COBRA Continuation Health Coverage

 As Congress searches for ways to stimulate the economy and lessen the impact of the recession, one idea being floated is to extend the 65% health insurance subsidy under COBRA. So what is COBRA, and what does it have to do with family law?

If you get divorced, and your health insurance is through your spouse's job, you must find new insurance. But COBRA - the Consolidated Omnibus Budget Reconciliation Act of 1986 - permits you to stay insured under your ex-spouse's insurance for up to eighteen months, provided you pay the premium at group rates. The Department of Labor's Employee Benefits Security Administration explains:

Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

The Administration's "stimulus bill" (the American Recovery and Reinvestment Act of 2009) included a 65% subsidy in the form of a tax credit to insurance companies that insure "assistance eligible individuals." Per the Employee Benefits Security Administration's Fact Sheet: COBRA Premium Reduction, such an individual must be an employee who lost his or her job (and therefore his or her insurance) after September 1, 2008, and who is not "eligible for other group health coverage (such as a spouse's plan) or Medicare."

The subsidy originally spanned six months; Congress extended it to fifteen months in early 2010. The current debate is whether to extend the subsidy again.

The stimulus bill's effect on those who are divorced but have insurance through their employment is the same as for anyone else: If you lose your job and therefore your insurance, then you are eligible for the subsidy unless you are eligible for other group insurance or Medicare.

But what about those who already have elected COBRA coverage through their ex-spouse's employment? If the ex-spouse loses his or her job, may the other former spouse take advantage of the subsidy if he or she otherwise qualifies? Frankly, we don't know the answer, but we're sure this issue will come up one of these days as the recession continues.