The Basics of Health Insurance in Oregon Divorce
Every Oregon divorce or custody case that involves children must include a provision about 1) who is going to cover the children on health insurance, and 2) how unreimbursed medical expenses are going to be paid for. It can also address how parents’ health insurance is going to be handled, although that is not required. Here is an overview of important concepts to keep in mind when going through a divorce or custody case:
Health Insurance for Children. Every judgment must require that at least one parent provides health insurance for the children, even if the children do not currently have health insurance. The children can be double-covered, but they don’t have to be.
Oregon Health Plan. If the children are covered on the Oregon Health Plan, the judgment must include a provision that one of the parents is required to maintain OHP coverage for the children (it has to specify which parent). Further, the judgment must include a provision that says both parents are required to provide private health insurance if it is available to the children and is “reasonable” in cost. “Reasonable” is defined as no more than 4% of a parent’s adjusted income (there are additional limitations which may apply). However, once one parent covers the children, double coverage is not required.
If the children are on OHP and the child support obligor (the parent who owes child support) has income that is more than minimum wage, that parent will be required to pay something called “cash medical support” to the state. (There are other exceptions to payment of cash medical support as well.) This is basically a reimbursement to the state if they are receiving state-subsidized health coverage. Cash medical support can also be owed from one party to the other, although this does not usually happen (people usually divide unreimbursed medical expenses instead of paying cash medical support).
Cost of Premiums. Typically, at least one parent has some out-of-pocket cost for a child’s health insurance premium. Parents sometimes ask whether the other parent is required to contribute to the cost. The way this gets addressed is that the cost for a child’s health insurance premium is factored into the child support calculation. The calculator then divides the cost between the parties proportionate to their incomes. What this ends up meaning is that if a parent is receiving child support and also provides health insurance, child support will increase. On the other hand, if someone is receiving child support and the other parent provides health insurance, then child support will go down. In this way both parents end up contributing to the cost of health insurance premiums for the children, even though only parent pays the actual premium.
Unreimbursed Medical Expenses. “Unreimbursed medical expenses” refers to the out-of-pocket cost of medical expenses for the children which is not covered by health insurance. Every judgment needs to address how these costs will be paid. Think of it this way, if you received an $800 medical bill for children after insurance coverage, how would that bill get paid between you? The two most common approaches are to split these expenses 50/50 or to split them proportionate to your incomes. Generally, these costs are split 50/50 unless there is a significant disparity in incomes, in which case proportionate to incomes may make more sense.
The following applies to health insurance for adults:
COBRA. Someone can only be covered on their spouse’s health insurance while they are married. Once they are divorced, the now-former spouse can no longer be covered. COBRA is a federal law that allows for the continuation of health insurance coverage after divorce for the now-former spouse. (COBRA applies to employers with 20 or more employees. There is an Oregon law that applies to employers that are smaller than this.) There are very strict timelines that apply to maintain health insurance coverage under COBRA. Further, COBRA tends to be fairly expensive because you have to pay the entire cost of the health insurance (and you no longer receive an employer subsidy).
If you are considering maintaining your health insurance through COBRA, you will want to know how much your premium will be. The employee can find this out by contacting HR or the benefits department. You will need to let the employer know that you are going through a divorce and that you need to know the cost of COBRA for your soon-to-be-ex spouse to maintain health insurance. The employer will know what you are talking about and should be able to provide you with a rate sheet which shows the cost to maintain COBRA coverage.
COBRA allows a former spouse to maintain health insurance for up to 3 years as long as all premiums are paid on time. The Oregon law that applies to smaller employers lasts for a shorter duration.
COBRA used to be more important than it currently is because it used to be that health insurance could be very difficult to obtain. Currently, the Affordable Care Act allows anyone to obtain health insurance, regardless of pre-existing conditions. It remains to be seen whether there will be changes to the Affordable Care Act. Depending on how the law changes (if it changes), COBRA could once again be very important in the divorce context.
Paying for Health Insurance. A common question is whether a person who is paying spousal support “has to” provide health insurance for a former spouse. There is not a rule that health insurance must be provided. However, this is usually addressed via spousal support. A person who is receiving spousal support will typically include the cost of health insurance in his or her budget. This doesn’t necessarily mean that the total budget will be covered by support (there might not be enough money to cover everything), but it will at least get factored in.
Tip: If you are going through divorce and going to lose health insurance coverage, you should determine the cost of COBRA coverage and also get a quote for health insurance through Healthcare.gov so that you can compare the two. If you are employed, check to see whether health insurance is offered through your employer and what the cost is. Employer-provided health insurance is often the most cost-effective option.