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Health Insurance After Divorce
Options for Seniors

With the increasing cost of medical care in the United States, health insurance is a must for seniors. Unfortunately, divorce can cause major problems with health insurance benefits, especially for seniors with limited financial resources.

It is not unusual for a spouse to have been a stay-at-home parent and have no health insurance benefits. A spouse's employer or former employer often provides health insurance. Upon divorce the insurance will no longer cover the former spouse. In a divorce, a court may order a spouse to pay the health insurance premium for the dependent spouse, but this is not always financially feasible or ordered if the marriage has not been a long one.

Aside from the dependent spouse purchasing his or her own individual health insurance policy, the options are limited. COBRA continuation coverage, Medicare and Medicaid may provide some help for seniors after a divorce.

COBRA

Federal law known as COBRA permits a dependent spouse to continue his or her health coverage if current coverage is terminated due to a "qualifying event," including divorce or legal separation from the covered employee/spouse. A dependent spouse can elect COBRA continuation coverage for 36 months from the date the divorce or legal separation is final.

While COBRA does not define the term "legal separation," in Ohio a legal separation does not occur until the separation is actually finalized by the court and the parties receive a "decree of legal separation." Parties considering a legal separation in the hopes of retaining health insurance coverage should also read the insurance policy language very carefully.

Some insurance companies now include language which causes coverage to end upon legal separation. Simply living apart, waiting for the divorce to be final, or entering into an informal separation agreement does not make the separation a "legal separation" recognized by the state.

Insurance coverage should continue throughout this period, which is why many seniors considering divorce may elect to stay married.

Whether triggered by divorce or legal separation, continuation of coverage under COBRA is expensive. A monthly premium must be paid by the dependent spouse. The premium is equal to 100% of the premium paid by the former spouse's employer, plus an administrative fee.

Average COBRA premiums exceed $400 a month for individuals, making the COBRA continuation coverage in some instances too expensive.

Additionally, since COBRA coverage ends after 36 months, a divorced spouse will eventually have to purchase their own insurance or rely on Medicare or Medicaid benefits if eligible.

Medicare

For seniors divorcing near or after age 65, Medicare may be the only affordable health care coverage available. Medicare is a federal program that pays for certain health care expenses for people aged 65 or older. People who are disabled or have permanent kidney failure can get Medicare at any age.

Individuals must pay deductibles and co-payments, but much of their medical costs are covered. Medicare is an important source of postretirement health care for many. Medicare has four parts:

  1. Hospital insurance (Part A) helps pay for inpatient hospital care and certain follow-up services.
  2. Medical insurance (Part B) helps pay for doctors' services, outpatient hospital care and other medical services.
  3. Medicare Advantage plans (Part C) are available in many areas. People with Medicare Parts A and B can choose to receive all of their health care services through a provider organization under Part C.
  4. Prescription drug coverage (Part D) helps pay for medications doctors prescribe for medical treatment.
Most individuals do not pay a monthly premium for Part A coverage because they (or their spouse) paid Medicare taxes for at least 10 years. This is called "premium-free Part A." People who are not eligible for premium-free Part A may be able to buy Part A for a monthly premium if they have received Social Security disability benefits for 24 months.

A former spouse who has not worked and is not eligible for Medicare in her or his own right may qualify for Medicare (and Social Security retirement benefits) if the parties were married for at least 10 years.

Unlike Part A, everyone must pay a premium for Part B Medicare. For those new to the Medicare program in 2011, the Part B premium monthly cost is $115.40. In Ohio, you may be able to get some help with the payment of Medicare premiums if you qualify for one of the four "Medicare Savings Programs."

To qualify a single individual cannot have assets over $6,680 and income more than $928 or $1109 monthly depending on the program. Medicare Part C or a Medicare Advantage Plan is like an HMO or PPO. They are offered by private companies approved by Medicare and the plan will provide all of your Part A and B coverage, plus offer extra coverage such as vision, hearing, and dental. Usually you will pay one monthly premium for the services included.

Prescription drug coverage, Part D, is available to anyone who has Medicare Part A or Part B. Joining a Medicare prescription drug plan is voluntary and you pay an additional monthly premium for the coverage. The cost of Part D coverage varies greatly.

Medicaid

Medicaid is a joint federal and state program which provides health coverage to low-income people, including children up to age 19, pregnant women, people with disabilities and the elderly (age 65 and over). Medicaid is a means-tested program, based on limited income and financial resources.

In Ohio, an individual over 65 or an individual at any age with a disability may qualify for Medicaid if their income is less than $589 a month and have assets less than $1,500. Countable assets include checking and savings accounts, IRAs, stocks, and basically all money and property or any item that can be valued and turned into cash.

Some property is exempt, such as the home in which an individual lives, household and personal belongings, and an automobile.

A Medicaid spend-down program is also available for those who meet all Medicaid eligibility guidelines except their income is too high. Individuals may use monthly paid or incurred medical expenses to qualify for Medicaid coverage for the remainder of the month. The program is similar to paying a monthly deductible or out-ofpocket expenses.

Unlike Medicare, an individual need not pay a monthly premium for Medicaid coverage. The Medicaid program provides coverage for services including hospital stays, physician services, dental services, and nursing home stays. Prescription drug coverage is also provided under Medicaid.

Staying Together for Insurance?

Divorce is difficult at any age. For seniors struggling financially and facing health issues, loss of insurance coverage is devastating. Before deciding to divorce, you may want to review potential coverage under COBRA, Medicare and Medicaid.

If you are currently covered under your spouse's health insurance, contact the plan administrator regarding the cost of continuing coverage under COBRA.

For more information regarding Medicaid, contact your county Job and Family Services. 1-800-MEDICARE provides answers to Medicare coverage questions.

This article was written by Deborah Dallmann, Esq., a staff attorney in Legal Aid's Elyria office who handles family, benefits and education cases. It is reprinted with permission from The Alert, a publication of The Legal Aid Society of Cleveland.



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