Clare D. McGorrian is senior staff attorney for Health Law Advocates, Inc., a nonprofit, public-interest law firm. McGorrian represents low-income consumers in Massachusetts in matters that involve access to affordable, quality health care.
Without proper planning and advice, losing health insurance is a real risk for a divorcing spouse who relies on the other spouse for coverage. Women in particular face this risk, as they are twice as likely as men to have coverage through their spouse's employer. Although state and federal laws provide protections, lack of understanding of these laws can result in failure to adequately protect health insurance for the dependent spouse.
This article reviews the legal rights of spouses in Massachusetts to remain on an ex-spouse's employer group health plan after divorce or legal separation. In addition, the article discusses alternatives for divorcing spouses who do not have access to a group plan.
Authority of the Probate and Family Court
Under Massachusetts law, Probate and Family Court judges presiding over an action for divorce or separate support must determine if the obligor spouse has employer-sponsored group health insurance that will cover the other spouse. If such group coverage is available, judges must generally order the insured spouse to extend coverage to the dependent spouse. The judge must consider the health insurance coverage of the parties:
(a) Upon commencement of the action, and if there is an existing policy that covers the dependent spouse, shall enter an order requiring maintenance of the coverage during the pendency of the action; Supp. Prob. Court Rule 411;
(b) Upon motions for temporary support orders; G.L. c. 208, ß 17 (temporary order of alimony), G.L. c. 208 ß 20 (order for spousal maintenance upon temporary separation); G.L. c. 209, ß 32 (temporary order of separate support); and
(c) Upon entering final judgment for divorce or separate support. G.L. c. 208, ß 34 (alimony upon judgment of divorce); G.L. c. 209, ß 32 (judgment of separate support).
Massachusetts laws on continued coverage
State insurance laws allow the dependent spouse to remain on the insured spouse's private employer-sponsored group plan after divorce and legal separation. See G.L. c. 175, ß 110I (commercial health insurance carriers); G.L. c. 176A, ß 8F and G.L. c. 176B, ß6B (Blue Cross/Blue Shield plans); G.L. c. 176G, ß 5A (HMOs); G.L. c. 176I, ß 9 (preferred provider arrangements). State, county and municipal government employees in Massachusetts enjoy the same protections. G.L. c. 32A, ß 11A; G.L. c. 32B, ß 9H.
Pursuant to the above laws, if a member of a group plan is a party to a judgment absolute of divorce or separate support, the member's spouse "shall be and remain eligible" for coverage, "as if said judgment had not been entered." See, e.g., G.L. c. 175, ß110I(a). Eligibility for coverage lasts as long as the insured spouse is a participant in a group plan, whether judgment was entered before the effective date of the plan. Id. The coverage ends when the dependent spouse remarries, but the judgment may provide for coverage to continue after the insured spouse remarries. See, e.g., G.L. c. 175 ß110I(b). As long as the insured spouse has not remarried, the insurer may not charge an additional premium for the family coverage. G.L. c. 175 ß110I(a).
Impact of federal preemption by ERISA
Health insurance may lapse after a divorce despite language in the judgment that reflects the foregoing state laws. The reason often lies in the type of plan the insured spouse's employer offers. Employer-sponsored group health plans may be either insured or self-insured. With an insured health plan, the employer purchases coverage from an insurance carrier or managed care organization (such as an HMO) and bears no risk for claims. With a self-insured (or self-funded) plan, the employer bears financial risk for employee medical claims.
The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. ß 1001 et seq., regulates private employer group health plans. ERISA does not mandate benefits but requires employers to satisfy procedural requirements with regard to plan beneficiaries. For example, an ERISA-governed group health plan must designate fiduciaries and a plan administrator to manage the plan. 29 U.S.C. ßß 1102, 1104. Employers subject to ERISA must also provide beneficiaries with a summary plan description of their health benefits. 29 U.S.C. ßß 1021(a).
ERISA's preemption clause, 29 U.S.C. ß 1144(b)(2)(B), exempts self-insured employer group health plans from state insurance laws, including the Massachusetts laws that extend health insurance eligibility to a divorced spouse. See Bergin v. Wausau Ins. Co., 863 F. Supp. 34 (D. Mass. 1994); Cellilli v. Cellilli, 939 F. Supp. 72 (D. Mass. 1996). Even if the employer only bears limited risk (due to reinsurance or "stop-loss" protection), the plan is still considered self-insured for ERISA preemption purposes. See, e.g., Cuttle v. Federal Employees Metal Trades Council, 623 F. Supp. 1154, 1157 (D. Me. 1985).
Only insured plans are subject to the Massachusetts insurance laws that deem a divorced spouse eligible for the ex-spouse's group health plan. Therefore, a lawyer for the dependent spouse must determine whether the plan is self-insured. The summary plan description must disclose whether the plan is self-insured. 29 U.S.C. ßß 1021(a), 1022, 1024(b). In figuring out a plan's status, it is important to remember that many self-insured plans hire an insurer or HMO to administer plan benefits. Also, some employers offer both self-insured and insured options to employees.
Continuation rights under federal law
Although state insurance continuation laws do not apply to self-insured plans, a dependent spouse may qualify for continued coverage under federal law. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 29 U.S.C. ß 1161 et seq., private employers with 20 or more employees that offer health plans must offer continuation coverage to divorced and separated spouses of employees. (COBRA also applies, concurrently with state insurance laws, to insured group plans of these employers.)
