Buying Individual Health Insurance During a Divorce

Buying individual health insurance may not be the first thing that comes to mind during a divorce, but it should be an important part of your preparation. Considering your options and having a short term medical insurance plan in place will help you protect your finances from medical expenses associated with unexpected accidents and illness.

Once a divorce is filed, a spouse covered as a dependent on another’s employer-sponsored plan loses coverage. Any dependent children may remain, depending on what arrangement the couple makes. If the individual does not have access to major medical insurance through his or her own employer, these are the main options available:

COBRA

COBRA continuation coverage is extended to the spouse by law. This allows the individual to remain on his or her former partners’ employer-sponsored plan for as long as 18 months. The coverage would remain the same as it was before the divorce; however, the individual is responsible for the entire premium plus 2 percent for administrative costs.

According to the 2009 Kaiser/HRET Employer Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $4,824 annually. At 102 percent for COBRA, monthly premiums nearly reach $410.

Choosing COBRA does have advantages. Individuals are allowed to keep their existing coverage, which may be more comprehensive than alternative plans. In addition, COBRA helps those with pre-existing conditions remain insured—they may have trouble qualifying for other types of coverage and, if they do qualify, face higher premium rates and exclusions.

Those who foresee many medical costs may want to compare COBRA premiums against other plans whose deductibles, copays and prescription drug charges may add up, making COBRA a better option.

Individual major medical

An individual major medical plan provides long-term coverage similar to an insurance plan obtained through an employer. Purchased privately, these plans are subject to evidence of insurability.

Those applying for coverage must answer health-related questions and undergo a medical examination to provide evidence of insurability to the insurance company. This helps the company determine the applicant’s eligibility, rates and coverage. An individual may be denied health insurance based on habits, medical history, age, income and other factors, or the insurer may issue a policy with limitations on coverage.

Short-term health insurance

For an individual anticipating a brief gap between health insurance coverage—12 months or fewer—a short term health insurance plan may be an easy, economical option. Short term medical plans generally cover catastrophic illness and injuries, which makes them best suited for those in good health who want to keep premium costs low.

Another advantage of short term medical is that it may be quickly obtained. Applicants may qualify and enroll online. Approval comes within minutes, and coverage may begin as early as the next day. To determine eligibility, applicants answer a small number of health-related questions; those with serious health conditions are unlikely to qualify.

While short term medical premiums are a fraction of major medical insurance, it is important to remember that out-of-pocket expenses will be higher when medical care is needed. Plans may last as few as 30 days or as many as 12 months. Once a plan expires, it is possible to apply for another policy; however, that policy is considered completely new and will not cover illnesses developed under the first one.

Additional reading:
  Health Insurance and Divorce
    LINK: http://www.divorcesource.com/NJ/ARTICLES/sliwinski55.html]
  Divorce and Health Insurance Options
    [LINK: http://www.womansdivorce.com/divorce-and-health-insurance.html]
  FAQ About Health Insurance and Divorce
    [LINK: http://www.womansdivorce.com/health-insurance-and-divorce.html]