How you will pay for future health care may not be the first thing that comes to mind during a divorce. However, considering your health insurance options is important. Buying an individual health insurance policy or having a temporary health insurance plan in place will help you protect your finances from medical expenses associated with unexpected accidents and illness.
When a marriage terminates, women especially experience disruption in their health insurance coverage. Nearly 115,000 American women lose private health insurance annually in the months following divorce, and about 65,000 of them become uninsured, according to “Divorce and Women’s Risk of Health Insurance Loss,” a study published in the December 2012 issue of the Journal of Health and Social Behavior. Most of these women were middle-income and covered by their partner’s employer-sponsored plan.
Once a divorce is filed, a spouse included 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:
Under the Consolidated Omnibus Reconciliation Act, more commonly known as COBRA, employees and their dependents may opt to retain their group health insurance benefits for a limited time if certain situations impact their eligibility. Divorce is among the life events that qualify.
COBRA continuation coverage is extended to the spouse by law. An individual may remain on his or her former partner’s employer-sponsored plan for up to 36 months. The coverage would remain the same as it was before the divorce; however, the individual is responsible for paying the entire premium plus 2 percent for administrative costs.
According to the 2013 Kaiser/HRET Employer Benefits Survey, the full annual cost of employer-sponsored health insurance for an individual averaged $5,8845. At 102 percent for COBRA, monthly premiums nearly reach $500.
Choosing COBRA has its advantages. Individuals are allowed to keep their existing coverage, which may be more comprehensive than alternative plans and allows continued access to current in-network providers.
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.
Read Wife.org’s “Maintaining your health insurance after divorce”
Individual major medical
An individual major medical plan provides long-term coverage similar to an employer-sponsored insurance. Under the Affordable Care Act, these plans include certain preventive services at no additional cost to the insured and 10 categories of essential health benefits. Applicants can no longer be denied coverage or charged more based on health history or gender.
Rates are based on age, location, tobacco use, family size, and plan category. There are four coverage tiers to choose from, which allows applicants to select cost-sharing percentages that make sense for their typical medical needs.
Individual major medical insurance that qualifies as ACA-compliant minimum essential coverage is available on state-based and federally facilitated health insurance exchanges as well as the private marketplace. Only plans purchased through Obamacare exchanges are eligible for income-based premium tax credits and cost-sharing subsidies.
Read WebMd’s “7 ways to hang onto health insurance post-divorce”
Temporary health insurance
For an individual anticipating a brief gap between health insurance coverage, a temporary health insurance plan may be an easy, economical option. Also known as short term medical insurance, these 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 temporary health insurance is that it may be quickly obtained. This can help ease stress and buy time amid the many decisions being made during a divorce. 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 temporary health insurance premiums are a fraction of major medical insurance premiums, it is important to remember that out-of-pocket expenses will be higher when medical care is needed. Temporary health insurance plans are not ACA-compliant. Having it may not prevent you from owing a tax penalty for going without minimum essential coverage.
Temporary health insurance policies may last as few as 30 days or as many as 12 months. It is possible to apply for another policy once the plan expires; however, that policy is considered completely new and will not cover illnesses developed under the first one. Policy length and renewal eligibility are subject to state laws.
Read: “Divorce costs thousands of American women health insurance coverage,” at ScienceDaily
Medicaid and CHIP
Medicaid and the Children’s Health Insurance Program (CHIP) make free or low-cost health insurance available to low-income adults and children, as well as those with disabilities. These programs may be worth looking into if affordability is a concern.
Medicaid and CHIP eligibility varies by state, and enrollment is open year-round. Visit Medicaid.gov to learn more.
Need help finding the right health insurance?
Call 866-278-1464 to talk to a licensed and certified health insurance agent from healthedeals.com. These individuals can help you determine whether or not you qualify for an Obamacare subsidy, answer your questions about health insurance and the Affordable Care Act, and assist you in weighing your options on and away from the state-based and federally facilitated health insurance exchanges.