What You Need to Know About Health Insurance Post-Divorce
There are some expenses post-divorce that give my clients “sticker shock”. Purchasing a different home is usually near the top of that list. Paying for college (even if it is just their half) is always surprising.
Paying for healthcare though is almost always number 1. In addition to being expensive, it’s confusing. Deductibles, co-pays, in-network, out-of-network…it makes your head spin!
The situation can become overwhelming, especially when considering the recent experience of divorce. My goal today is not to define every term used in healthcare but to introduce you to a few of your options and then what I recommend my clients do for healthcare.
COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) law was passed in 1986, and it provides an avenue for divorced individuals to obtain healthcare.
If your ex-spouse’s employer has at least 20 employees, you can elect to receive health insurance from that company for up to 3 years. Note that this is double the amount of time an employee who is fired gets COBRA coverage.
You will need to notify the company of the divorce within 60 days and then they have 45 days to notify you of your right to coverage. During this “intermediate” period, any healthcare costs you incur will be reimbursed, so keep receipts!
Now…you might say, okay Cale, that was too easy, I’ll stay on my ex-spouses’ plan which I already use and am comfortable with…well there’s more to it.
Other Options
Since COBRA coverage is so expensive, most of my clients will look elsewhere for health insurance. There are a few options.
1. Own employer
You could consider going on your own employer’s health insurance. Each company is different, but this is usually the best option when you consider price.
2. ACA Plan
This is the health insurance public market or “Obamacare” plans. They provide subsidies for low to moderate income earners but have plans available to everyone. You can usually choose from a few options and the coverage is good.
Speaking from personal experience, I purchased an ACA plan shortly after being diagnosed with cancer. I thought it was an easy experience, and I was happy with the service from the insurance company. I will say that it was expensive and for most of my clients that is the biggest downside. You can learn more at healthcare.gov.
I will say that it was expensive, and for most of my clients that is the biggest downside. You can learn more at healthcare.gov.
3. Medicare
If you are over age 65 and have 10+ years in the workforce then you can go on Medicare. Also, if you were married for 10+ years to a person who now qualifies for Medicare, you may be covered.
Even though this is the last option I listed, this would be my recommendation for most clients if they are over 65 and are eligible. It is usually the cheapest option and provides great coverage. A note here…if you are being told that you should get a Medicare Advantage Plan also called Part C, you should talk to a financial advisor and a health care specialist. These plans can be right in specific situations but can be complicated and their terms should be reviewed.
At my firm, we do not sell health insurance. In our opinion, health insurance should be viewed in the context of your overall financial plan.
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