Thursday, January 29, 2009

Insurance Coverage under COBRA after a Texas Divorce.

Pursuant to Federal statute (specifically, the Consolidated Omnibus Budget Reconciliation Act of 1985 or "COBRA"), you should keep in mind that a spouse (and dependent child) who is covered under the insurance policy of an employee may have the right to so-called COBRA "continuation coverage" after a Divorce is finalized. In order to qualify, the employee must: (1) work for an employer who has 20 or more employees, (2) file an application with the employer no later than sixty (60) days after the divorce is finalized, and (3) keep up the premium payments, which cannot be two percent (2%) more than the original premium payments.

COBRA coverage can become especially important for spouses with significant pre-existing conditions that might not be covered with a new insurance carrier. As a result, as long as the coverage elections are timely made, the former spouse cannot be required to take a physical exam or otherwise qualify for the continued coverage. The continuation coverage has the potential to last for three (3) years after the Divorce is finalized. After that, the former spouse still may be able to purchase "conversion coverage" under COBRA; however, with the conversion policy, the employer or insurance carrier can charge significantly higher rates.

These rights only apply in situations of qualifying employees (those policies purchased through work or an association) and not with an individual plan, or those that you purchase on your own. Individual plans are generally not subject to the COBRA provisions. As a result, once you lose that coverage, you won't be able to get an extension.

COBRA Insurance coverage generally ends when: (1) the last date of maximum coverage endes; (2) premiums are not paid on a timely basis; (3) the employer ceases to maintain any group health plan, (4) you obtain coverage through another employer group health plan that does not have any exclusions or limitations with respect to a pre-existing condition of a beneficiary; (5) you move outside the health plan coverage area; and, (5) a beneficiary is entitled to Medicare benefits.