Health insurance costs are a significant financial obligation for most Americans, but couples going through a divorce tend to feel the financial strain more acutely. Employer-provided health insurance plans only cover family members, such as the employee’s spouse or children. That means that once a couple is divorced, the ex-spouse can no longer be covered under the employee’s family insurance plan, since they are no longer considered family members. Several options exist for either maintaining or obtaining new health insurance coverage; some of them are discussed below.
Obtaining New Health Insurance Coverage After Divorce
After a divorce, an ex-spouse who was covered by the other spouse’s insurance plan will need to obtain his or her own health insurance coverage. Separate health insurance plans are typically more expensive than family plans, so it is important to keep in mind that health insurance costs are likely to rise after divorce and plan for it accordingly throughout the divorce process.
COBRA, the Consolidated Omnibus Budget Reconciliation Act, is a federal program that allows people in certain situations to maintain health insurance coverage once it has been lost. You may be more familiar with COBRA as a health insurance option for people who have lost a job, but it also allows former spouses to keep their insurance coverage after the divorce. COBRA coverage is temporary, usually a maximum of 36 months, and the premiums are often significantly higher than they were under the family plan.
A cheaper and more permanent option is to obtain a new health insurance plan through your employer. Employer-provided health insurance plans are often much less expensive than a COBRA plan. Of course, if you are not working for a company that offers health insurance, this is not an option. A final option is to purchase your own health insurance plan from an insurance provider. The Affordable Care Act may offer you a cheaper option if you qualify.
New Jersey Divorce from Bed and Board
Another option for dealing with health insurance costs after a divorce is to–stay with me– not get divorced. While New Jersey does not offer the option of a legal separation, it does offer something very similar in what is called a New Jersey Divorce from Bed and Board. A divorce from bed and board is not an absolute divorce as we usually understand that term, but rather it is a limited type of divorce. A divorce from bed and board allows spouses to separate themselves financially while still technically remaining married. Since the couple will remain married, they may be able to stay on the same family health insurance plan and take advantage of the reduced cost. However, some health insurance companies might view a bed and board divorce as a full divorce. So check with your health insurance carrier when considering a bed and board divorce. Further, a divorce from bed and board requires a joint application, and since it doesn’t result in a full divorce, it is best used by spouses who can remain civil toward one another. A divorce from bed and board also does not allow either of the spouses to marry another person, so if that is a consideration, a divorce from bed and board is not an option.
Health insurance coverage is a major financial consideration in a divorce. If you have questions about your health insurance during a New Jersey divorce, please contact Peter Van Aulen for a free 30 minute in office consultation.