How long your insurance coverage lasts after divorce depends on the kind of insurance your ex-spouse has. If your ex-spouse works for a large employer, federal law permits you to keep your insurance for up to 36 months. If your ex-spouse works for a small employer, state law could allow you to keep your insurance, but the length of time you may keep it varies depending on the law of the state where the employer is located. However, you might fare better by buying your own insurance upon divorce because you could save money and obtain better coverage than under your ex-spouse's insurance.
Insurance After Divorce
If you are insured under your spouse's group policy, your coverage ends when you divorce because the insured cannot carry an ex-spouse on her insurance. However, the federal government, and some states, have passed laws that allow uninsured ex-spouses to maintain their insurance coverage for limited periods of time after divorce. The federal law is called the Consolidated Omnibus Budget Reconciliation Act. The state laws are commonly called Mini-COBRAs.
For employers with at least 20 employees, COBRA sets the rules for continuing group insurance after divorce. Under COBRA, you can keep group insurance benefits for up to 36 months after divorce, but you must pay for them. Often, COBRA coverage is expensive because the employer subsidizes the employee's share of the premium but not the premium for family members. In addition, the employer may charge a 2 percent administration fee. Thus, you could end up paying 102 percent of your premium. If you decide to elect for COBRA coverage, federal regulations require you to notify the employer's insurance plan administrator within 60 days of the date you lose coverage or the date the employer or plan administrator provides you with COBRA election notice, whichever is later.
Most states have passed laws like COBRA that regulate group insurance plans for employers with no more than 19 employees. The coverage periods and costs vary according to each state's laws. For example, California offers 36 months of coverage at 110 percent of your total premium, Texas offers six months of coverage at an average individual cost of $400 or more, and Pennsylvania offers nine months of coverage, but you'll pay 102 percent of your premium. The period of time in which you must elect Mini-COBRA coverage varies among the states.
Individual and Private Family Insurance
It could be to your advantage to buy your own insurance rather than elect to remain covered by your ex-spouse's policy. Because employers normally pay 50 percent or more of the employee's health insurance premium, the premium to cover the non-employee spouse is the lion's share of the entire premium. Individual and family insurance policies offer a range of coverages and costs, often at significantly less expense than policies maintained through COBRA or a Mini-COBRA.