A part of the pre-divorce or post-divorce budget planning should be the investigation of the cost and availability of health insurance.
Divorce will eliminate a non-employee spouse's entitlement to health insurance. Although COBRA may be available to provide continued coverage, entitlement is limited, new insurance will have to be obtained when the entitlement period elapses (usually 36 months), and pre-existing conditions may make it impossible to obtain adequate health insurance.
Many retirement benefits provide for the retention of health insurance by the non-employee spouse if the divorce occurs after the retirement date of the employee spouse. If possible, the retirement plan should be carefully evaluated to determine the optimum divorce date.
If the non-employee spouse is 65 years of age or will be 65 within the COBRA entitlement period, and is entitled to Social Security benefits, Medicare will probably be their primary insurer. The non-employee spouse should be counseled to obtain information on the costs and benefits of Medicare Part A and Part B, and the costs, benefits, and propriety of Medigap Insurance.
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