Health Insurance 101 for Divorcing Couples
The topic of health insurance coverage for a former spouse in Massachusetts can be very complicated, and even the representatives in Human Resources departments of many companies are not clear about this topic. In general, if the provider spouse works for a conventional Massachusetts employer and maintains family coverage, most divorced spouses are entitled to continuing health benefits at no additional cost until one of them remarries. But the list of exceptions is long. Here are some of the most common situations where coverage for divorced spouses may not apply:
• The provider spouse works for the federal government or federal agency (including the armed forces);
• The provider spouse works for a church organization;
• The provider spouse’s health insurance is provided by a union (i.e., “Health
and Welfare Benefit Fund”);
• The provider spouse is retired and health coverage is part of his or her retirement benefits;
• The provider spouse works for an out-of-state company with fewer than 11 employees or an office in Massachusetts which elects to be a “non-contributing” employer;
• The provider spouse works for a self-insured company, i.e., one that does not purchase a conventional health benefit plan from an insurance company (these can be difficult to uncover because self-insured companies often subcontract to insurance companies to administer their benefits);
• The provider spouse does not reside in Massachusetts;
• The provider spouse changes jobs after the divorce.
Although the list of exceptions appears to be daunting, the majority of divorcing couples still fit into the general rule and have continuing coverage. However, it is wise to find out in advance if you will have continuing coverage or not. When in doubt about your eligibility for continuing coverage, you should obtain a copy of the “Summary Plan Description” from the employer and study it carefully or consult an experienced lawyer.
There are a few additional issues you should be aware of:
• Even when continuing eligibility is not available under the Massachusetts statutes, federal COBRA coverage should normally be available to provide continuing coverage for the divorcing spouse, however, COBRA costs money, and coverage may lapse if not timely paid.
• Massachusetts has a “mini-COBRA” law which provides additional coverage to employees of small companies (2-19 employees);
• Some employers are withholding extra income tax from the provider spouse’s paycheck as a result of former spouse coverage. This is caused by “imputed income” rules and the jury is still out on whether this is proper or not.
• Many health insurance companies now offer single parent plans for a smaller premium than the full family plan.
• In some cases where continuing coverage is not available, a rider may be available to provide continuing coverage at affordable cost.
Careful planning during the divorce process and proper language in the separation agreement can eliminate surprises and maximize your options.
To learn more about health insurance coverage for former spouses, contact us today to schedule a free half-hour consultation about this and other divorce topics.