Legal Insight from the Barrows Firm: COBRA & Health Insurance Options After Divorce

Should I Get COBRA After Divorce or Are There Alternative Options for Health Insurance in Texas?

After a divorce in Texas, a spouse qualifies for continuing health insurance through COBRA, at 102 percent of the plan premium, or may choose an alternative short or long-term health insurance option. Keeping health insurance is important, especially when parents have dependent children. During a divorce, the Court normally orders the parties to maintain the status quo with insurance coverage, until the divorce is final. After the divorce, a spouse who will lose health insurance coverage must be notified and allowed to enroll in COBRA coverage, to remain on the current health plan until they can get new coverage on a short-term or long-term basis. Opting-in for COBRA coverage is expensive because both the employer and employee premiums must be paid, as well as a two percent administrative fee. Many parents must consider alternative health insurance plans and options that are affordable and provide necessary and required health coverage.

Related Article from Survive Divorce: A Guide to Health Insurance During and After Divorce

Children with acute and ongoing health conditions cannot be without health insurance. When divorcing in Texas the parents make agreements and the Court can order the parties to pay for healthcare expenses. Having uninsured dependent children, and former spouses is not an option. Parties not complying with the Court’s orders regarding post-divorce health insurance coverage can lead to enforcement and modification suits.

Because the spouse with the option of enrolling in COBRA coverage must pay the full premium rate plus two percent, insurance is expensive, even at the same group rate price. Depending on the insurance plan coverage, the needs of the parent and dependent children, an alternative health plan option might make more sense financially.

Health Insurance During and After Divorce in Texas

In most families, the parents and children are enrolled in the best health insurance plan offered by the employer with the best health and medical coverage for the family’s health care needs. When someone files for divorce in Texas, one of the initial hearings is the Temporary Orders hearing, where initial determinations are made about who will live where, drive what cars, and satisfy which financial responsibilities.

In addition to COBRA health insurance coverage after a divorce in Texas, the spouse, and dependent children in need of insurance might qualify for Medicare or Medicaid. For many parents getting a divorce, the spouse in need of coverage through the employer, must wait until the next enrolment period and need a short-term coverage option in the interim. Especially with children who may have significant medical needs, a lapse in coverage can be a serious problem, and COBRA might not be the best option.

From the Barrows Firm Article Collection: Considering a summer divorce? Read our article on point, Why Starting a Divorce in June is Popular in Texas.

What is COBRA, and How Does it Work to Preserve Health Insurance Coverage After Divorce in Texas?

COBRA is the Consolidated Omnibus Budget Reconciliation Act, the law requiring health insurance providers to offer continued coverage to former spouses and dependent children after divorce. This is how COBRA applies in divorce in Texas. In other scenarios, continued health coverage under COBRA must be available after the reduction in an employee’s hours of employment, employee termination, death, or other qualifying events such as divorce.

Employees are entitled to COBRA coverage when they work for a qualified employer, which is an employer who has at least 20 employees on more than half of the working business days in the previous year.

After a Divorce in Texas, An Ex-Spouse Can Get COBRA for 18 Months, and 36 Months for Dependent Children

Following the date of divorce, the spouse being removed from the insurance plan of the other must be given notice of COBRA eligibility within 14 days, that they have within 60 days to enroll in COBRA benefits. When the spouse takes the COBRA option, they can remain on the former spouse’s health insurance plan, the one they were on before the divorce, for up to 18 months. Additional COBRA coverage is available for dependent children for up to 36 months.

Parents and children have different health care needs. A parent might cost more to insure than their children. If a child has a significant medical condition and sees physicians frequently, it might be important to keep that dependent child on COBRA coverage until a better option is available. This is another example of the different care options for families in need of health insurance after divorce.

Short-Term Versus Long-Term Health Insurance Options Instead of COBRA Coverage

In Texas, there are several options for health insurance for medical needs and care for parents and children after divorce. When a parent is getting a divorce in Texas and has the option of electing to enroll in COBRA coverage, they might also select a short-term or along-term insurance option. Whether the former spouse has employer-based coverage options coming up in an open enrolment period, or whether they chose to buy private health coverage, not through an employer, short and long-term options alternatives to COBRA are available. Considering the cost of COBRA, and the full premium cost, without the normal employer contribution, and two percent additional administrative fees, a short-term or long-term private plan might be the more cost-effective option.

Watch this YouTube Video About Short-Term &Long-Term Health Insurance Options

Short and long-term plans are different in their cost and their available benefits. For basic coverage for healthy people who do not use insurance often, a competitive short-term plan makes sense. If however, the parent or dependent children have significant medical needs, the additional benefits provided in long-term medical and health care plans can be necessary. In addition to insurance eligibility and benefits, there two other issues are policy renewals and cancellations. What if something happens to someone during a short-term policy? A Policy may be canceled, or it may not be renewable.

Because medical and health care costs are significant, especially when people have children, it is important to consult with an experienced family lawyer to help determine which options make the most sense to cover former spouses and their children.