Divorce Rich with Jacki Roessler, CDFA

The Shocking Cost of Health Coverage After Divorce

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The moment a divorce becomes real, health insurance can feel like quicksand. Premiums spike, deadlines loom, and the plans you relied on may no longer cover the treatments that keep you well. We walk through a real client’s story to show how to evaluate COBRA, employer coverage, and ACA marketplace plans without guesswork or panic. The twist: even with a higher monthly premium, COBRA can sometimes save you money and protect continuity of care when you factor in deductibles, prescriptions, integrative therapies, and network access.


Health insurance choices are also legal strategy. We explain how to document costs and negotiate COBRA into temporary orders, spousal support, or property settlements, especially when one spouse keeps valuable workplace subsidies. To cap it off, our mailbag tackles QDROs—what they are, why your divorce judgment isn’t enough to divide retirement plans, and why using a specialist protects your share.

If you’re navigating divorce and want clarity, control, and peace of mind, this conversation gives you a step-by-step plan to protect your health and your wallet. Follow the show, share with a friend who needs it, and leave a review to help others find these resources.

  • Click this link to discover Affordable Care Act options, https://www.healthcare.gov/
  • To meet with Jacki and discuss if you're a good fit for divorce financial planning, click here https://www.roesslerdivorce.com/contact-us/

Visit us at https://www.roesslerdivorce.com/ to learn more about Jacki's practice and to find valuable resources for your case.

The Divorce Rich podcast is proudly sponsored by Center for Financial Planning: Striving to Improve Lives through Financial Planning Done Right! https://www.centerfinplan.com/

SPEAKER_02:

Every fall, as open enrollment season starts, I hear the same anxious questions from clients going through divorce. What happens to my health insurance? Do I lose my coverage when the divorce is final? And what in the world is Cobra and why is it so expensive? I want to tell you about a client who faced this head on. She'd been covered under her husband's employer plan for years. And that plan happened to cover every piece of her holistic and integrative care. She had a three-year health plan mapped out with her doctors, acupuncture, nutritional counseling, specialized therapy, everything she needed to survive her ongoing health management. When she learned that after the divorce she'd have to move off her husband's insurance, she was devastated. Cobra, of course, was an option, but it was shockingly expensive. Her employer also offered coverage, but when she started comparing benefits, she realized that most of her integrative treatments wouldn't be covered at all. So she did what smart, proactive people do. She dug in. She called her providers, compared costs, confirmed codes, and ran the numbers. When we added everything up together, it turned out that even though Cobra had the higher monthly premium, it was actually cheaper overall than paying out of pocket for her uncovered treatments under her new plan. It was not an easy decision. It took a lot of time, legwork, and analysis, but it gave her something priceless, peace of mind. Today I want to walk you through exactly what she discovered and what you can learn from her experience.

SPEAKER_01:

Welcome to the Divorce Rich Podcast. I'm your host, Jackie Ressler.

SPEAKER_02:

I've been a certified divorce financial analyst for 28 years, helping clients and their attorneys navigate the often complex and confusing financial issues in divorce. If you're in the process of or considering divorce, now is the time for you to take a deep breath and give yourself permission to find clarity on the financial issues you're facing. Rich means many things to many people. I believe the best definition of being rich is someone who has access to many resources. Along with my guests on this podcast, I will be bringing you a wide variety of information so that you can make sound and informed financial decisions for your financial future. Hey, if you're recently divorced or still in the middle of it, you already know that life can feel like it's been turned upside down. And let's be honest, the financial part, it's overwhelming, confusing, and often the last thing you want to deal with. That's why I want to tell you about the independent wealth management team at Center for Financial Planning. Their team of certified financial planners specializes in helping people just like you navigate life changes with confidence, whether it's assessing your new financial circumstances, creating or updating your retirement plan, or helping you adjust to the new normal. They'll work with you to get a clear, customized plan to feel in control and move forward with confidence. So if you're interested in working with a financial planner who you can trust to have your best interests in mind and you're ready to take the next step, visit centerfinplan.com. That's centerfinplan.com and schedule a conversation. Center for Financial Planning, live your plan.

SPEAKER_00:

Disclosure. Securities offered through Raymond James Financial Services, Inc., member FENRET, SIPC. Investment Advisory Services offered through Center for Financial Planning Inc. Center for Financial Planning Inc. is not a registered broker dealer and is independent of Raymond James Financial Services. Center for Financial Planning was a sponsor of the Divorce Rich Podcast. The Center for Financial Planning and Raymond James are not affiliated with or endorsed by the Divorce Rich Podcast.

