The financial separation that occurs during divorce involves more than just dividing assets and taking responsibility for an independent household. Spouses also need to consider the loss of shared benefits, including health insurance, which can be a significant concern for stay-at-home parents or those with chronic medical conditions that leave them unable to earn a living wage. Even in families with two working spouses, one spouse may have far better insurance coverage than the other.
Concerns about loss of health insurance coverage can complicate many aspects of divorce proceedings, including support negotiations and custody discussions.
There are multiple solutions that can be considered. One strategy is to account for future health insurance costs during spousal support negotiations. Dependent and lower-earning spouses can seek estimates for policy costs. They can then include their future monthly health care costs to the spousal support that they request as part of the divorce. This arrangement can be beneficial, especially for those intending to reenter the workforce once they improve their earning potential.
If alimony or spousal support is unlikely or if the paying spouse’s income is too low to fully cover policy premiums, then the spouse losing their coverage might exercise their option to temporarily continue their access to private coverage through COBRA. This federal law allows people to access the same treatment and health care providers they relied on while covered by their spouse’s policy. COBRA coverage can last for up to 36 months after a divorce, but it requires payment of the full policy premium without employer contributions and an additional 2 percent for administrative expenses.
Looking into coverage through the federal Health Insurance Marketplace, under the Affordable Care Act (ACA), can also be an option. Lower-earning spouses may even qualify for tax credit subsidies that reduce their monthly payment premiums.
When the divorcing couple has minor children, if the entire family previously relied on one parent’s coverage, that parent may be required to keep the minor children on his or her policy until they age out. If there is dual coverage, the courts may mandate which parent provides coverage or how the parents split the cost of paying for a policy for minor children. If both parents have comparable coverage and have similar amounts of parenting time, then the courts may apply the “birthday rule.” The parent whose birthday is first during the calendar year will need to cover the children on his or her policy.
At Dawson Family Law, PLLC in Sterling Heights and Troy, we help clients in Oakland, Macomb and St. Clair Counties navigate complex Michigan divorce issues. To learn more about your options, calling 586-514-0084 or contact us online.
