One of the major problems in many divorces occurs when the non-employee spouse is no longer eligible for coverage under the employee spouse’s health insurance. If the non-employee spouse is uninsurable for any reason, the loss of such coverage can be disastrous.
All policies of group health insurance privately offered in California must give an insured the right to a converted policy issued to him or her by the same insurer under whose group policy he or she was covered, without evidence of insurability. Employers providing hospital, surgical, or major medical benefits must make available conversion coverage. Thus, you or your spouse will be able, as a matter of right, to obtain a private medical insurance policy from the insurance company that is currently covering you through employment. However, the California statutes do not mandate limits on the price of such coverage. Nonetheless, the right of conversion is available to you.
Continuation-Coverage Requirements for Group Health Plans
The Consolidated Omnibus Budget Reconciliation Act of 1985, hereinafter referred to as COBRA, provides for continued health coverage in employer-provided group health plans effective for “plan years” beginning after July 1, 1986. If, however, the plan is maintained per a collective-bargaining agreement, the effective date is January 1, 1987, or the existing plan’s termination date in 1987, whichever is later. This provision applies to employers with 20 or more employees. In the event of divorce, the plan must offer continued group health coverage for 3 years that is identical to coverage provided to similarly situated qualified beneficiaries. The non-employee spouse and the children of the marriage would be a “qualified beneficiary.” At the expiration of the continued coverage, the health plan must offer a conversion option as generally available under the plan. The cost to the “qualified beneficiary” is approximately the same as the applicable premium (the cost of the plan for coverage whether or not such cost is paid by the employer or the employee). Thus, unlike California law, Federal law places a ceiling on the amount of premium that can be charged.
Recent “Technical Corrections” to COBRA
Several technical corrections have recently been adopted that affect the group health plan law, as set forth in COBRA, in several ways. First, this technical correction specifies that a covered employee or qualified beneficiary has 60 days after the “qualifying event” (dissolution of the marriage) to notify the plan administrator of the occurrence of the qualifying event. Thus, you or your spouse will have only 60 days to “apply” for the continued coverage under COBRA. The failure to timely apply will result in the loss of all such benefits.
Secondly, the technical corrections also provide that you or your spouse, as a qualified beneficiary, are entitled to a separate election of continuation coverage. In other words, even if the employer elects certain coverage, you or your spouse may elect different coverage.