By Diane C. Pappas, CDFA
A client of mine recently asked what the following sentence in her separation agreement meant: “The husband shall maintain in full force and effect his current family health insurance coverage…for the benefit of the Wife for so long as it is available to her and for so long as she remains eligible.” Specifically, she wanted to know what ‘available to her’ meant.
This is a common question and concern for many people going through a divorce. Will I have health insurance after a divorce? What if I am a stay-at-home Mom and do not have access to an employer group plan because I do not work? Can my spouse, out of spite, say ‘no’ to allowing me to remain on his/her plan?
Know the Law in Massachusetts
Very simply, according to Massachusetts General Laws on Divorce (MA General Law: Chapter 208, Section 34), the court has to consider the availability of health insurance to the parties and shall require the covered spouse to extend coverage to both the children and the spouse who does not have health insurance. The covered spouse shall do one of the following: exercise the option of additional coverage, obtain coverage for the other spouse, or reimburse the other spouse for the cost of health insurance. Please consult with your attorney to see how this applies to your particular situation.
It is also important to understand the Massachusetts state insurance law that addresses continued coverage for those covered under an employer group health insurance plan. Group health insurance is health care coverage that is sold collectively to a group of people (employees of a company) rather than to individuals. The group policy is purchased by an employer and is offered to all eligible employees of that company. This differs from non-group or private plans for individuals, families and small businesses obtained through an insurance broker or online in MA through the Massachusetts Health Connector. Most self-employed individuals will have private health insurance. A few will have coverage through COBRA.
Group Health Insurance is Available to You
For those employers with group plans that are subject to our state insurance laws, the law states that in the event of divorce, the spouse of the employee member of the plan, “shall be and remain eligible for benefits under said plan, without additional premium or examination, as if said judgment (of divorce) had not been entered”. This means that if your spouse currently has a group insurance plan through his/her employer and the employer is subject to state insurance laws, then you shall remain on that plan, with no additional premium or additional health exam, as if the divorce had never happened. Health insurance is ‘available’ to you.
Let’s look at the typical case where the husband is the one employed by a company that offers a group health insurance plan. It is determined through discovery that this particular employer’s insurance company is subject to MA state insurance laws. Therefor, health insurance is ‘available’ to the wife and because of the law, she is eligible to remain covered on her husband’s plan until the remarriage of either spouse, or until such time as provided by their separation agreement.
In this case, neither the husband nor the employer can deny continued coverage for the wife. However, there are a number of large employers that are not subject to MA state insurance laws. Companies like EMC and Wal-Mart are self-insured or self funded, meaning the employer provides health benefits to employees with its own funds, rather than purchasing a group policy as discussed above. Companies that are self-funded are not subject to MA insurance laws and do not have to provide continued coverage for a spouse after divorce. Spouses who find themselves in a situation like this will be able to have continued coverage under COBRA for up to 36 months after the divorce. But remember, COBRA tends to be very expensive, and you will be responsible for the entire premium, which could be up to 102% of the cost of the group rate.
Click this link for more information on COBRA: COBRA Information
What if my Spouse is Self-Employed and has Private Insurance?
If your spouse currently has a private insurance plan, chances are you will be able to remain on that policy, but you should always double check with the insurer prior to signing any agreements. There may be an additional charge for your coverage, so you should compare that cost with the cost of your own individual plan and address the extra cost in your separation agreement.
What Happens if my Spouse Remarries? Will I lose my coverage?
The question here should be how much will my coverage cost and should I look for a private plan of my own? If your spouse remarries (group or private plan), you may still be eligible for continued coverage, but you will most likely have to pay an additional cost. Like COBRA, the new cost for your own policy with that employer/private plan may be significantly higher than the cost of an Individual plan. Before you opt for either COBRA or continued coverage if your spouse remarries, check out other private plans and compare the benefits and the cost. The MA Health Connector website is an excellent source for comparing all the different plans available in your area and because of our national health reform, everyone is eligible for health insurance regardless of any preexisting conditions. You may even qualify for a subsidy to help pay for the cost.
Click this link to go to the MA Health Connector: mahealthconnector.org
4 Tips for Insuring Your Health
- Know the health plan that is currently available to the family – Obtain the Summary Plan Description from the insured spouse’s HR department. This is the only document that will tell you if the plan is self-funded. The Summary of Benefits does not provide this information;
- Know the costs – Premium, out-of-pocket limits, deductibles, co-insurance costs, co-pays;
- Know your options – Government, military and church plans have their own rules. Find out the cost of COBRA before you agree to anything, research private plans;
- Plan for contingencies – Your Separation Agreement should address all health insurance concerns. If you do need to find your own insurance, negotiate for your spouse to help pay for it. Know that alimony cannot be reduced as a result of the obligor’s cost for health insurance for the spouse. Some employers may add the cost of the spouse’s premium as W2 income to the employee – know this ahead of time so there are no surprises.
Every situation is different. Be sure to check with your attorney, financial professional or health care advocate to understand what applies to you and what is best for you and your family.
This article pertains to divorces in MA only, laws and practices vary from state to state. Taking information out of context generally has negative consequences. If you have questions relating to your particular matter, you should contact an attorney in your state for advice.