Evaluating the Impact of Divorce on Your Health Insurance Coverage: Essential Tips and Considerations

It’s common for a married couple to be covered under one health insurance plan, usually through one of the individual’s employer.  The spouse who has the insurance through their employer is the “primary enrollee” or “policy holder.” The spouse of the employee or policy holder is the “dependent” or “family member.”  But what happens to the dependent spouse’s health coverage during and after a divorce in Illinois?   This article will explain what you need to know your rights, options, and responsibilities of health insurance during and after a divorce in Illinois.

How Divorce Affects Your Health Insurance Coverage

During the divorce proceedings, both spouses can stay covered by an existing insurance policy. However, policy-holder spouse can change their plan at any time.  Once the divorce is finalized, the dependent is no longer considered a “family member” and cannot be covered by the plan. The dependent, former spouse now must find new health insurance coverage and pay their own premium.

This is why it is important to discuss the terms of health insurance during the divorce proceedings. Because it is common for one spouse to lose coverage after a divorce, the topic should be discussed. One option to keep healthcare coverage comes from the Illinois Spousal Continuation Coverage Law . This is a way to continue covering the dependent spouse on the current health plan – an option that may be available for an additional cost.  Under this law, the dependent-spouse would be responsible for paying the premium for their continued coverage.  The owner of the plan must notify their employer within 30 days after the final divorce decree.

The insurance company will send out a notice about continuation of coverage, and it will require a response. However, only certain plans are eligible to provide continued coverage after a divorce.  Typically, plans through self-employment, union plans, or out-of-state plans are not eligible.  Additionally, there can be time limits for how long the health insurance coverage can continue.  This can depend on how soon a spouse plans to retire or if they are eligible for Medicare coverage.

Another possible settlement offer can include an option for the employee spouse to financially support the dependent-spouse’s new health insurance plan by sending money directly to them. This could be a viable option, especially if the employee spouse earned a higher income than the dependent spouse during the marriage.

What to Do if Your Spouse Removes You From Health Insurance During a Divorce in Illinois

The policy-holder spouse can only make changes and remove the dependent-spouse from the plan during open enrollment periods or within 30 days of a qualifying event.  While qualifying events may vary from plan to plan, filing for divorce is generally not a qualifying event.  A finalized divorce – with a Judgement of Dissolution of Marriage – would be a qualifying event.  Everyone should remain on the current health insurance until the divorce is final.  So, if your spouse removes you from the health insurance plan during the divorce process, you can go to a judge with an emergency motion requesting that the health insurance plan be reinstated with your coverage.  Any healthcare expenses related to the loss of the health insurance would be the responsibility of the policy-holder spouse who removed you.

Exploring New Health Insurance Plans After Divorce

If you lose insurance due to divorce, there are several options you can consider for health insurance after a divorce.

Exploring COBRA as a Health Insurance Option

The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families to continue group health benefits for a limited time after losing their coverage. This option applies in specific cases like job loss or divorce.

Eligibility and Costs

Under COBRA, employers must offer continuation coverage to employees, their spouses, former spouses, and dependent children when certain events would otherwise cause them to lose their group health coverage. However, COBRA coverage often costs more than regular group health insurance because the full premium, up to 102% of the plan’s cost, can be charged to the individual.

Coverage During Divorce

In cases of divorce, a covered spouse and dependent children can extend their health coverage for up to 36 months. The spouse must notify the plan administrator within 60 days of the divorce. The plan administrator then has 14 days to inform the qualified beneficiary about the option to elect COBRA continuation coverage.

Considering Health Insurance from Your Employer

Coverage offered through your current employer is a great option.  In most states, your employer is required to pay for at least half of your premium.  Even if your employer doesn’t provide the same level of coverage you had on your spouse’s plan, it’s still a practical choice. Talk to your employer about how to enroll in the company’s plan.

Evaluating ACA Marketplace Plans

The Affordable Care Act (ACA) helps families or individuals get health insurance coverage through the government’s Health Insurance Marketplace.  Under the ACA, health insurance plans must cover a set of 10 categories.  These include hospital care, prescription medications, mental health services, pregnancy and childbirth. Some plans may cover more services, but all plans must offer dental and vision coverage for children.

Each state has its own Health Insurance Marketplace with differing enrollment instructions. There is a specific time of the year during which you can choose a plan for the first time, make changes to a current Marketplace plan, or choose a new plan to replace your existing plan. However, a divorce may make you eligible for a special enrollment period. For additional information and tips about how to enroll in a Marketplace Insurance Plan, visit this quick marketplace insurance guide.

Looking into Medicaid for Coverage

Medicaid is the government insurance program that provides free or low-cost health care coverage to some low-income individuals, families and children, older people, pregnant people and people with disabilities.  All Kids provides health coverage for children, newborn through age 18.  FamilyCare provides health coverage to parents or caretaker relatives of dependent children.  Children are considered dependent if they are under the age of 18 and live with parents or caretakers.

It can be hard to tell whether you are eligible for Medicaid, so if you need Medicaid, the best thing to do is apply. There is no penalty for applying, even if you are not found eligible. Luckily, there is no specific enrollment period or deadlines with Medicaid, so you can enroll any time of the year.

Typically with Medicaid, out-of-pocket costs are low or none for services, but services are limited to doctors that accept Medicaid.

Short-Term Health Insurance as a Temporary Solution

Short term insurance provides a bridge to fill in any temporary gaps in your insurance coverage. In Illinois, short term health insurance is limited to six months, and at least six insurers offer short term health plan in Illinois as of 2024. New federal rules will limit short-term health plans to initial terms of no more than three months.  Illinois law does not allow these plans to be renewed. Unfortunately, Illinois has enacted legislation that will ban the sale of short-term plans altogether, starting in January 2025.

Updating Directives and Beneficiaries After Divorce

In general, it’s important to keep your estate plan updated through big changes in your life.  After a divorce, you should update your will or estate plan and advance directives concerning healthcare and decision-making in case you become incapacitated.  Estate planning also involves matters concerning beneficiaries for insurance purposes.

Updating Your Estate Plan

After your divorce, you likely don’t want your ex-spouse to inherit your cherished belongings or valuable assets.  Instead, you probably want your children or other family members to receive them. To ensure this, work with an estates and trusts lawyer to promptly update your will and make the necessary legal changes.

Updating Advance Directives

In Illinois, there are four types of advance directives.  An advance directive is a statement you prepare that describes how you want medical decisions to be made in the future, if you are not able to make them yourself.  The four types of advance directives in Illinois include the following:

1. Healthcare power of attorney:  Power of Attorney for your health care names another person who can make health care decisions for you in the event you are unable to do so yourself.
2. Living will:  This states what your healthcare preferences are, especially for things like life-saving treatment, if you are unable to communicate or make such a decision for yourself.
3. Mental health treatment preference declaration
4. Do-Not-Resuscitate (DNR)/Practitioner Orders for Life-Sustaining Treatment (POLST)

Some advance directives may not need changes, but like many married people, you likely named your spouse as your healthcare power of attorney.  During or after a divorce, you may want to change the person named to make these decisions.  Similarly, you may want to reconsider the beneficiaries listed on your life insurance policies.

If you are concerned about how your divorce will impact your health insurance coverage, Anderson Boback & Marshall can provide the legal support and guidance you need.  Contact us today to schedule a consultation and ensure you make the best decisions for your healthcare needs.