The
Basics
How divorce affects your health insurance
If you're getting
divorced, your insurer need to know how both spouses want to handle their coverage. And be
sure to make sensible choices for your child's coverage.
Dealing with your health insurer is probably not at the top of
your "to do" list if you're getting a divorce. However, there's important
information you should supply to your insurer if you're going through a divorce,
especially if there are issues about the custody of children.
Divorce under a
group health policy
Let's suppose a
couple that's insured on the husband's group policy gets a divorce and the wife needs to
be removed from the husband's health plan. The husband should inform his employer or
health plan administrator of the change, most likely by filling out an
enrollment/change-of-policy form. The form is forwarded to the health provider, which
makes the appropriate adjustments to premiums and policies.
Your health insurer requires proof of a divorce, such as a
notarized divorce certificate, before any adjustments are made.
Fortunately, the wife
in this scenario will not necessarily find herself suddenly without health insurance --
but coverage will come at a price. COBRA acts as a safety net for folks going through
rough times: death, divorce or unemployment. It guarantees, in this case, that the wife
can buy 36 months' worth of health coverage through her ex-husband's group health plan.
The husband needs to notify the insurance carrier that he wishes to set up COBRA benefits
for his ex-spouse, and she'll have to pay the full cost (plus possibly a small
administrative charge) for the benefits.
Since COBRA benefits are costly and meant to be short-term, the
wife in this scenario may want to consider securing another health care provider. In
addition, if both parties have group coverage available through their workplaces, the
spouse who is dropped from the original health coverage immediately can pick up group
coverage through his or her employer without waiting for an open enrollment period.
Watch out, though. If
your divorce is exceptionally acrimonious, your spouse can notify his or her insurance
company to drop you from their group policy without requesting COBRA coverage for you and
without needing your signature. Therefore, if you're insured by your spouse's group health
plan, it's in your best interests to seek new coverage right away.
Divorce under an
individual health policy
Individual
health policies work much the same way. When your divorce is finalized, you'll have to
notify your insurance carrier and the company will terminate the policy you and your
ex-spouse shared. Both of you then will have to re-enroll by filling out another
application form or by buying coverage with another insurance provider.
If you and your ex-spouse decide to stick with the same
insurance company, it will issue two separate policies after the application process is
complete.
Child's coverage
follows the birthday rule
Your
children can be covered by either your or your ex-spouse's insurance provider. However,
the insurance industry uses what it calls a "birthday rule" to determine whose
coverage is used in the event of a claim. For example, if your birthday is in March and
your ex-spouse's birthday is in June and you both have the same type of health coverage --
say, group plans -- your insurance will be used to
provide health care for your children.
There's a different rule applied, however, if you and your
ex-spouse have different health plans -- for example, one group and one individual. Say
you keep your group health plan offered through your employer and your ex-spouse has COBRA
or an individual policy, and both of you have named your children as dependents on your
health policies. A group policy will be used before an individual policy to cover the
children. This is an industry-wide practice established by the National Association of
Insurance Commissioners.
Also keep in mind
that most HMOs are not national health care providers; they're limited to regional
service. This can complicate your children's insurance. Your children may still be insured
by your spouse's policy, but if you and the children move outside the HMO's service area,
coverage for your children will be limited to emergency care only.
No reason to keep
double coverage
"There's
no reason for you, with a group health plan, and your wife with an individual plan, to
both name your children as dependents," says Paula Bender, a spokeswoman for
ConnectiCare, an HMO. Bender says that individual policies are so expensive that adding
dependents to one when the other parent has a group plan doesn't make any sense.
By the same logic, it doesn't make any sense to name children on
both group plans and pay for two separate family coverage's. If you can work through these
issues amicably, the two of you should decide which group plan offers the best benefits
for your children and put your children on that plan. Remember, however, that notices
about changes in benefits and rules will be mailed to the parent who holds that plan,
which may not be the parent who has custody.
If you and your
spouse aren't communicating, the courts generally will make sure the spouse with custody
has all the necessary information to guarantee health care, such as medical records and
insurance identification numbers. |
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