Federal health insurance reform did pass. But it has not fully taken effect yet, and the problem of being left without insurance after a divorce still exists in New Jersey and other states.
This article is an introduction to some of the options that a divorcing spouse has when his or her health insurance is affected by the marital breakup. For detailed advice customized to your specific circumstances, contact a New Jersey family law attorney.
EX-SPOUSE’S POLICY NO LONGER AVAILABLE
If your medical insurance was through your spouse’s policy, you need to consider your options for staying insured after a divorce. This is especially a concern for people with pre-existing conditions, who could easily be turned down by cost-conscious insurers in the private market.
If you get divorced, you cannot be on your spouse’s policy anymore. There is employment right to coverage for a very brief period of time under the federal COBRA law. You may then apply for individual healthcare insurance with the same company that insured you under COBRA, and you will not have to reapply for approval or undergo a physical examination. But COBRA premiums can be very expensive, and the COBRA exception may not be available indefinitely due to the healthcare reform law.
In New Jersey, for companies with fewer than 20 employees, it is possible that protections for divorced spouses similar to COBRA may be available. But again, those premiums are very expensive. You want to stay insured without breaking the bank.
So what do you do?
This is where the nuances of New Jersey divorce law really come into play. It’s important to understand the differences among a few different ways that your divorce can be structured.
LIMITED DIVORCE FROM BED AND BOARD
Under a judgment of limited divorce from bed and board, it may be possible to remain insured under your spouse’s policy. In New Jersey, a judgment of limited divorce from bed and board is just like a divorce, except that the marriage is not legally dissolved. Marital assets are divided like in a full divorce and issues involving children are resolved as in a plenary divorce proceeding. It is possible to file a motion at a later date to have it converted into a full divorce.
Until such a motion is filed, however, it may be possible to remain on your spouse’s insurance. This type of occurrence has become more common in recent months, perhaps due to the down economy.
Insurance companies have started to object to the practice, claiming that it is a way of circumventing divorce laws to keep someone on another party’s insurance. Although this is a legal gray area, involving the definition of an “insured” under a given policy, it is worth discussing with your family law lawyer.
OTHER OPTIONS TO MAINTAIN INSURANCE
Another option worth considering is to resolve the question of insurance as part of a separate maintenance agreement between the spouses. There is no formal dissolution of marriage, and thus no equitable division of property. But the spouse who needs insurance could receive it through a maintenance agreement that can accompany a legal separation.
A marital settlement agreement, by contrast, is premised on equitable distribution of property and allocation of debt. Here too, however, the agreement between the spouses could be structured to make sure that health insurance is covered.
Other alternatives may be possible as well. For example, one party could voluntarily dismiss a divorce complaint and remain on the other spouse’s health insurance for a certain period of time while making other insurance arrangements.
Talk these options over with a New Jersey family law attorney and decide what works best for you in your situation. Doing that will help you put your mind at rest and move forward with your life – with proper health insurance.