SPEAKER_02:

Hi everyone, and welcome back to the Divorce Rich Podcast. We're going to dive right into our topic of healthcare coverage and divorce today. So divorce automatically triggers a change in insurance eligibility. So if you're currently covered under your spouse's employer-sponsored plan, there's been a qualifying event when you get divorced, and that triggers a change in your eligibility. So whether or not it's open enrollment season, it doesn't matter. If there's a qualifying event, which includes divorce, you always have the option to pick up Cobra through your former spouse's employer. Unfortunately, some people overlook this until it's too late. There are timing limitations in terms of when you can get on your ex-spouse's employer's coverage that you have to be aware of. Let's break down how Cobra fits into the picture and why it can be a surprisingly smart move, at least in the short term. So what is Cobra actually? Cobra is the federal law that lets you stay on your ex-spouse's employer's health plan temporarily after divorce, up to 36 months in most cases. Now, I actually had to look it up because I could not remember what it stands for. But COBRA is the acronym for Consolidated Omnibus Budget Reconciliation Act. And again, this is a federal law that lets you qualify temporarily on your ex-spouse's coverage. Now, if you've been laid off from your job, you might be familiar with Cobra, which also applies. But if you lose your job, you can only stay on Cobra for up to 18 months. Whereas when you get divorced, you can stay on your ex-spouse's coverage under their plan for up to double that amount or 36 months. So it's a it's an amazing opportunity if you have it available to you, even though it can be shockingly expensive. And I'm going to explain why. Um it applies to most private sector businesses that they have to have at least 20 employees. So if your spouse works at a small firm, let's say it's a mom and pop shop and they've got five employees, Cobra's probably not going to be an option for you. The federal law says there has to be at least 20 employees. Smaller companies may have some state mini Cobra versions, but you would want to find out while the divorce is in process. Now you still pay the full premium plus a small administration fee, but sometimes it can be worth every single penny. The reason why Cobra is expensive is that the employer subsidy part disappears. So for example, if your family plan through I'm in Michigan, we use Blue Cross, Blue Shield in Michigan a lot. A lot of employees have that. If your family plan was$1,500 per month and your spouse's employer was covering half, you as an individual going on Cobra might suddenly be paying the full$1,500 by yourself. Now that's a huge shock, but context matters. Sometimes Cobra is the very best coverage that you can get. And there are other places that you can get coverage, but if you have if you have specific health needs, Cobra is probably going to the best be the best coverage option available to you. Now let's go back and quickly revisit the example I gave at the front of this episode about my current client who had an experience with holistic holistic health care plan. And my client had a serious medical illness, and she had already been in the process of a successful recovery. And part of that recovery was an integrative, um, an integrative plan that she had with her integrative doctor. And it was fairly expensive if she had to pay for it out of pocket. But her current healthcare coverage through her husband actually covered all of those costs. What I really want to emphasize here is the process and the legwork because that's the piece that is generally missing when you're getting divorced. It's one of these pieces that I talk about that are often overlooked while you're negotiating a settlement. And it makes sense that it's overlooked because the in a divorce case, you're negotiating spousal support, parenting time, child support components, um, so many big, big things, how you're going to handle the house, how you're going to divide retirement plans. And unfortunately, at times your health care insurance is an afterthought. However, if you hopefully are listening to this episode and this may apply to you, use this as your um your trigger to go out there and do some research for yourself. And you want to follow the same process that my client did. She reached out to all of her current providers and found out what the out-of-pocket cost was currently for any treatment that she was having under her current insurance. And then she also had to compare it with her future insurance, which would be with her employer. I'm sure you can imagine this involved several phone calls and waiting on hold and calling several different places to get this information. But once we had the information, she was able to put it into a spreadsheet and we could look at it together and compare the premium price of Cobra versus an Affordable Care Act plan or through a plan through her employer. And it was pretty clear to see that if she wanted to continue her treatments, which she did, she was much better off staying with Cobra. Now, the reason why I say it's important that you do this research during the divorce process is that once your divorce is final, your spouse and has to notify their employer that there's been a divorce, you have 