Often times, the judgment of divorce will state that the non-working spouse will take advantage of health insurance coverage through their ex-spouse’s employer. This coverage is available through The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). COBRA is only available if the employer has more than 20 employees.
As a divorced spouse, you are entitled to obtain COBRA coverage for up to thirty-six months. While taking COBRA is often the right decision, there are a few potential pitfalls to consider.
At the end of the 36-month period, the employer has no legal obligation to continue the policy. I had a client who went on COBRA (in perfect health) and developed a heart condition during the three year period. After COBRA ended, her new policy excluded coverage for her heart condition which cost her considerably in out-of-pocket expenses. In fact, a good portion of her divorce settlement went to paying for her health care costs when COBRA ran out.
Sometimes, it’s best to purchase your own individual policy at the time of the divorce (when you’re still healthy) since the carrier can’t drop you as long as you make the premium payments. It may even cost less per month to get an individual policy versus COBRA. As always, seek professional assistance before making any decision and make sure that you keep COBRA in place until you are sure the new policy is in force.