This is a “guest post” from Don’t Divorce Your Money.
In the traditional marriage where the husband is the main wage earner, one concern is maintaining health insurance for the ex-wife after divorce. This is an important consideration if the husband is the one without health insurance, too, especially if they have pre-existing conditions.
It is not uncommon for women over 40 years of age to develop severe health problems. Some become almost uninsurable, at least at a reasonable cost. This is a real concern where they are suddenly on their own and responsible for acquiring health insurance.
The COBRA law passed in 1986 allows a spouse to continue to get health insurance from their ex’s company if it has at least 20 employees, for three years after the divorce. The normal COBRA provision states that, if an employee is fired or leaves a job, he or she can get health insurance from that company for 18 months. However, in a divorce, it is extended to 36 months.
Linda and Bob are getting divorced. Assume that Linda decides to continue health insurance under COBRA from Bob’s company. Linda must pay the premium as agreed. If she misses a premium payment, the health insurance company can drop her and they do not need to reinstate her.
Typically, Linda will not get the discounted group rate but will be charged the full rate. It is important to shop for health insurance, even though the COBRA provision may supply a quick solution to health care coverage, it may not be the best. It may be purchased at a lesser cost somewhere else.
There are two drawbacks to using the COBRA health insurance provision:
- It’s usually very expensive because you’re getting the corporate health insurance plan but not the corporate billing rate.
- If you have an illness or injury during the 3 years, you may not be insurable when the 3 years of COBRA is over.
If you’re healthy, I recommend getting your own health insurance policy NOW, even if you’re not yet divorced. Then if something happens, as long as you pay your premiums, you are covered. Otherwise, at the end of three years, COBRA drops you and you have to start shopping for your own insurance. At that time, you may not be insurable.
Even something like a breast cyst, anti-depressant medications, back problems or headaches can disqualify you for health insurance in some states. A friend of mine used her husband’s health insurance for acupuncture to relieve her stress and she is now uninsurable! Doctor visits, therapy, chiropractic, chiropractic and massage that’s paid for with insurance remains in your medical records when you apply for health insurance.
Most states have insurance for those who are uninsurable and cannot get health insurance any other way. This insurance is often very costly. It is better to look ahead and get individual health insurance for a lower premium while you are still healthy than to gamble that you will still be healthy three years from now.
I know this is one of the “unfair” things about getting divorced. Health insurance is critical to your future financial, emotional and physical well-being. Our current health care laws and systems are a national disaster but you must work to make sure you and your health are taken care of.
A few legislative changes that would work in your favor are:
- A Public Option for health insurance purchases
- Elimination of disqualification for pre-existing medical conditions
- Portability – being able to take your current medical insurance to another job or another state
- Reasonable rates for self-employed or unemployed
This is a good time to let your Senators and Representatives know you need these changes to be made because all Americans need safe and affordable health insurance.
In the meantime, seek out an independent health insurance broker to find an individual policy for yourself NOW. Put it at the top of your list of “to do’s”!
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]]>Question: My spouse and I are getting divorced and we have a lot of debt. Do you have any tips I should know about?
Answer: Yes, this is a very important topic. In your divorce, you’ll probably each take some of the debt (and whatever assets are available). The divorce decree will state who is taking responsibility for which debts.
The thing you have to know, however, is that the credit card companies don’t give a “hoot” about the divorce papers. If it’s a joint account, you are still responsible and if your spouse isn’t able/willing to pay it, they will come after you. This is true for state and federal income taxes, too.
A client recently came to me with this very situation. Her ex-husband had been paying on the debts just fine until he had a very bad motorcycle accident and ended up in bankruptcy. The creditors came after her for the balances.
The best thing you can do is to get all the joint debts paid off out of the proceeds of the assets if at all possible.
Warmly, Cindy
P.S. I am a Certified Divorce Financial Analyst and can help you with these matters. Please contact me if you need help maximizing the division of your assets and minimizing the debt issues.
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]]>Question: What advice can you give recently divorced women on how to manage their finances now that they are facing life as a single mom on a limited income? What should be their first priority? Lisa A. Fredette ~ CTA Certified Life Coach ~ Passionate About Life Coaching ~ http://www.lisafredette.com
Answer: Hi Lisa, that’s a really great question and I’m sure most newly divorced single moms are wondering the same thing. I could write a book about that!
Seriously, there are several things you’ll need to do to manage your finances now – some “outer” and some “inner”.
Outer:
- Live below your means. That means creating a spending plan that takes future expenses into consideration including car repairs, home repairs and medical expenses. I recommend www.INGDirect.com for keeping that money.
- Take advantage of any government programs you are eligible for such as food stamps or free/reduced meals for your children. You may also be eligible for Earned Income Credit – check with your Tax Preparer (H&R Block doesn’t charge you to do estimates).
- Review your employer’s benefit programs such as 401k (the match is free money and your contributions reduce your income taxes), health savings accounts (also reduce your taxes). Also check to see that you don’t have too much being taken out of your paycheck for taxes. It’s always nice to get a tax refund but it’s been your money all along and you lend it to the government interest free all year.
Inner:
- Take time to play. Play with your kids, play with your friends and take time for yourself. Kids don’t need you to spend money on them, they would rather play make-believe or bake cookies with you. When my kids were little, we used to have “no silverware dinner” – ribs or chicken nuggets, oven fries, veggie sticks or artichokes (”Mom, who do you think invented artichokes,” they would ask). They’re teenagers now and they still get a kick out of seeing only plates and napkins on the table. Get together with other single moms for a potluck or picnic at the park or movie night – you don’t have to go out to have fun. Do a babysitting swap so you can have time for yourself – just to read, take a walk or a bubble bath.
- Express Gratitude Daily. Even though times are tough, it will get better. Expressing gratitude can keep life bright for you. It’s a great tool to teach your children, too. Practice giving back – help them weed for an elderly neighbor or pick up a few groceries for someone who’s housebound. Work together at a food bank or a Habitat for Humanity project.
- Talk to kids about money. Teach them how to figure out unit costs and sale prices. Teach them how to make choices. Teach them about saving for things they want in the near future and far away like college. When they ask for something, ask them “how can we make that happen?” rather than “we can’t afford that”. Offer to match money they’ve saved or help them make money. Give them an allowance appropriate to their age and transfer responsibility to them. For example, make the entertainment money you hand them out of pocket part of their allowance and the same for clothing. An allowance doesn’t have to mean that you are giving them any more money than you are already spending on them but that you let them decide how to spend it. They’ll stop “nickel and diming” you and you’ll be surprised at the choices them make when it’s their money rather than yours!
Warmly, Cindy
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