Health insurance used to be a tricky issue in divorce. A spouse covered under the other spouse’s, work-related, group insurance would lose health insurance after divorce. Successive legislation, culminating in the Affordable Care Act (“ACA”), largely fixed this. However, if the ACA is repealed, access to health care after divorce may once again be a huge concern.
Decades ago, in the traditional family model, the (usually male) earner spouse had group insurance through his job, which covered the stay-at-home mom and children. Divorce ended coverage for the non-employee ex-spouse. Private plans typically had narrower coverage than group plans, as well as pre-exiting condition exclusions. Many couples deferred divorce, even after separating and resolving financial issues, just so that the dependent spouse could continue to have health insurance under the employed spouse’s policy.
In 1985, Congress passed the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), which went into effect in 1986. It applied to private employers with twenty or more employees and state and local governments. After divorce, COBRA allowed a spouse and children to continue on the employed spouse’s group policy for up to three years, although someone in the family (and not the employer) had to pay for the coverage.
Thus, COBRA gave the dependent spouse a three year window to return to the workforce or otherwise secure their own insurance. Moreover, even after the three year period, an ex-spouse could sometimes purchase continuation coverage from the group plan insurer. Many states, like Maryland, enacted min-COBRA statutes, to fill in gaps in the federal COBRA statute. For example, the Maryland statute applies to group plans issued in the state to employers with fewer than twenty employees.
Then came the Affordable Care Act. Access to health insurance after divorce was no longer an issue—it was guaranteed. No one had to worry about what would happen to the dependent spouse after three years. Even if that person did not return to the workforce, even if that person worked for themselves, even if that person worked part-time, even if that person had pre-existing conditions, their right to health insurance through the Exchange was guaranteed. The cost of the insurance, and deductibles and co-pays had to be addressed, but the coverage was guaranteed.
Now, it looks like that will change. We have yet to learn how the ACA will be repealed or modified. Families will, hopefully, still have the protections set forth in COBRA and the state mini-COBRA laws. States like Maryland, who are running their own Exchanges, may or may not elect to keep such programs. But it looks like families will once again have to consider the scary absence of guaranteed future health care coverage when puzzling out the effects and terms of a divorce. And this will be most problematic for spouses who have stepped out of the work force to raise children, and spouses who are self-employed, or involved in small, entrepreneurial businesses that do not provide group health insurance coverage.
January 27, 2017
This is not legal advice. Please read our “disclaimer” to understand why this information is not a substitute for legal advice.