July 16, 2011

Medical Insurance And Divorce

We get a lot of questions in consultations about how divorce affects medical insurance.  Many people do not realize that post-divorce, the non-employed spouse generally loses the coverage they enjoyed while married.  Gaps in coverage can make it very difficult to contain complete coverage in the future.  Also, post divorce coverage can be a significant expense and should be part of a budget.  The purpose of this post is not to detail every rule and restriction applicable to different post-divorce coverage options, but to alert the person losing coverage that they need to carefully plan for and research their options, and discuss them in detail with their lawyer.

Most persons about to lose insurance rights because of a divorce have the right to obtain continuation coverage under COBRA, or portability coverage under Oregon’s portability coverage rules.

In general, the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) allows divorcing spouses to  continue their plan coverage for a limited time when they would otherwise lose coverage. For COBRA, the non-employed divorced spouse may be able to stay on the employed party’s health plan for an limited period of time. Generally, to qualify, the employed spouse must:

  1. Work for an employer with 20 or more employees.
  2. Must be covered under the employer’s group health plan as an employee or as the spouse or dependent child of an employee.
  3. Have a qualifying event that would causes the loss of group health coverage, such as divorce.
  4. Comply with varying application deadlines.

Portability rules require insurance carriers to provide plans to qualifying individuals. For  portability coverage, a person must:

  1. Have at least 180 consecutive days of coverage under one or more Oregon group health plans;
  2. Have applied for portability coverage within 63 days after termination of the group coverage;
  3. Be an Oregon resident when applying for portability coverage;
  4. Not be eligible for either medicare or the prior group coverage, except for continuation coverage, at the time portability coverage would begin.
  5. Comply with application deadlines.
Different rules apply depending on if the group health insurance was issued or delivered in Oregon, or out of Oregon. The Oregon Medical Insurance Pool can provide portability coverage for plans issued or delivered outside of Oregon.

Persons can move from continuation coverage to portability coverage, but not portability coverage to continuation coverage.  Persons may be eligible for both types of coverage, and differences exist between the type of coverage, application rules, deadlines, and duration of coverage.

Children losing benefits may qualify for extended COBRA coverage through a qualified medical child support order (QMCSO).

Portability and continuation coverage rules and restrictions are complex, and clients should  plan with their lawyer early in the process to determine what type of coverage is available, and best suits their needs.