Domestic Diversions

COBRA coverage: keeping your health insurance after the divorce

COBRA [Consolidated Omnibus Budget Reconciliation Act of 1985] provides the right for certain employees and their dependents to purchase continuation health care insurance coverage through their employers. The act applies to employers with 20 or more employees, including certain federal employees and State and local governments. See ERISA, 29 USC §§ 1161-1168; IRC § 4980B; 29 USC § 1003(b)(1); and 42 USC 300bb-1 et seq.

In order to secure your COBRA rights, you must act within 60 days of a “qualifying event,” that is, your divorce or legal separation. The covered employee or the qualified beneficiary (former spouse or dependent children) must notify the plan administrator, and the plan administrator must notify the qualified beneficiaries (at their last known addresses) of COBRA availability. The beneficiary must make a written decision within a 60 day window and must make the COBRA payment within another 45 day window.

In the event of divorce, COBRA coverage may continue for up to 36 months. It may terminate earlier if the employer terminates the entire plan, if premiums are not timely paid, or if the qualified beneficiary is covered by another employer’s group health plan. [A qualified beneficiary with a preexisting condition that is not covered by a new employer’s plan can use COBRA coverage until it, or the new plan’s exclusion period, expires.]

The primary drawbacks of COBRA are the expense of the premium payments and the fact that after the 36-month coverage period is up, the non-employee spouse does not necessarily have the ability to continue the coverage. In addition, if the former spouse had promised to make the payments but fails to send in the premium payment, the employer and/or insurance carrier can cancel the coverage.

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