How Divorce Effects the Different Types of Insurance Coverage
When you decide to get divorced, it’s important to think about the effect it may have on your various insurance policies. Most people are not prepared for the changes it can cause even to homeowners’, car insurance, health insurance, dental insurance, life insurance, disability insurance, and even property insurance. All insurance policies can be viewed by the court as assets, and during the divorce process, it is important to consider who will take responsibility for the payment of premiums.
Divorce and Health Insurance
One of the most important questions a spouse may wish to know when getting divorced is whether he or she will lose their health insurance coverage. There are federal laws that regulate health insurance. These laws may allow the parties in a divorce action to continue covering health insurance after divorce. The regulations require insurance companies to continue providing coverage for up to three years before both parties must apply for individual coverage. During this interim period, it may also be necessary to assess whether the former spouse is healthy enough to qualify for individual coverage once the three years have ended. If there are health issues, it may be necessary to account for conditional provisions to protect against any potential changes that may occur in the area of health of disability.
In most cases, health insurance provided by the ex-spouse’s employer will cease once the divorce is final. Provisions regarding health insurance coverage are defined under both federal and state law in addition to the provisions of the divorce settlement agreement. The agreement may require one of the parties to cover health insurance costs for the other. There may be a time limit on the coverage requirement up to and including the lifetime of the ex-spouse.
Protecting Your Child’s Insurance Coverage
Settlement agreements also provide for insurance coverage for the children. The parents may agree children will be covered under one of their employer’s health insurance plans or one parent will be required to purchase a private insurance plan. They may also agree if one of them will cover the entire cost or whether they will share it proportionate to their individual incomes.
If both parents are covered under group plans, they can both cover the children. One plan will be primary and the other secondary. In that case, the secondary policy would cover anything not covered by the primary policy such as deductibles and co-pays. If any of the children suffer from pre-existing conditions, you want to avoid switching health insurance for the child. Not often do former spouses honor agreements concerning insurance and health care issues. To avoid any issues, create a contract between the parents and doctor that shows which parent holds responsibility for specific costs. This would allow the doctor to bill the parents separately for any costs not covered by insurance. The parent responsible for providing health insurance coverage must notify the other parent of any changes to the coverage.
Divorce and Life Insurance
Many life insurance policies build cash value. When dividing the assets during divorce, these values must be included when calculating the division of assets. On the other hand, if you surrender the cash value, it usually terminates the coverage under the policy or it will at least change the terms of the policy. This may not be the result you want, and it may be necessary to obtain other financial arrangements to account for the acquisition of those assets.
While term life insurance is not considered a marital asset during divorce, the cash surrender value of a whole life policy frequently is. Term life insurance policies have no cash value, which is why they are not counted as a marital asset.
If your ex-spouse will be providing any type of financial support, you may be within your rights to ask them to maintain life insurance and name you as a beneficiary. The three main reasons you may wish to include life insurance as part of your divorce settlement are:
- