Excerpt from Book #5

"What You Need to Know
About Health Insurance"
By Michael J. Malasnik,
Independent Insurance Broker

When Your Current Health Insurance Is in Jeopardy, What Are Your Options, and What Are Your Risks?

I. WHEN YOU ARE INSURED UNDER YOUR SPOUSE'S GROUP-HEALTH POLICY

Facing the potential loss of health insurance under your spouse's group policy due to divorce or legal separation is a common scenario and can be threatening, particularly if you have pre-existing medical conditions. The federal government responded to this need several years ago and passed a law called the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). In general, if a company sponsoring the group health-insurance plan employs more than twenty people, COBRA will apply; if the company employs less than twenty people, you will most likely be offered health insurance in the form of a conversion policy.

Tip: In some cases a group insurer will honor a court order in a divorce that directs the spouse with the insurance to continue to cover the other spouse. Even though the court usually has no jurisdiction over the health-insurance company, some companies seem to be willing to honor such a court order. Contact the human relations department of your spouse's employer and your employer's insurer directly, tell them you are getting a divorce, and ask the following question: "If the court orders my spouse to continue to provide my health insurance, will your (the insurance) company keep me insured under my spouse's plan with no additional premium?" If they say "yes," get it in writing and find out exactly how it will work. Will the present dependency coverage continue as is? Could you be removed from the policy without your knowledge? Is there a time limit on the coverage? What if your former spouse remarries?

Insurance companies do not usually offer continuing health insurance for divorced or separated spouses other than required by law, but it is worth asking.

A. How Cobra Works

1. What is the coverage?

If COBRA applies, the insurance provider must offer you a continuation of the same coverage for a period of thirty-six months after the divorce. (If your spouse's employment is terminated before the divorce is final, the COBRA coverage will be for a period of eighteen months.)

COBRA coverage does require the payment of a premium. The premium will now be the full amount charged by the insurance company to your spouse's employer. The company cannot charge you a different rate for thirty-six months after the divorce (or legal separation) because of pre-existing medical conditions or for any other reason.

In most cases, you will be given sixty days from the date of last coverage to enroll in a COBRA plan. The date of last coverage will be the first of the month following the date of the divorce decree. Your coverage will become effective retroactively to the first of the month following the date of divorce so there will not be a lapse in coverage as long as the required enrollment forms and premium were received by the end of the sixty days. COBRA coverage is particularly valuable if you are currently going through medical treatment or suffer from severe or multiple pre-existing conditions. If this does not apply, then consider individual insurance. It will be far less expensive.