COBRA and Divorce

Andrew Hatherley |

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that provides a temporary option for individuals to continue their employer-sponsored health insurance coverage after certain life events, such as divorce. In this blog post, we will explore the complexities surrounding COBRA and divorce, offering insights and guidance on how to navigate this often-overlooked aspect of separation.

Understanding COBRA

The Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, was enacted in 1985 to help individuals and their families maintain health insurance coverage in certain situations. COBRA applies to employers with 20 or more employees, offering a temporary extension of health insurance benefits when an individual loses their eligibility due to specific qualifying events, including divorce.

The Impact of Divorce on Health Insurance Coverage

When a couple decides to end their marriage, the dynamics of their healthcare coverage inevitably change. In many cases, one spouse may have been covered under the other spouse's employer-sponsored health insurance plan. In the event of divorce, the non-employee spouse can no longer remain on the plan, leaving them potentially uninsured. COBRA provides a vital safety net during this transitional period by allowing the non-employee spouse to continue the same coverage, although at their own expense.

COBRA Eligibility and Coverage Period

To be eligible for COBRA continuation coverage, the non-employee spouse must meet specific criteria. The divorce itself does not automatically trigger COBRA eligibility. Instead, it is considered a "qualifying event" that allows the non-employee spouse to elect COBRA coverage. The divorce must result in a loss of healthcare coverage under the employee spouse's plan. And it is important to note that if an employer is not informed of the divorce within 60 days, the non-employee spouse will lose his/her COBRA rights!!

Once the non-employee spouse elects COBRA coverage, they can maintain the same health insurance benefits they had during the marriage. However, it's important to note that COBRA coverage is temporary and typically lasts for up to 36 months. The specific duration of COBRA coverage depends on the circumstances and the length of the marriage.

Financial Considerations

While COBRA allows divorced individuals to retain their health insurance coverage, it is crucial to consider the financial implications. Under COBRA, the non-employee spouse becomes responsible for the entire premium cost, including the portion previously paid by the employer. This often results in a significant increase in healthcare expenses, as the employer's contribution is no longer subsidized.
Planning Ahead

Given the potential financial strain of COBRA coverage, it's advisable to explore alternative options for obtaining healthcare coverage following divorce. Some potential avenues to consider include:
Individual Health Insurance: Research individual health insurance plans to find an affordable and comprehensive option that meets your needs.

Marketplace Coverage: Explore the health insurance marketplace established under the Affordable Care Act (ACA). Depending on your income level, you may qualify for subsidies that reduce the cost of coverage.

Medicaid: If you meet the income requirements, Medicaid can provide low-cost or free healthcare coverage for eligible individuals.

Employer-Sponsored Plans: If available, consider seeking employment with an employer who offers health insurance benefits. It may be more cost-effective than maintaining COBRA coverage.

Divorce is a life-altering event that impacts numerous aspects of one's life, including healthcare coverage. COBRA serves as a temporary solution, allowing divorced individuals to continue their employer-sponsored health insurance coverage. However, it's essential to understand the limitations and financial implications of COBRA. Exploring alternative options and planning ahead can help navigate the complexities of divorce and healthcare, ensuring that individuals have the coverage they need during this transitional period.