Health Insurance and Divorce

In a marriage where one spouse is the primary wage earner, one concern is maintaining health insurance for the non-career spouse. Since it isn’t uncommon for people in their 40’s and beyond to develop severe health problems, they used to be uninsurable for any reasonable cost. However, now that has changed thanks to the Affordable Care Act. Let’s discuss options for the non-career spouse.

COBRA

The Older Women’s League (OWL) worked hard to get the Consolidated Omnibus Budget Reconciliation Act (COBRA) law passed in 1986. It allows spouses to continue to get health insurance from their ex-spouse’s company if it has at least 20 employees, for three years after a divorce. The normal COBRA provision states that, if an employee is fired or leaves a job, he or she can get health insurance from that company for 18 months. In case of a divorce, it is generally extended to 36 months.

The non-employee spouse must pay the premium as agreed. If a premium payment is missed, the health insurance provider can drop that person and is not required to reinstate them. So, it is critical to ensure prompt payment.

COBRA may sound like a good idea since it is a quick and easy solution, however, it is imperative to shop around as COBRA is typically very expensive and it may not be the best solution. It is better for a non-career spouse to research all options and decide which coverage is most economical before the divorce is final.

Affordable Care Act Summarized

If you may need coverage in the near future, it is time to familiarize yourself with the Affordable Care Act. The Act has been signed into law and approved by the Supreme Court. It is effective as of January 1, 2014. Let’s hope it becomes the blessing for us that Medicare became for seniors. Yes, the initial rollout of the website was flawed, but hopefully, that will be repaired. The first open enrollment period lasted through March 31, 2014. Future years’ open enrollment will last from October 1st to December 7th.

The ACA includes numerous provisions, the most important of which include:

1. Guaranteed issue: requires that policies must be issued in spite of any medical condition with the same premium to the same age, sex and geographical location. Tobacco is the exception to the level premiums.
2. Individual Mandate requires all individuals not covered by an employer plan or Medicare to secure coverage or pay a penalty. The penalties are waived in cases of financial hardship. Subsidies are available to individuals with incomes up to $45,960. The income limit rises to $94,200 for a family of four. The credits will be sent directly to the insurer every month. The inclusion of the mandate increases the size and diversity of those insured, spreading out the risk in a sustainable manner.
3. Minimum standards for health insurance policies are established. This means that coverage will be far better than before. Some of the new requirements include:
   1. Emergency care: no longer will one have to secure preauthorization.
   2. Mental health services must be covered
   3. Habilitative services, which are therapies to help overcome long-term disabilities like Multiple Sclerosis, must be provided.
   4. Preventive and wellness services: The law instructs insurers to provide all of the 50 preventive services recommended by the U. S. Preventive Services Task Force at no extra cost.
   5. Pediatric Dental and Ophthalmologist care: Children under age 19 will be able to get their teeth cleaned twice a year, as well as receive X-rays and fillings. They will also be entitled to an eye exam and one pair of glasses or contact lenses each year.
   6. Prenatal care must be provided at no extra cost, considered “preventive care”.
   7. A grandfather clause exempts policies issued before 2010 from many of these changes, but they are still subject to other provisions.
4. ACA eliminates lifetime limits on medical expenses. No longer can a person reach the limit and be forced into bankruptcy.
5. Prohibits insurers from dropping your coverage or raising your premiums if you get sick.
6. ACA caps annual out-of-pocket medical expenses up to $6,400 for individuals and $12,800 for families. This should effectively eliminate the over 600,000 bankruptcies in the U. S. each year due to medical expenses.
7. Insurance exchanges must be set up in every state. If the State refuses to set one up, then the U. S. Department of Health and Human Services will do so.  These exchanges allow individuals to easily compare prices and plans. Only approved plans that meet the minimum standards will be included in these virtual marketplaces. This will reduce prices because of competition among the providers, since consumers can readily compare prices.
8. Four tiers of coverage are included: Bronze, silver, gold and platinum.  All offer the same set of essential benefits. But, the out-of-pocket costs will differ, with bronze plans having the lowest monthly premiums and higher-out-of-pocket costs and vice versa for the platinum plans. The percentage of care that plans will cover are, on average:
   1. 60% Bronze
   2. 70% Silver
   3. 80% Gold
   4. 90% Platinum
   5. over 600,000 bankruptcies in the U. S. each year due to medical expenses.

According to the Kaiser Family Foundation, most people will pay less than before the Act. About half the people will be eligible for subsidies. These subsidies will average $5,550 per household, discounting their cost by two thirds. Even with changes in health, premiums will be stable and transparent.

The bottom line is that most Americans will benefit from the Affordable Care Act, giving them better coverage than ever before. Children, especially, will have new important coverage to protect not only their health, but their dental care and vision.

The Supreme Court has ruled that the act is a “permissible exercise of Congress’ taxing powers under the Constitution”, so we are advised to learn about the benefits and figure out how to work with the new system.