Insurance: a vital but often overlooked element in divorce planning – Part 1 Health Insurance

by Lesley Politi on April 9, 2009

Many couples going through a divorce are full of emotion trying to deal with issues such as custody disputes or quarrels over the division of property or assets.  One concern that seems to fall through the cracks is failing to properly account for insurance needs.  In this four-part series of articles we are going to focus on several vital insurance-related issues that require attention during this difficult time.
Many families have employer provided health insurance benefits that cover the entire family. When a divorce occurs, although children typically qualify for coverage under the ex-spouses plan, the former spouse will not be covered and will need to obtain their own insurance coverage. 
There are three basic options. First, if you are employed, then you can certainly look to obtain coverage through your own employer plan. 
Second, if your ex-spouse worked for an employer with 20 or more employees then you can continue coverage through that plan for up to three years as allowed under The Consolidated Omnibus Budget Reconciliation Act.  This federal law, otherwise known as COBRA, mandates that a person covered under a health insurance policy be given the right to continue that coverage, at their own cost, for a set time period if certain requirements are met.    If choosing COBRA full premiums will have to be paid and the insurance is not automatic so you need to be certain to notify the plan administrator of your intent within 60 days after the divorce.  If you do not provide the appropriate notice you may not be eligible for coverage. The cost for COBRA is not cheap and usually ranges from $650 – $750 per month. The risk of developing health problems during the COBRA coverage period can pose a huge risk because you may find that you are uninsurable and unable to purchase other health insurance coverage once your COBRA benefits cease.
The last option available is to purchase your own health insurance policy directly from an insurance company. This allows you to shop for the type of benefits that you want.   If you don’t have insurance through your employer then many times this option may prove to be the best choice in the long run. You may able to purchase health insurance at a matching or lower cost elsewhere. This way you are insured in case a health problem arises.
Health insurance coverage is something that should be dealt with prior to finalizing the settlement agreement. A divorced spouse should know exactly how much it will cost him or her to obtain health insurance benefits and the agreement should clearly spell out who pays for what so there will be no misunderstanding. If there are children involved, you and your ex-spouse must come to an agreement on who will carry coverage for them. Usually whoever was carrying coverage for the children prior to the divorce would continue to carry that coverage. You should also agree on who is responsible for unreimbursed medical expenses for the children. A general rule of thumb is that each parent is responsible for a percentage of these expenses. The percentage is usually based on the percentage of each parent’s income to the total of his or her combined incomes at the time the divorce agreement is finalized.
Questions Please call Politi Insurance Agents & Brokers

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