Divorcing Couples: Do Not Overlook Health Insurance

When asked, divorcing individuals express many concerns. They worry about their children and how they will react to parents’ divorce; they worry about where they will live; they worry about saving for retirement; they worry about money—all kinds of money concerns, both in the present and in the future. Yet although they do mention health insurance as a concern, since clearly having good and affordable insurance is a priority, rarely do they consider different options or seek to evaluate the available choices.

In short, married, separated, or divorcing couples do not in general recognize that they have to approach planning for the family’s health insurance as a subject requiring research and analysis. At Centre for Mediation & Dispute Resolution, the subject of health insurance is not overlooked or treated casually. The problem solving approach to mediation provides a forum for considering the family’s options and evaluating different approaches.

Let’s consider some of the questions:

ACCESS TO HEALTH INSURANCE AFTER DIVORCE (FOR SPOUSES):

• If both spouses are currently covered under one party’s insurance, the first question is whether coverage can continue after divorce. If the employer is not self-insured and is covering a Massachusetts employer, coverage post divorce is an option.
• If both spouses are able to obtain health insurance through employment and the parties wish to switch the family’s coverage, the change should occur prior to divorce for continued post divorce coverage.
• If one spouse or both is/are approaching age 65 or collecting government disability, checking into coverage through Medicare with additional supplemental coverage is important (Access is not a question, but benefits and costs need to be checked).
• Checking the Mass Health Connector for policies available is another source of information.

COSTS AND BENEFITS:

Analyzing the benefits available in comparison to cost is critically important. In particular you should consider:

• Benefits provided by an employer (e.g., contribution to HSA for high
  deductible plans; additional mental health benefits and other benefits paid in whole or in part by the employer)
• Each family member’s usage of specific providers and of specific services, as well as projected future usage (e.g., orthodontic treatment). You might, for example, want one parent to carry a child under his or her plan and the other parent to carry another child based on different needs for each child.
• Cost of different plans including high deductible plans, PPO(s) and HMO varieties

HEATH SAVINGS PLAN:

HSA(s) offer many benefits, including the opportunity to pay, through the Plan, for health expenses using pretax money. In addition at age 65, the HSA is like an IRA, becoming a retirement plan.

In divorce, the Health Saving Plan may be divided without tax consequences. The funds held in separate accounts may continue to be withdrawn, as nontaxable, by each spouse for health expenses. Couples should review and consider Health Savings Plans in projections for future needs and savings.

In addition child-related health expenses may be withdrawn without tax consequences regardless of which parent has primary custody of the child. Allocating contributions for children’s needs is a part of parental planning.

At CMDR, the welfare of families after divorce is a key focus of mediation. Health insurance, as well as out-of-pocket health costs, needs to be included in planning for future well being of all family members.