As we enter open enrollment season for health insurance, it is timely to discuss how divorce can affect your current health insurance. If you are currently covered under your spouse’s health insurance, divorce or legal separation is a qualifying event that triggers COBRA coverage for the non-participating spouse (and possibly the children) under a group health plan covering 20 or more employees. Making a change to the beneficiaries during an Open Enrollment Period is not a qualifying event and does not activate COBRA coverage.
Many medical plans have an Open Enrollment Period once a year allowing participants to select among HMO or PPO coverage or other options the plan/employer may offer. Often the plan provider will change during this period as well, as the employer seeks to find a cheaper medical plan vendor. A participant can add or drop a spouse or children (or any other qualified person) during the Open Enrollment Period without having to explain the reasons for the change. Usually the parties being dropped have their own medical coverage via their own plan, or the spouse can cover the children at a more reasonable price.
A party who is obtaining a divorce may be tempted to drop the spouse and children from medical coverage during an Open Enrollment Period to save a few dollars or to gain leverage in the proceeding. The dependent spouse will not receive any notice of the change and will find out their coverage is cancelled only when they attempt to obtain treatment.
What can you do to prevent this from happening?
- Obtain a Qualified Medical Child Support Order. This allows the non-participating parent to submit bills, obtain reimbursements, and communicate directly with the insurance company. The participant may no longer unilaterally drop coverage for the children. Such an order does not cover the spouse, however.
- Send a “status quo” letter to your spouse’s attorney before the Open Enrollment Period advising that medical coverage needs to be maintained for the family.
- Send a letter to your spouse’s medical insurance and / or employee benefits department explaining that a divorce is pending and request that no changes be made to the family’s medical coverage.If necessary, obtain a court order to require your spouse to maintain the status quo and keep all family members on the medical insurance.
- Send a letter to your spouse’s attorney noting that if you or the children lose medical coverage while the divorce is pending, the participant spouse may be held responsible for any medical bills you and the children incur. It is cheaper and wiser to pay the additional cost for dependent medical insurance than to take the risk of paying for uninsured medical care.
Once the divorce or legal separation proceedings are final, a COBRA notice should be issued, and medical coverage may be maintained for up to 36 months.