Wondering What Will Happen to Your Health Insurance Post-Divorce? Here’s Some Good News!
The premiums being charged for adequate health insurance are hitting the roof with each passing day, making it increasingly difficult for average Americans such as us to remain covered under a plan. While receiving coverage under the health insurance plan being provided by your spouse’s employer is a sweet deal, the situation becomes instantly more complicated if you decide to break things off and get a divorce.
In such a scenario, it is best to shift to the insurance plan being provided by your own employer, which of course is only possible if you are employed. Not only does this offer a tax advantage since your insurance premium is deducted at source, it also allows you to get coverage with really low premium payments compared to privately available plans.
However, in case you were not employed at the time of your divorce, it may be a good time to get a job in order to secure yourself under the group insurance policy of an employer. But that is not necessary at all, as there are a few options that can ensure coverage for you even after divorce while you choose to remain a stay-at-home person.
Coverage Under COBRA
The COBRA Act of 1985 gives a provision for those stay-at-home spouses who enter into a divorce to continue retaining the benefits being provided by the insurance plan of their spouse while they were married for a specific time period. While private insurance companies would usually not cover spouses post-divorce, the COBRA Act ensures that these spouses remain covered in the group health insurance plans.
It should be noted that the Act applies only to companies with more than 20 employees. Coverage is ensured for up to three years; however enrollment under COBRA is not an automatic process. As soon as you become eligible for COBRA after your divorce, it’s of paramount importance that the enrollment form is returned within 60 days of eligibility notice receipt.
But COBRA has its downsides as well. The program demands a rate of 102% of the rate being charged by the total group, as both the employer side and the employee side of the premiums must be paid plus 2% to be charged as administrative fee. Also, the subsequent COBRA plan does not cover prescription costs, any deductibles, or cover out-of-pocket costs.
Continuation Coverage Sponsored by the State
Now this one depends entirely upon the state you reside in, as every state has its own set of laws when it comes to offering continued coverage for healthcare. Most of the states do offer continuation coverage, meaning that you will most likely remain eligible for coverage under the insurance plan offered by your spouse’s company even after your divorce has been finalized, however the time duration varies according to states.
For example, while some states offer coverage for up to three months after your divorce, others allow you to remain covered until you become eligible for Medicare which happens at the age of 65. It is to be noted that these plans, while are casually referred to as the mini-COBRA for their likeness to the COBRA plan, are state sponsored, so in effect it is the state that pays for your insurance coverage for the specified time.
The ACA Individual Healthcare Plan
Instead of opting for plans that are part of a group insurance scheme, this is an option that allows you to enroll in a plan as an individual. There are many ways you can opt for an individual healthcare plan, either through the programs offered by the government through its exchange, or with a broker, whatever is easier to obtain and more feasible to sustain in the long term.
A major benefit of the ACA since its enactment in 2014 is that it has made healthcare plans for individuals much more robust than before, without excluding any pre-existing conditions or limiting any of the benefits. That is why plans which are covered under the ACA have become the preferred ones by those who lose coverage in group insurance plans.
Healthcare.gov is the first place you should visit to observe and choose the best plan being offered by the government through its exchange.
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