60 days.
That may be all the time you have after your divorce to request healthcare insurance coverage through your newly ex-spouse’s plan.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives employees and their family members the right to continue group healthcare insurance coverage with the employer under certain circumstances, divorce being one of them. The coverage is variously referred to as “COBRA benefits,” “continuation coverage,” “COBRA continuation coverage,” or, simply, “COBRA” for short. If you’ve heard about “COBRA” from your ex’s employer, then there’s a good chance this 60 day rule applies to you.
COBRA requires that group plans sponsored by employers with at least 20 employees in the year immediately preceding the qualifying event, such as divorce, offer the employee and the employee’s family the opportunity to extend their coverage, which would otherwise terminate. The extension varies depending on the qualifying event (for example, 18 months for loss of employment), but, for divorce, the minimum period is 36 months. The period begins from the date of the qualifying event, and it may terminate early if you do not pay the premium, the employer ceases to sponsor a group plan, the employer goes out of business, you obtain coverage with another group plan that does not contain any exclusions or limitations for pre-existing conditions, or you become eligible for Medicare benefits.
However, COBRA coverage comes at a high cost. The plan can charge you up to 100% of the premium cost plus an additional 2% of the cost as a fee to administer the plan to you. If you are divorced and under- or unemployed, the cost could exceed your monthly income. For example, a study from Families USA concluded that the national average monthly COBA cost consumed 84% of the average monthly unemployment benefit and, in nine states, exceeded that benefit. This is not to say you should avoid COBRA coverage altogether – you may qualify for federal assistance of up to 65% of the monthly premium. Be sure to contact your ex’ benefits office to determine whether you qualify.
You should contact the benefits office immediately. Ideally, before your divorce. You will have only 60 days after your divorce to elect COBRA coverage. (There is a narrow exception that extends this coverage to 60 days after the employer gave you notice of the right to elect coverage, but this exception rarely applies. Most employers send form letters annually to notify employees of COBRA. You may have tossed this aside or filed it away without looking at it.) Within 14 days, the employer must provide you with materials to continue coverage, after which you will have 45 days to elect coverage. This is called the “election period.”
During this period, you can sit and do nothing, in which case, your right terminates; elect coverage, which will be retroactive to the date of the qualifying event, or affirmatively waive coverage, then change you mind with a written revocation, which will entitle you to coverage from the date of your revocation. If you elect coverage, be prepared for a hefty bill: you must pay the premium within the first 45 days, and it could be for coverage retroactive to your qualifying event, over 60 days, or more than 2 months, prior.
There are steps you should take during your divorce to take advantage of COBRA:
Contact the benefits office. Request current healthcare insurance information for your spouse’s plan. You may use a discovery device, such as an interrogatory, to your spouse or a records production device, such as a subpoena, to your spouse’s benefits office. At a minimum, you should request the plan summary, the cost per person covered, any optional coverages, the latest COBRA notice letter, and the name, address and telephone number of the individual who receives notices of qualifying events, such as your divorce. You might also request all information regarding federal programs, state programs or employer programs that assist individuals with paying the costs to continue coverage.
Investigate plans. Use the period before your divorce to investigate other healthcare insurance plans. Given the high cost of COBRA coverage, you may find an individual private plan is more affordable.
Request alimony to pay premiums. If you cannot locate a private plan or do not qualify for one, then you might use the anticipated high cost for COBA coverage as a basis to request alimony to help defray the costs. Be careful, however, because alimony will be taxable income to you.
Request an offset or deviation because you pay premiums. Similarly, you might use the high cost to obtain COBRA coverage as a bargaining tool to avoid paying alimony or to deviate from your state’s child support requirements.
Obtain a copy of your divorce decree. Be sure to obtain an official copy of your decree, preferably the same day your divorce is final to avoid multiple trips to the courthouse or your attorney’s office, to send with your notice to the benefits office.
And, as always, review your options thoroughly with an attorney and the benefits office. Miss your 60 day notice period, and you could be foreclosed from continued coverage altogether; but, if researched and noticed properly, you could have an extra three years of insurance, and at a reduced rate.