Insurance Plans in Divorce

Insurance Plans While a Divorce is Pending

Once a divorce petition is filed, a court may issue a temporary order that outlines the obligations and limitations of each party during the divorce proceedings. In Dallas and other counties, a standard order may prohibit either spouse from modifying, terminating, or affecting any insurance policies that cover either spouse or their children. As a result, if one spouse is covered by the other's health insurance policy, the coverage is usually preserved until the divorce is officially finalized.

Insurance Plans After a Divorce is Final

Texas law does not mandate insurance companies to offer insurance coverage to an ex-spouse after the divorce is finalized. Hence, the court is not authorized to require a spouse's insurer to continue coverage for an ex-spouse after the divorce. Consequently, in most cases, the dissolution of a marriage will result in a loss of coverage for a person who was covered under their spouse's policy. Nevertheless, individuals may retain coverage through their ex-spouse's insurance plan under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows a divorcing spouse to purchase health insurance from their ex-spouse's employer for up to thirty-six months, with a cost not exceeding 102% of the premium cost. It is crucial to note that spouses seeking COBRA coverage must apply for coverage within sixty days of the divorce's finalization.

Although the court cannot order a party to sustain insurance coverage for their ex-spouse after a divorce, it may adjust the distribution of any marital assets to reflect the financial impact of having to buy insurance for the spouse who will no longer be insured. For example, the court may direct a spouse to pay contractual alimony equivalent to their ex-spouse's insurance premium. In such circumstances, it is advisable to consult a knowledgeable divorce lawyer for assistance with the ensuing negotiations.

Health Insurance for Children of Divorce

If one or both spouses have health insurance that covers their children, the court may order that the coverage continues after the divorce. If neither parent has access to employer-based insurance but can purchase insurance for the child at a reasonable cost, the court may order that parent to obtain the insurance. If insurance is not available at a reasonable cost, either parent may be required to make payments to the other parent to cover the child's medical expenses. However, the payment obligation cannot exceed 9% of the parent's income. It is important to note that a parent may be required to provide insurance coverage for their child, even if they do not have primary custody.