COBRA Coverage

COBRA health insurance coverage is a great bridge for people going through divorce who need health insurance temporarily while they line up something permanent. Too often, people rely too heavily on it and end up getting burned. This page explains how COBRA works, how you should use it, and how to control the risks.

Even if your spouse will be providing health insurance for the children, he or she cannot provide coverage for you through the employer’s group plan, because you’re no longer a member of his or her family. If your spouse has been providing coverage for you, and if your spouse’s employer has more than 20 employees, you’ll want to explore coverage under COBRA (pronounced just like the snake). COBRA coverage can be a lifesaver. It’s available for 36 months after divorce, and the coverage is equivalent to the coverage available to your spouse.

Beware of a COBRA “Gotcha:” your spouse’s employer must provide COBRA coverage only if it receives notice of your divorce within 60 days after the divorce is effective. That places the burden on you to make sure the company gets notified.

There are two problems as I see it with COBRA insurance coverage:

The cost of the coverage. COBRA coverage is considerably more expensive than the coverage available from most employers, because you’ll have to pay 102% of the premium (no subsidy from your spouse’s employer). Health insurance under COBRA can be a budget-buster.

The risk of becoming uninsurable. COBRA coverage will end by its own terms within 36 months after your divorce is effective. What happens if you’re stricken with heart disease or cancer during that 36 months? You would then face the unpleasant prospect of searching for new medical insurance at the end of the 36 months with a most unappealing medical history. Not where you want to be. Not what you want to be doing.

So what do you do? COBRA is a useful tool, but you need to view it and use it as a temporary fix. You need to use it to tide you over while you search — immediately — for more permanent coverage from an employer (or if you’re approaching 65, from Medicare).