Under COBRA, an employee's spouse who was covered on the day before the divorce is considered a "qualified beneficiary." 29 U.S.C. ß 1161(a). Divorce and legal separation are deemed "qualifying events." 29 U.S.C. ß 1163. The spouse, as a qualified beneficiary, may elect to continue coverage for up to 36 months. 29 U.S.C. ß 1167(2), (3). Coverage will end earlier if: a) premiums are not paid; b) the beneficiary becomes eligible for Medicare; c) the beneficiary becomes eligible for other group coverage that covers all her pre-existing conditions; or d) the ex-spouse's employer ceases to offer health coverage to employees. Id.
The employee or spouse must notify the health plan administrator of the divorce within 60 days from the date of the final judgment. In the case of legal separation, the triggering date for the 60-day notice period varies, as employer plans may define "legally separated" differently.
COBRA premiums can be 102 percent of the amount charged to non-COBRA plan members. Timely payment of premiums is essential to maintaining coverage.
Governmental employers and church health plans are exempt from COBRA. 29 U.S.C. ß 1003(b). However, many government workers have the right to continue health coverage under other laws. Spouses of Massachusetts government workers have continuation rights under G.L. c. 32A, ß 11A (state employees) and G.L. c. 32B, ß 9H (county and municipal employees). Spouses of federal employees who get divorced have COBRA-like continuation rights under the Federal Employees Health Benefits Amendments Act (FEHBA), 5 U.S.C. ß 8905a.
Massachusetts' "mini-COBRA" law requires insured group health plans of employers with two to 19 employees to offer continuation coverage to divorcing spouses of covered employees. G.L. c. 176, ß9. The Massachusetts statute generally tracks the provisions of COBRA. Because a divorcing spouse can continue health coverage for more than 36 months under G.L. c. 175 ß 110I and related statutes, invoking mini-COBRA in these cases may not be necessary.
Remarriage rules vary
The right to continue coverage under an ex-spouse's group plan after remarriage differs depending on whether state law or COBRA applies. Under COBRA, remarriage of either party does not affect continuation rights during the 36-month COBRA period. Under state insurance law, e.g., G.L. c. 175, ß 110I, parties need to plan for remarriage and how it will affect health insurance. If the dependent spouse remarries, the right to continue coverage under the member spouse's plan ceases. However, if the member spouse remarries, the dependent spouse may qualify for continued coverage via a "rider" to the family plan or an individual policy. See, e.g., G.L. c. 175 ß110I(b). The parties must specify these rights in their divorce judgment. Id. The insurer may charge the dependent spouse an added premium for continuing coverage after the member spouse remarries. Id.
Alternatives to group insurance coverage
Some divorcing couples do not have access to group health insurance. Under state probate laws, if the obligor under an alimony or separate support order does not have group insurance, the court must determine whether other coverage is available at reasonable cost to cover the spouse. See, e.g., G.L. c. 208, ß 34. If it is, the judge can order the obligor spouse to purchase a non-group policy for the obligee spouse. Id.
Any Massachusetts resident, other than a Medicare or MassHealth enrollee, is eligible for non-group coverage. G.L. c. 176M, ß 1. Non-group insurers may impose up to a six-month preexisting condition exclusion or waiting period in some cases. G.L. c. 176M, ß 3(b).
Non-group insurers must offer a plan with a standard set of benefits, including hospital and physician services and prescription drugs. G.L. c. 176M, ß 2(d). Insurers may vary premiums based on age, geographic area and whether the applicant seeks individual or family coverage.
Public and charitable programs
If affordable non-group coverage is unavailable, the only remaining options are public and charitable programs. The following programs provide free or low-cost health-care assistance to eligible adults in Massachusetts. (This is not an exhaustive list.)
• Run by Division of Medical Assistance
• Must meet categorical (e.g., elder, disabled) and financial requirements
Medical Security Plan (www.detma.org/workers/msp.htm)
• For Massachusetts residents receiving unemployment benefits who meet income guidelines
• Helps pay COBRA premiums or provides direct coverage
Free Care (http://www.state.ma.us/dhcfp)
• Available at hospitals and community health centers to under- and uninsured residents
• Income guidelines
• Overseen by Division of Health Care Finance and Policy
• Individual manufacturers set guidelines
• Information: www.massmedline.com or www.phrma.org
Language in the separation agreement or proposed judgment
Many divorce judgments require the insured spouse to cover the dependent spouse under the employer group plan "as long as there is no extra cost." This general language, which often reflects the parties' separation agreement, does not adequately address the allocation of costs.
It is critical for parties to work out payment details before submitting a separation agreement or proposed judgment to the court. State insurance laws prohibit insurers from charging an additional premium to cover a spouse after divorce. However, ERISA gives employers maximum flexibility to design their employee benefit plans, including whether to pay any portion of the costs. Thus, even though the insurer cannot increase the total premium, the parties may have to contribute more toward the cost of the family plan than before the divorce. Proper planning can prevent future confusion and distress and minimize the risk of coverage loss.
When COBRA applies, the non-member spouse is responsible for payment of premiums. However, a lawyer can ask the judge for an order that the insured spouse reimburse the dependent spouse for the premium cost. Knowing that COBRA coverage will end in 36 months, the lawyer may also seek an order requiring the insured spouse to pay for non-group coverage for the dependent spouse when COBRA ends.
Maintaining health insurance coverage after a divorce or separation is challenging due to the array of applicable laws. Family law practitioners must become familiar with these laws to better assist clients to maintain essential health benefits.