DIVORCE, Insurance Basics

Everything you need to know about insurance


Insurance Q.& A. :    DIVORCE, Insurance Basics
The Basics

How divorce affects your health insurance

If you're getting divorced, your insurer need to know how both spouses want to handle their coverage. And be sure to make sensible choices for your child's coverage.

Dealing with your health insurer is probably not at the top of your "to do" list if you're getting a divorce. However, there's important information you should supply to your insurer if you're going through a divorce, especially if there are issues about the custody of children.

Divorce under a group health policy

Let's suppose a couple that's insured on the husband's group policy gets a divorce and the wife needs to be removed from the husband's health plan. The husband should inform his employer or health plan administrator of the change, most likely by filling out an enrollment/change-of-policy form. The form is forwarded to the health provider, which makes the appropriate adjustments to premiums and policies.

Your health insurer requires proof of a divorce, such as a notarized divorce certificate, before any adjustments are made.

Fortunately, the wife in this scenario will not necessarily find herself suddenly without health insurance -- but coverage will come at a price. COBRA acts as a safety net for folks going through rough times: death, divorce or unemployment. It guarantees, in this case, that the wife can buy 36 months' worth of health coverage through her ex-husband's group health plan. The husband needs to notify the insurance carrier that he wishes to set up COBRA benefits for his ex-spouse, and she'll have to pay the full cost (plus possibly a small administrative charge) for the benefits.

Since COBRA benefits are costly and meant to be short-term, the wife in this scenario may want to consider securing another health care provider. In addition, if both parties have group coverage available through their workplaces, the spouse who is dropped from the original health coverage immediately can pick up group coverage through his or her employer without waiting for an open enrollment period.

Watch out, though. If your divorce is exceptionally acrimonious, your spouse can notify his or her insurance company to drop you from their group policy without requesting COBRA coverage for you and without needing your signature. Therefore, if you're insured by your spouse's group health plan, it's in your best interests to seek new coverage right away.

Divorce under an individual health policy

Individual health policies work much the same way. When your divorce is finalized, you'll have to notify your insurance carrier and the company will terminate the policy you and your ex-spouse shared. Both of you then will have to re-enroll by filling out another application form or by buying coverage with another insurance provider.

If you and your ex-spouse decide to stick with the same insurance company, it will issue two separate policies after the application process is complete.

Child's coverage follows the birthday rule

Your children can be covered by either your or your ex-spouse's insurance provider. However, the insurance industry uses what it calls a "birthday rule" to determine whose coverage is used in the event of a claim. For example, if your birthday is in March and your ex-spouse's birthday is in June and you both have the same type of health coverage -- say, group plans -- your insurance will be used to provide health care for your children.

There's a different rule applied, however, if you and your ex-spouse have different health plans -- for example, one group and one individual. Say you keep your group health plan offered through your employer and your ex-spouse has COBRA or an individual policy, and both of you have named your children as dependents on your health policies. A group policy will be used before an individual policy to cover the children. This is an industry-wide practice established by the National Association of Insurance Commissioners.

Also keep in mind that most HMOs are not national health care providers; they're limited to regional service. This can complicate your children's insurance. Your children may still be insured by your spouse's policy, but if you and the children move outside the HMO's service area, coverage for your children will be limited to emergency care only.

No reason to keep double coverage

"There's no reason for you, with a group health plan, and your wife with an individual plan, to both name your children as dependents," says Paula Bender, a spokeswoman for ConnectiCare, an HMO. Bender says that individual policies are so expensive that adding dependents to one when the other parent has a group plan doesn't make any sense.

By the same logic, it doesn't make any sense to name children on both group plans and pay for two separate family coverage's. If you can work through these issues amicably, the two of you should decide which group plan offers the best benefits for your children and put your children on that plan. Remember, however, that notices about changes in benefits and rules will be mailed to the parent who holds that plan, which may not be the parent who has custody.

If you and your spouse aren't communicating, the courts generally will make sure the spouse with custody has all the necessary information to guarantee health care, such as medical records and insurance identification numbers.


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