are responsible for paying to the provider for the services you receive in addition to the amount your health insurance covers.
Deductible: Some policies have deductibles which are out-of-pocket spending thresholds you must reach before certain insurance benefits kick in.
There are many kinds of health insurance, and some even involve wellness plans to lower premiums or flex spending accounts to offset out-of-pocket costs. As you shop, you’ll discover that plans with high deductibles may offer lower premiums and less out-of-pocket costs.
Your options for health insurance after a divorce
Before you finalize the divorce, make sure you have a plan in place for health insurance coverage. If you’re currently separated, you’re still eligible for health insurance through your spouse’s policy. Once the divorce decree is filed, you need to notify the health plan administrator within 60 days to be eligible for certain kinds of coverage such as COBRA.
Here are four options for securing health care coverage if you’re no longer eligible under your current plan due to divorce.
1. Get insurance through your employer
If you’re eligible for health insurance through your own employer, this is going to be hands-down the cheapest way to secure coverage. Employers often subsidize the cost of insurance so your premiums will usually be lower than anything you could obtain as an individual. While there are strict employee open enrollment periods, you can generally add coverage if you have proof of a life-changing event such as divorce.
2. Use COBRA or mini-COBRA
A federal law nicknamed COBRA (Consolidated Omnibus Budget Reconciliation Act) ensures that any company with more than 20 employees must offer coverage if you’re no longer eligible through your spouse’s policy. This coverage has two major stipulations, however. One is that you must notify the plan administrator within 60 days of the divorce or you won’t be eligible. Secondly, COBRA coverage is only available for 36 months, so it’s more of a contingency plan than a long-term solution.
COBRA has advantages for those who are concerned about keeping the same provider, but it’s more expensive than other health insurance options. While the employer is obligated to offer the coverage, they no longer subsidize it, so you’ll end up paying the full cost of the premium plus an administration fee.
State continuation coverage sometimes referred to as mini-COBRA, is designed to supply health insurance options to those whose policy sits with a small company that has less than 20 employees. In some states, coverage only lasts three months while other states provide options that could cover you until Medicare eligibility kicks in. Because coverage and eligibility differ wildly from state to state, you’ll need to do a little research to determine if this is a viable option for you.
3. Buy insurance in the marketplace
Due to the ACA (Affordable Care Act) and subsequent reforms, you can now purchase healthcare as an individual and, depending on your income, these plans may be subsidized. There are both government and off-exchange or direct platforms for applying, comparing, and purchasing plans that eliminate broker fees and deal directly with health insurance providers.
The most popular option is to secure coverage through the federal healthcare exchange, which rates plans in the marketplace as Bronze, Silver, Gold, Platinum, and Catastrophic according to the amount of coverage. Open enrollment for the marketplaces is typically November 1st through December 15th but, like employer-sponsored plans, qualifying events such as divorce provide a special enrollment window of 60 days.
4. See if you qualify for Medicare
Medicare is a health insurance plan offered through the federal government for people 65 and older and certain people with disabilities. There are several different levels of coverage through Medicare (Plan A, B, C, and D), and your eligibility will be based on a few factors. These include age, marital status, length of employment, and social security eligibility. In some cases, Medicare and Medicaid can be used simultaneously to provide more comprehensive coverage.
Navigating Medicare eligibility and enrollment can be tricky, so it’s best to consult directly with representatives at Medicare about which options would work best for your situation.
Divorce can be a stressful time, so in addition to securing health insurance, make sure to set aside time to take care of yourself. Stay up to date on yearly check-ups and invest in preventative care. Staying in good health means you’ll be able to enjoy the benefits of the new life you’re building and have the energy to take on whatever opportunities come your way.