Who Gets the Coverage?

Many couples discover the hard way that planning the wedding was the easy part—divorcing a spouse is a much longer, drawn out process from both an emotional and a financial perspective. Divorce means not only considering how best to fairly divide the shared property such as a house, vehicles, and bank accounts, but also how to best distribute intangible, but no less important, shared benefits. Careful consideration should be given when a couple has a family health insurance plan.

Unless both spouses have their own individual health insurance and their marriage has no children, the issue of health care should be at the top of a checklist of important items to include in the divorce decree, according to Kelly Ausley-Flores, a certified family law attorney with Ausley, Algert, Robertson & Flores in Austin, Texas. "There's so much to cover in the overall divorce scheme of things that health insurance coverage gets put at the bottom of the list, or not considered at all," says Flores, "and that is the biggest mistake people can make."

Federal law states that spouses and their dependent children who are currently insured by a health plan are eligible for Consolidated Omnibus Budget Reconciliation (COBRA) health insurance, and insurers may offer COBRA benefits for a period of 18 to 36 months.

"If you are the spouse who will be receiving the COBRA health insurance, you need to educate yourself," emphasizes Ausley-Flores. "How long do the COBRA benefits last under that particular insurer? What is the cost to you? How will you pay for it? You will be under a new contract with the health insurance company, so you need to find out what you need to know. It's basically a new situation where you have an ex-spouse with the insurance company, and they are required under federal law to offer you a policy."

The spouse receiving the COBRA benefit also needs to make sure that the insurance company is informed of the divorce within 30 days after the divorce has been granted. "This is best done through a certified letter," warns Ausley-Flores. "Once the 30 days have passed, your policy is considered lapsed, and [the insurance company] is not obligated to offer coverage. If you miss the 30-day window, it can be a huge problem."

Another misunderstanding sometimes occurs when the divorce is an amicable one. Federal law dictates that spouses cannot keep an ex-spouse on a health care policy after a divorce has been finalized. In these cases, the timing of a case may have significant impact, and a couple will agree to file for divorce in a time frame that will allow an ex-spouse to take advantage of COBRA benefits until eligible for another program, such as Medicare.