COBRA Health Coverage and Divorce

A divorce will have a major impact on all aspects of your life, such as where you'll live and how you'll manage your personal finances. What you might not have considered is how the divorce will effect the health insurance coverage that you, your spouse, and your children will have after the divorce.

The Consolidated Omnibus Budget Reconciliation Act ("COBRA") requires certain employers to provide their employees and covered family members with health insurance at group rates upon the happening of certain "qualifying events," including divorce or separation of the covered employee from his or her spouse.

COBRA has various requirements for and limitations on coverage, such as the types of employers that have to follow COBRA and how long benefits have to be offered to you and your family. If you're involved in a divorce, you need to know some things about this law. Also, you should consider seeking the advice of an experienced divorce attorney.

What Employers Are Covered?

COBRA health care provisions generally apply to employers with 20 or more employees. They apply to both private and public employers. They do not, however, apply to the federal government or to church-related organizations. COBRA's health care provisions apply to group health care insurance plans, including plans for dental, vision, or prescription drugs. They do not apply to life insurance policies.

What Will COBRA Provide, When, and For How Much?

The COBRA health care provisions generally allow employees or their qualifying dependents to temporarily retain their group health care coverage if that coverage would otherwise be lost due to one of several "qualifying events." To retain this coverage after such an event occurs, the employee or the dependent must pay for the coverage, including the portion of the premium that used to be paid by the employer. COBRA participants may not be required to pay more than 102 percent of the cost to the plan. In other words, a two percent administration fee can be charged by the employer.

Employees may choose to temporarily retain their group health care coverage after one of the following qualifying events:

• Voluntary or involuntary termination (Except for "gross misconduct")
• Reduction in the number of hours of employment

Spouses and children of employees who have been covered by the employee's health care plan may choose to temporarily retain their group health care coverage after a "qualifying event," such as:

• Divorce or legal separation from the employee
• The employee quits or, in most cases, the employee is fired from his or her employment
• Reduction in the number of hours of employment
• Death of the employee
• The employee becomes eligible for Medicare

Employees and their families are not eligible if they have any other health insurance, such as Medicare.

How Long Can You Get COBRA Coverage?

In cases of divorce or legal separation, the dependent-spouse and his or her children can buy COBRA insurance from the covered spouse's employer for up to three years. (When employees lose their jobs or have their hours reduced, employees and their dependents can buy coverage for an 18-month period only.) Regardless of the qualifying event, COBRA coverage can be terminated by the employer if you fail to pay COBRA premiums or if the employer stops offering health care coverage completely.

Notice and Election Period

Employers must give their employees or their dependents notice of their eligibility for COBRA in the event that a qualifying event occurs. Persons generally have 60 days from the date of a qualifying event to elect COBRA coverage. If during that 60-day period, the person waives his or her right to coverage, that waiver may be revoked, so long as the 60-day election period has not yet expired.

What If the Employer Refuses to Give COBRA Coverage?

If your or your spouse's employer does not follow COBRA and offer you coverage, the employer can be forced to pay a fine of $110 per day, which will be paid to each qualified dependent (such as the dependent-spouse and/or children), for each day the employer fails to follow COBRA. In addition, the employer will likely have to pay your attorney fees and court costs if you file a lawsuit to force it to comply with COBRA.

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