Many years after Massachusetts created significant rights for divorcing families beyond the federal "COBRA" benefits for coverage of ex-spouses, an important loophole remains that undermines objectives of those statutes. In this entry, we will consider one of the exclusion of "self-insured" company medical plans from the scope of these enumerated rights.
In simple terms, our law states that medical insurers cannot exclude unmarried ex-spouses from an employee's family plan coverage post-divorce; and even if the employee-spouse remarries, the insurer must extend "rider" coverage to the unmarried former husband or wife. The insurance carrier may charge for rider coverage, but it may not surcharge. These benefits significantly exceed the so-called "COBRA” coverage provided by federal statute (36 months of maximum coverage at surcharged rates).
Yet, these benefits are not available to everyone with employment medical coverage in the Commonwealth. That is because these statutes do not apply to so-called “self-insured” medical plans (where the employer assumes the risks of employee medical costs, rather than an insurer), leaving their divorcing employees and their families to the lesser federal COBRA benefits. (Worse still, as we will discuss in a later entry, same sex divorcees have no protection at all, since they do not qualify for COBRA at this time.)
The reason for this unfortunate loophole is that these laws are insurance-based. They fall within the insurance statutes, regulating that industry; and the legislature did not extend these substantive family law rights beyond the insurance statutes. Further, what looks like an insurance plan may not be one. Self-insurers often hire insurance companies to serve as “administrators” of the plan, while the risk of loss remains the employer’s. Thus, while the employee may have what looks like an insurer’s coverage card, the law does not apply.
Meanwhile, since the 2006 Health Reform law here, the policy of the Commonwealth is that all residents have medical insurance. Next year, that will be effective federal law, too. The self-insured loophole is certainly inconsistent with these state and federal policies. Moreover, is it not unreasonable to disproportionately burden divorced persons who are unlucky enough to have a self-insured employer? Under current law, they can obtain private coverage, but it is routinely more expensive and/or less comprehensive than group employment coverage.
If the intent of the insurance laws and health coverage reform is to assist divided families, and to protect taxpayers from funding the insurable medical expenses of split dependents, is there any sustainable policy basis for maintaining this gap in the law? As divorce mediators, we grapple with the impact of the self-insured loophole.
Isn't a legislative fix long overdue?