Divorce dramatically impacts all aspects of your life. It can affect where you live and how you manage your personal finances. What you might not have considered is how a divorce can affect your health insurance coverage. 

If you're covered through your spouse's job, you'll lose that health insurance when you divorce.  Although your children may continue to be covered, you need to find another way to provide health insurance for yourself.

COBRA Continued Coverage

One option is to seek continued health coverage through your spouse's employer under a federal law known as COBRA. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act.

COBRA allows you to keep employee group health insurance for a limited time when coverage would otherwise end due to a life event, like divorce.  

COBRA Qualifying Events

Events that trigger COBRA insurance coverage for employees and their family members include:

  • The covered employee quits or is let go from the job (for a reason other than gross misconduct)
  • The employee's work hours are reduced
  • The employee becomes eligible for Medicare
  • The employee gets a divorce or legal separation
  • The employee dies
  • The employee's children age out of dependent status

When COBRA Applies

COBRA applies to most employee group health plans, including:

  • Plans sponsored by employers with at least 20 employees
  • Plans sponsored by private and public employers, including corporations, partnerships, non-profit organizations and state and local governments
  • Plans that cover medical, dental, vision or prescription drug expenses
  • Plans that provide health care through insurance or a health maintenance organization

COBRA does not apply to:

  • Plans sponsored by small employers with less than 20 employees
  • Plans sponsored by the federal government or church-related organizations
  • Plans for life insurance or disability benefits

COBRA Costs

You can be charged the entire cost of your health insurance coverage under COBRA. You may have to pay the entire premium, including the portion that was paid by the employer.  You can also be charged a two percent administration fee. In other words, you may be charged 102 percent of the group rate.

Limits on COBRA Coverage

You can continue COBRA insurance with your covered spouse's employer for up to three years after your divorce.

Your COBRA coverage can be terminated if you fail to pay the premiums. Your coverage can also end if the employer stops offering health care coverage completely.

Notice and Election Periods

The law sets time limits on notices that must be provided by you and the health plan administrator under COBRA:

  • The plan administrator must give you general information about your COBRA rights within the first 90 days of coverage
  • You have 60 days to notify the plan administrator about your divorce. You can do this by contacting the insurance company or person who handles employee benefits for your spouse's employer
  • The plan administrator then has 14 days to send you an election notice that describes your COBRA rights and tells how to make an election to continue health coverage
  • You then have 60 days to decide whether you want to continue insurance coverage under COBRA

Failure to Provide COBRA Coverage

If an employer fails to provide health coverage as required by COBRA, the employer can be forced to pay you a fine of $110 per day. In addition, the employer will likely have to pay your attorney's fees and court costs if you file a lawsuit to force it to comply with COBRA.

Weighing Your Options

Compare the cost of continued COBRA coverage with other available options. You might find it's cheaper to seek insurance through your own job if your employer pays part of your premiums. Also, see how the cost of an individual plan compares to group coverage under COBRA.  

Many states have enacted laws similar to COBRA. Your state's law might give you added rights to continued medical insurance coverage.

If you're considering divorce, health insurance is one of many important topics you'll want to discuss with your divorce lawyer. You'll want to make the cost of maintaining health insurance part of your divorce settlement negotiations.

Questions for Your Attorney

  • Can my spouse be required to pay for my health insurance after our divorce?
  • Will my health problems make it hard for me to switch to another insurance plan?
  • Does my state have a law that requires small employers to provide continued health coverage?