60 days from the date that the plan is notified to elect that coverage. If you go beyond that date, you might miss that window. You it's also really important that you find out when is my coverage going to end? If my marriage is my divorce is going to be final on December 31st of this year, for example, does that mean that my coverage ends in December or January? And if I wait 60 days to elect Cobra, am I going to have a gap in my coverage? You don't even want to have a gap of one week in your coverage, let alone a gap of significantly more time. So just to emphasize with the example I gave with my client, I want to really highlight that she made an informed strategic choice, not a reactive one, that ended up saving her a lot of peace of mind and money in the long term. I want to turn and talk a little bit about alternatives to Cobra. Let's say that you feel like you price it out and Cobra just seems like it's too expensive. Cobra can be anywhere between$500 and$1,500 per month. So we're not talking about an insignificant amount of money. If you have insurance available to you through your employer, of course, that would be what you would want to check first. And if you do have insurance available, you want to make sure that you do the same, go through the same process that I talked about a moment ago, where you reach out to your providers and see my current providers accept coverage that would be offered through my employer. And then you simply create your own spreadsheet or notes. You know, I love a spreadsheet, but you can put it in notes too. And you can just jot down what the current out-of-pocket costs are going to be. Make sure that you ask about deductibles and annual out-of-pocket premiums for in-network and out-of-network. You want to make sure that your doctors that you use on a regular basis are in network. And so that would be one option. Another option is to go into the general marketplace and get an affordable care plan. So what you want to do is go to healthcare.gov, that's G-O-V, and look up and see what your options are. So you put your information into that website and it'll give you several different resources for you to look into. Again, none of this is going to take five minutes. And you have to be okay with it because this is such having the right and the proper healthcare insurance is such an important piece of your financial well-being going forward after divorce that this is worth putting the time into. There might be Medicaid or state programs that would be applicable to you also. And there could be some temporary or even short-term policies that you could have access to, you know, with the caveat that you want to make sure that you convert to permanent coverage at some point. The key is to compare apples to apples, but don't just look at the premiums, but at deductibles, at coverage and what you actually use. Make sure that you look up your prescription costs currently under your coverage and what they would be under the new policy. So now remember, divorce is a qualifying life event under health insurance policies. So you can make changes to your health insurance coverage mid-year. But if your divorce happens around open enrollment, like right now, when I am taping this, we are in the process of open enrollment for many companies. The timing can really help you plan that transition smoothly. Again, I cannot emphasize enough that you always need to confirm the coverage end dates so you don't accidentally end up uninsured for a week or two. And I've seen that happen. Lastly, let's wrap up talking about the financial and legal considerations for Cobra. Cobra costs might be part of support negotiations or temporary orders. For example, if you um the client that I was speaking about at the top of this episode, she all of her research went to her attorney. And her attorney used that information that she gathered to help negotiate for her during her case. And she had the backup to do that. So she had the backup her attorney did to say, you know, we think that our client deserves spousal support that covers her cobra payment because she needs this ongoing health insurance. It's been a long-term marriage, and this is something that she needs financially in order to survive. Um, so it can be part of negotiations. It can be something that's talked about in terms of maybe even having a lump sum of money up front and property settlement to compensate someone who is going to be spending more in their health care coverage, whether it's out of pocket costs or for healthcare premiums, especially when the other person is receiving that premium subsidy as a benefit of work. There are some people, their family plan might be$1,500, but they might only be paying$200 a month out of pocket for that. That's a benefit of work that the other person doesn't have. And it needs to be considered in those cases for purposes of alimony and support, in my humble opinion. Health insurance is not just a financial line item. It's really part of your security, your care, your peace of mind. So keep in mind, cobra may be expensive, but sometimes it's the bridge that keeps your world stable while everything else is shifting. I cannot encourage you enough to take the time to research, compare, and get advice. The best decisions aren't always the cheapest. They're the ones that make you feel safe and supported.

