In today’s world, having PHI insurance or permanent health insurance is very much a requirement if you want to avoid major expenditures when medical service is needed.
When you go through a divorce, insurance matters can get very complicated and sometimes lead to coverage gaps. In some cases, using the Consolidated Omnibus Budget Reconciliation Act or COBRA can provide you with the coverage you need to avoid being caught without medical insurance.
This is designed to be a short-term option until you can find some other kind of health insurance. So how exactly does COBRA work and why would you want to use it if you were going through a divorce?
COBRA Basics
COBRA is a plan that is required of businesses with 20 employees or more. If an employee leaves his job, he can get involved with COBRA for up to 60 days after leaving his place of employment. In addition to providing a safety net for employees who lose their jobs or leave for other reasons, COBRA can also be used as a way to help divorced spouses. For example, if you are married to a spouse who has a job that offers group health insurance coverage, you can apply for COBRA within 60 days of the divorce. The major advantage of this program is that it gives you up to 36 months of coverage without having to apply for a new policy. If you have a preexisting condition or if you are pregnant, this allows you to remain on your existing coverage without having to switch to a new policy and risk not being covered.
COBRA Coverage Cost Issue
While COBRA does provide you with a way to get insurance, you do not get to receive coverage for free. In order to receive COBRA coverage, you have to pay the monthly premiums through the employer’s plan. Since you are no longer associated with your spouse’s plan, this means that you won’t be receiving the discount your ex likely received from his or her employer. In many cases, when an employer offers insurance to its employee, it pays for all or a portion of the premiums. When you go on COBRA, all of that money comes out of your own pocket. In some cases, it can be extraordinarily expensive.
COBRA is Only a Temporary Solution
When you sign up for COBRA, one of the major disadvantages is that it only provides you with temporary help. After the 36 months are up, you have to apply for and get on a different insurance plan. If you have health problems, it may be difficult to get approved for another plan. While three years is a long time to find another insurance plan, it can sneak up on you quickly if you’re not paying attention.
COBRA Alternative – Obtaining Your Own Coverage
Because of the cost of paying for COBRA out of pocket, it may be in your best interest to shop around for another plan sooner rather than later. You’re going to have to get on your own insurance plan anyway at some point, so it sometimes makes sense to go ahead and start shopping for a plan now. In some cases, paying for a private insurance plan is actually cheaper on a per-month basis than what you would pay through COBRA. This is especially true if you have kids to pay for on your plan. In the divorce settlement, your spouse may have to continue paying insurance costs for the kids, but if not, you’ll be paying for them.
COBRA’s Biggest Advantage – Continued Coverage
Although it is not known for being particularly affordable, the biggest advantage of COBRA is that it gives you some breathing room. You do not have to go out the day after getting a divorce and start shopping for health insurance. Instead, you can take your time, possibly find a job that offers insurance and then plan your next move. When you’re going through divorce, dealing with lawyers and possibly moving out of your home, it’s nice to not have to worry about something major at the same time.
About the Author
Scott Morgan is a board certified Austin divorce lawyer who regularly blogs on the subject of divorce and family law. You can read his blog at AustinDivorceSpecialist.com.
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