Losing insurance after divorce? Maybe you don’t have to

Filed Under: Costs, Health plans, Patients

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People lose insurance coverage for all sorts of reasons: a job loss, the simple act of turning 27 years old, or a spouse’s job loss.

One of the knottiest problems is divorce, which can bring a seemingly unending, and unexpected, list of traumas — among them the loss of health insurance for a dependent spouse.  “Roughly 115,000 American women lose private health insurance annually in the months following divorce and roughly 65,000 of these women become uninsured,” according to a study by the Journal of Health and Social Behavior from Nov. 12, 2012.

This doesn’t have to be the case. For married couples in New Jersey and some other states, Limited Divorce, also referred to as Divorce from Bed and Board (the statute is here: N.J.S.A. 2:34-3), is a legal separation, which basically means the two remain married but for all intents and purposes, they are  legally separated, and are living separate lives. New York also recognizes legal separation (that information can be found here).

Some states recognize this, but not every employer does. Check with your employer, or that of your spouse, if you are dependent. Some corporations  recognize Limited Divorce and  will continue to cover the separated spouse under the existing plan, at no penalty to the employed spouse. The employed spouse or the dependent spouse should contact the benefits administrator at work and at the insurance company, to get full information on whether or not the employer recognizes limited divorce, and any terms and conditions. The laws vary by state; while some states, including Delaware, Florida, Pennsylvania and Texas, do not recognize legal separation, there are variations in the definition which could still include health care coverage for the separated spouse.

This is an option to consider, if even just for the short term, beyond COBRA, which under federal mandate, allows the unemployed spouse the right to continue the existing group health coverage for a specific period of time, but at his or her expense. This can be too expensive  for many people, as it means coughing up 100 percent of the cost of the premium, plus administrative fees.

One caveat – read the fine print on the corporation’s group health plan, and look for the section that lists “Legal Separation or Divorce,” as a “Qualifying Event.” This will outline limits to the length of coverage,  which can range from one year to three years.

We got a hold of Lashanay C., a health guide for Blue Cross Blue Shield of Minnesota, who explained this further by saying many employer-based health insurance plans are underwritten by COBRA. She explained that when this is the case, regardless of how long a couple is continuing a limited divorce, the uninsured spouse will only be covered for a maximum of 36 months from the date the policy goes into effect.

We’re not sure if there is more to this than what we’ve found. Further research has suggested that, while the law varies from state to state, it appears regardless of how long a couple remains in a limited divorce, the policy is: employer-issued health insurance will run out for the dependent spouse after three years, even if absolute divorce isn’t on the horizon.

It can be overwhelming for the dependent spouse to ask the right questions of the employer, especially if the relationship with the husband or wife is not amicable. But the two are not mutually exclusive, and the dependent spouse is protected under the United States Department of Labor’s Employee Benefits Security Administration. Here are answers to some FAQs, and the toll-free number to call with any specific questions you may have about coverage and your rights: 1-866-444-3272.

Do you have anything to add? Let us know at info [at] clearhealthcosts [dot] com.