SPEAKER_01:

Okay, it's time for our mailbag segment where my son Kevin co-host and picks out some special questions from our mailbag to share with listeners.

SPEAKER_03:

Hi.

SPEAKER_02:

Hi Kevin.

SPEAKER_03:

How's it going?

SPEAKER_02:

It's going great today. How about you?

SPEAKER_03:

I'm doing good. I'm excited uh for this mailbag segment. Great. Got some fun questions coming. Oh, great. All right. First one. Everyone keeps saying I'll need a quadro to divide retirement accounts, but I don't really understand what that is. Is it something I file myself?

SPEAKER_02:

Good question. And you know what, Kevin? I'm so impressed that you knew how to pronounce quadro.

SPEAKER_03:

Well, it's I my father deals in them quite frequently. So I'm very familiar with the term.

SPEAKER_02:

I know you are. So Kevin's dad owns a quadro drafting company. And Steven has known about quadros his whole life. Yes. Um, so a quadro is a short for a qualified domestic relations order. That's the separate legal document that's drafted that will actually award money from one person's retirement account to the other one after their divorce. So your judgment of divorce actually is not going to help you here. So the plan administrator who has the final say on whether or not a quadro is actually qualified, they will not accept just your judgment of divorce. So for a lot of cases, as the door is hitting the client on the backside, the attorney says, and by the way, get a quadro. So it's kind of an afterthought. So this is a really common question. In fact, when I used to work with your dad, Kevin, and people would call in, a lot of them didn't even know what they were asking for. Like they called the office and they said, I need this thing. It's called the quadro. My attorney told me to call you. Are you the one that's going to write me a check? And so I mean, people really are not informed. And sometimes attorneys explain it really well. The clients are overwhelmed when the divorce is done and they're just not thinking about all of the details. So this is a big one. And this is one of those things where you have to run not walk to get it done. Because the more time that goes by, if something happens to your spouse, if they die, they get remarried, or they retire, you could end up getting nothing from your spouse's retirement account, no matter what your judgment of divorce says. So this is really a big deal. And whenever I lecture attorneys about quadros, I always tell them that it's to think about it as if there are time bombs in your filing cabinets ready to go off at any minute until all of the quadros are drafted and approved. So not a small thing. I would suggest that most often it's going to be farmed out to an expert. Most divorce attorneys around the country will use experts like your dad, Kevin, to prepare the quadro. And that's somebody that that's all they do. Day in and day out, they prepare quadros. Yes. And so they know all of the little nuances that an attorney or certainly a person who's just a novice, someone who is even doing it for their own case wouldn't understand. So there it's it's a lot more cost effective for someone to hire an expert to do that for them than to pay an attorney to learn how to do it or to do it themselves and make a big mistake. And I've seen that happen way too many times. So usually your judgment of divorce says who is the expert that's going to be dividing or drafting your quadro. If your judgment of divorce does not say that, then you need to call your lawyer's office and find out who is. Um, if if you didn't use lawyers and you need to get this done, I still wouldn't recommend that you do it by yourself. I would still recommend that you go online and you find a quadro drafting company that can prepare it for you. And then you fill out the forms. There's usually a flat fee, and it's usually not a very large fee to get a quadro drafted. And I would absolutely recommend that you have an attorney look it over for you before you enter it with the court and then the plan administrator. There are 10 different steps in the quadro drafting process, and all of them have to be done right. And so again, this is why everyone should have an expert draft it for them and they need to have an attorney review it and make sure that they've that it's been prepared in their best interest. I always also tell attorneys when I lecture about quadros, there isn't any such thing as a neutral quadro. It always benefits one side at the expense of the other. Always. Unless all of the terms have been been negotiated, which very rarely ever happens. So it's really important that you have an expert. There are some companies that will like give you what they call a model quadro. And it's just kind of a form sheet. You can fill it out online or you can fill it out yourself. But do you know who those models benefit, Kevin? Companies? Absolutely. They do not benefit the planned participant, the owner of the account, and they certainly don't benefit the ex-pouse. They benefit the companies. And that's because the companies would love for everybody to use one form. They have to train their people only how to how to review the form. They don't have to treat the uh train them how to read quadros, which are all going to be different. And they would love, it's cheaper for them to do that, to have you do it. But I would not recommend anyone using to just use the model because, again, for most people, the largest asset they have other than their house is their retirement plan. So you want to make sure that it's done correctly. Yeah.

SPEAKER_03:

Makes sense. Thank you so much for listening to our mailbag segment. Um, very glad we could answer these questions. And please, if you have any questions, send them to us, divorcebridgepod at gmail.com. We love answering these questions from you. So if you get the chance, and if you have the inkling of anything, be sure to email us.

SPEAKER_02:

Thank you so much for taking time out of your day to listen to Divorce Rich Podcast. If you like this podcast, please follow us on Apple or anywhere that you download podcasts and share this link with any friends or family that you think might benefit from this information.

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Jacki Roessler, CDFA

Host

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