Negotiating a settlement in a divorce case is no small accomplishment. As we must tell our clients, being a Chicago family law attorney requires one to be a jack-of-all-trades. We must be aware of tax implications for retirement accounts and selling real estate, navigate a business valuation process, interpret complex corporate returns, and that doesn’t even dabble into the whole arena of child custody and 604(b) evaluations. That being said, even the smallest of areas require divorce attorneys to remain up to speed on current law. One such small area is health insurance. Oftentimes, one party is covered under the other party’s health insurance policy through an employer. Upon a divorce, the non-employee party is left trying to find health insurance coverage. Sometimes a concern even bigger than the cost of health insurance is whether the former spouse can obtain his or her own health insurance. The insurance industry being how it is, oftentimes even the most minor of health problems means higher premium costs, no coverage on preexisting conditions, or worse still, being completely uninsurable.
There is, however, a light at the end of the tunnel for some clients in this situation. Chicago family law attorneys negotiating a divorce settlement (and even in preparing for trial) need to read and keep in mind the Illinois Insurance Code and specifically the Spousal Continuation Privilege. 2 7 5 /LCS 5/367.2. The Spousal Continuation Privilege applies to every group policy of accident or health insurance cover-age issued or delivered after December 1, 1985. Its pertinent provisions state that coverage should be provided for a former spouse of an employee at the formers spouse’s expense for the full cost of the coverage. The coverage terminates upon the earliest to occur of the following:
- If the former spouse fails to pay the premiums,
- If the former spouse remarries,
- If the former spouse becomes an insured employee under any other group health plan,
- If the coverage would have terminated under the terms of the existing policy if the parties were still married, or
- 2 years from the date of continuation coverage began
Generally, in the field, we refer to this as a former spouse choosing to elect COBRA or ERISA, and including this election in settlement negotiations is nothing new. However, if the former spouse is 55 years of age or older, that two-year limitation no longer becomes a condition of termination. Instead, if the former spouse is 55 years of age or older, the expiration of the coverage must actually continue until he or she is able to qualify for Medicare. Provided that the former spouse is not subject to coverage termination under items 1) through 4), the coverage must continue until the former spouse is able to qualify for Medicare.
This difference for clients 55 years of age or older is small but important for that former spouse who may not be insurable, or who can’t obtain coverage for pre-existing conditions. Sometimes a former spouse’s ability to maintain usable health insurance can make a difference in cash flow analysis, and maintenance calculations.
It is also key to remember this statute when a soon-to-be former spouse is just shy of a 55th birthday. In terms of settlement it can be crucial to wait just a few months before entering the Judgment for Dissolution of Marriage in order to secure that coverage, which comes at no cost to the employee spouse.
Time after time we tell our clients that even the smallest variable can change the terms of settlement negotiations and this is one such example.
About the Author
Tiffany Alexander is a Partner at Hoffenberg and Block, LLC, a full-service Chicago Family Law Firm serving clients from Cook, Lake, DuPage, Will and McHenry Counties in Illinois for over 45 years.