COBRA’s Effect on Michigan Divorced Spouse’s Health Insurance
Many times in a marriage, the married couple has insurance through only one of the spouses’ employers. Imagine what can occur when a divorce happens in Michigan. Should one party be left without insurance coverage?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) has answered this question. It may be possible to still get insurance coverage through your ex-spouse’s employer, even though you are no longer married to an employee of that company. Like you might expect, there are a lot of hoops to jump through if you want to continue your insurance coverage, but for some families who may have trouble obtaining insurance otherwise, this can be an excellent option. Thousands of former spouses remain covered by the same insurance they had while still married. Using COBRA to continue this coverage is a very common practice all through Lansing, Ingham County, Eaton County and Clinton County. In fact, because Mid-Michigan has a few very large employers, COBRA insurance coverage is commonly discussed in a Judgment of Divorce.
Keeping medical insurance coverage after divorce in Michigan
The first thing to know is that COBRA only applies if the insurance was a group plan through a company that had at least 20 employees the year before the divorce. If there were the requisite number of employees at the company, the employer has 14 days after the divorce to provide you with materials that will allow you to continue insurance coverage through them. You will then have 45 days to choose to accept the continued coverage. If you do nothing during those 45 days, your insurance coverage will be automatically terminated. That means as a former spouse, you have up to 60 days after your divorce to tell the company you would like continued insurance coverage through them or else you will miss your chance to get insurance coverage through your ex-spouse’s employer.
If you do elect to continue to receive your insurance coverage through your ex-spouse’s employer, you cannot keep it forever. Rather, it is a minimum 36-month extension of your insurance that may terminate early if: (1) you do not pay the premium, (2) the employer no longer offers group insurance, (3) the employer goes out of business, (4) you obtain insurance through another group plan that does not have limits for pre-existing conditions, or (5) you become eligible for Medicare.
Expect to pay a lot of money for this extension of your ex-spouse’s employer’s insurance benefits under COBRA. The COBRA plan can charge you up to 100% of the cost of the premiums plus another 2% administration fee. Therefore, in order to get the same insurance you had before, it is likely to cost hundreds of dollars each month. This may not be an expense you are willing or able to pay at the time immediately following a divorce in the Lansing area, especially if you are unemployed. One study determined that the average cost for insurance extensions under COBRA equaled about 84% of the average monthly unemployment benefit. Thus, it may not be worth it to get extended insurance coverage through your ex-spouse’s employer under COBRA following a divorce. This is an important financial decision and should be thoroughly discussed with your attorney, accountant or financial advisor.
Divorce attorneys will continue to watch how the relatively recent passage of the Affordable Care Act (otherwise known as “Obamacare”) will affect insurance coverage for newly-divorced spouses. Some may find that purchasing health coverage through the insurance exchange is cheaper and easier than continuing coverage through COBRA. Others may decide to stay on their prior policies through COBRA for as long as possible.
At The Kronzek Firm PLC, we are highly-skilled attorneys with decades of combined experience of practicing family law. We can help walk you through the process of extending your insurance benefits or of purchasing new health insurance coverage. Divorce is a hard and confusing time, and we can help take away some of the stress associated with insurance. We offer free, no-pressure initial consultations with one of our team of trial attorneys. Call today to schedule your appointment! Call us today! (517) 886-1000.