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Health Reform 101

with Lisa Zamosky

WebMD helps readers understand their health insurance and the new health care reform law. The Affordable Care Act is bringing sweeping changes to American health care. Lisa Zamosky is here to help you navigate the health care maze and understand how these changes affect you.

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Thursday, March 15, 2012

7 Ways to Hang Onto Health Insurance Post-Divorce

By Lisa Zamosky

Insurance and Divorce

If you’re going through a divorce, health insurance may not be at the top of your list of things to worry about. But perhaps it should be. Splitting with a spouse leaves many people – women in particular – uninsured.

According to a recent study out of the University of Michigan, about 16% of women lose health insurance within six months of divorce and go without it for at least two years. One in four women who got health insurance through their husbands’ employment became uninsured.

If you’re going through divorce and are at risk of losing your health insurance, here are seven options to explore.

1. Negotiating: Maintaining health insurance coverage may be a negotiable part of your divorce settlement. It’s of high enough cost and of significant enough importance to put it at the top of your list when considering your financial well-being post divorce. If you’re working with an attorney, be sure to discuss health insurance as one of your financial concerns.

2. COBRA coverage: If you were covered through your spouse’s employer-based health plan, that coverage will come to an end once your divorce is final (however, your kids can stay on the plan with your spouse).

You may be eligible for COBRA benefits, which will allow you to continue coverage on your ex-spouse’s plan for up to 18 months (in some cases you can extend COBRA to a total of 36 months). Just be aware that the coverage is expensive: You’ll pay the full cost of the premium (the monthly charge for the plan) in addition to a 2% administrative fee. According to the University of Michigan study, the cost of COBRA benefits averaged $429 per month for individual coverage in 2010.

You’ll need to inform the employer providing the plan that you intend to continue your insurance coverage via COBRA within 60 days of your divorce being final.

3. Go to work: If you were getting insurance through your spouse, but work for an employer that offers health benefits, talk with your human resources department about signing up for a plan at work.

Divorce is considered a “qualifying event,” which means you’ll be able to pick up health benefits in between open enrollment periods.

4. Buy your own plan: Buying insurance on the private market may be an option. Just be aware that if you have a pre-existing health condition, you can be turned down until 2014 when, as a provision of the health reform law, insurers will be required to accept all applicants.

You can compare health plans online at Healthcare.gov, as well as at eHealthInsurance.com, where you can also purchase a plan. And it’s always a good idea to work with an experienced insurance broker in your area. To find one, visit the National Assn. of Health Underwriters website. Go to http://www.nahu.org, click on “Consumer Information” and choose “Find an Agent.”

5. Small business plans: Many people who run a very small business often don’t realize that with as few as two employees they can qualify for a group health plan. The major advantage of group plans is that you’re guaranteed coverage regardless of any health conditions you or your employees have. However, a pre-existing health condition can lead to higher costs. Typically, state law limits how much an insurer can increase your rates based on employees’ health conditions. Check with your state’s department of insurance or an insurance agent to learn more.

6. Medicaid: If you have children and your income is low, in many states you may qualify for Medicaid coverage (health insurance for people of low income). Adults without children, however, will find it very difficult, if not impossible, to qualify for coverage through Medicaid.

7. PCIPs: As I’ve discussed before, the Affordable Care Act made federally funded high-risk insurance pools available to people who could not obtain insurance on their own due to a pre-existing health condition.

To qualify for PCIP, you must be a U.S. citizen and be uninsured for at least six months before applying. You can find information about these plans by visiting pcip.gov.

Doing your research

A great resource for anyone searching for insurance coverage options is the Foundation for Health Coverage Education’s Eligibility Quiz. By answering a free, five-question survey online, you can learn about all of the public and private insurance plans that might be available to you and how to apply. Take the quiz at http://www.coverageforall.org.

For help getting your post-divorce financial house in order, check out the Institute for Divorce Financial Analysts.

Have you found yourself without coverage following a divorce? How did you cope? Share your stories in the comments below.

Photo: Wavebreak Media

Posted by: Lisa Zamosky at 1:37 pm

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