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Insurance coverage after divorce part 1: health insurance

There are many details that need to be worked out in a divorce. So many, in fact, that some are commonly overlooked. One example of this would be health insurance coverage. In many families, both spouses and the children are covered under one health insurance plan – often one spouse’s employer-sponsored plan.

What happens to coverage for the children and spouse who was not the policyholder once the divorce is finalized? Can insurance coverage be addressed in a settlement agreement or child custody order? These are some of the issues we’ll address in today’s post.

Maintaining Coverage For Kids

This is a fairly easy problem to solve, because minor children can stay on either parent’s insurance plan regardless of the marital status of their parents. Moreover, in North Carolina, divorcing parents are required to provide health and dental insurance coverage for their children if the costs are considered reasonable (which most employer-sponsored plans would be).

There are a number of options when it comes to paying for insurance coverage for kids. A divorcing couple can choose to have the children stay on one spouse’s employer-sponsored plan or they can agree to get private insurance coverage. Beyond that, they can negotiate whether one spouse will pay all costs associated with insurance coverage and medical care or if the costs will be split between both parents. The details of the arrangement should be written into a separation agreement or other settlement agreement.

Health Insurance For The Other Spouse

If you have health insurance under your spouse’s employer-sponsored plan, this will almost certainly come to an end after the divorce judgment has been entered in your case. Most insurance companies prohibit policyholders from keeping an ex-spouse on their plan.

You can technically stay on your ex-spouse’s plan for up to three years under a federal law known as The Consolidated Omnibus Budget Reconciliation Act (COBRA). Unfortunately, this is often prohibitively expensive. It requires you to pay the full premium by yourself plus an additional 2 percent in administrative costs. Many divorcees simply cannot afford such high costs.

The best option may be to find your own insurance coverage through your employer or through public exchanges established by the Affordable Care Act. If paying for care will be difficult, you may be able to address the costs of healthcare in your settlement agreement (such as having the higher-earning spouse cover the costs of obtaining coverage for the lower-earning spouse).