The division of assets, child support and marital debts, rather than health insurance, are usually the first concerns of parties who are filing for divorce. Accordingly, health insurance is probably not at the forefront of the divorce negotiations. However, the cost of health insurance is an ever-present concern for most Americans and an issue to be fully considered by the parties with their attorneys. The divorce agreement should contain a provision stating how the parties will pay for health insurance and uninsured health expenses going forward. If the family is all on the same health insurance policy, the coverage will likely be terminated for the non-policy holding spouse following the divorce or separation, depending upon the insurance carrier’s policies. Below is a discussion of different scenarios regarding divorce and health insurance.
When Both Parties Have Their Own Health Insurance Coverage
When each party has their own healthcare coverage through their respective employers or through other means, the situation is easier to resolve. In this case, the divorce agreement the parties may agree to stipulate that each party agrees to continue providing their own healthcare coverage and pay their own uninsured health care expenses.
When One Party Has Health Insurance Coverage for the Entire Family
Under the Affordable Care Act, also known as Obamacare, all tax payers and their dependents must acquire, at least minimal insurance or face tax penalties. 26 U.S.C. § 5000(a). It is important to discuss the nuances of your policy prior to filing for divorce or separation. Some insurance carriers will automatically drop the other spouse and children following a legal separation or divorce.
When one party uses their insurance through their employer to cover the other spouse, the cost of healthcare must be negotiated so that all parties still have coverage following the divorce. If both parties are employed but the insurance premiums were merely better through one employer, the parties may agree to each acquire separate policies through their respective employers. If employer provided health insurance is not available, then the parties have to look toward the Affordable Care Act or the Consolidated Omnibus Budget Reconciliation Act (COBRA) for insurance coverage.
If one party loses coverage, he or she may be eligible to obtain temporary coverage through COBRA. Fortunately, COBRA allows individuals to continue coverage that would otherwise be lost due to a major life event. Cobra will allow coverage for up to thirty-six (36) months but will be terminated in the event that the individual remarries or obtains alternative coverage. Cobra can be very expensive but by law, it cannot exceed a payment of 102% of the premium currently being paid.
If one party does not work or their job does not offer insurance, the parties may negotiate for both parties to stay on the current policy. However, one spouse is not obligated to continue insurance for the other spouse in the absence of a court order. Even if one party is ordered to continue or pay for the health insurance of their ex-spouse, keeping the ex-spouse on a current health insurance policy may not be an option. Most employer based insurance plans do not continue insurance for ex-spouses, but will be required to offer COBRA to the ex-spouse. This is a situation where obtaining insurance through the Affordable Care Act may be necessary.
In some situations, the non-policy holding spouse may have a chronic or terminal condition. Under the Affordable Care Act, individuals may not be denied coverage or charged higher premiums for preexisting conditions. Thus, even those individuals who are terminally ill should be able to obtain healthcare coverage. If the sick spouse has burdensome medical bills, especially expenses not covered by health insurance, additional spousal support may agreed to or awarded by the court to assist with medical costs.
Who Pays for the Children’s Health Insurance?
There are several ways to manage the cost of healthcare for the children after a divorce. If one parent already has insurance through their employer that covers the children, it will generally be easiest for that parent to continue the heath insurance coverage. When a parent has their attorney complete the Georgia Child Support Worksheet, he or she may claim the cost of the children’s insurance as a deviation, usually lowing the child support obligation for the party that pays for the health insurance.
This means that if the non-custodial parent is paying for healthcare coverage, the cost of the insurance will be partially offset against that parent’s income when the child support amount is calculated, resulting in a decreased payment. If for some reason the non-custodial parent’s employer or insurer refuses to continue the coverage for the children a Qualified Medical Child Support Order (QMCSO) may be obtained to guarantee the custodial parent’s right to insure their children under the non-custodial parent’s policy.
Under the Affordable Care Act, the parent who claims the child as a dependent is subject to a tax penalty if that child is not properly insured. This is true regardless of whether that parent is the parent responsible for paying for healthcare. In cases where a child has a terminal or chronic illness that results in extra medical bills, the parties can agree how to split the costs of the additional medical expenses.
In the event that the children lose coverage or neither parent can afford to cover the children, there are state and federally funded programs available. In Georgia, there is Peachcare; free to low cost healthcare available to children and is funded by the state.
Divorce and Health Insurance in Conclusion
Healthcare is an invaluable asset to be protected during a divorce proceeding. Deciding how coverage will be provided for both spouses and the children can be complicated and should be handled by an experienced divorce attorney. Failing to include this provision may, in the best case, result in financial penalties and, in the worst case, result in catastrophic medical bills. Discuss this provision with your Georgia divorce attorney to ensure that it is included in your divorce agreement.
If you are facing divorce in the metro-Atlanta or Alpharetta Georgia area, call us at 770-609-1247 to discuss your case with one of our experienced divorce and family law attorneys.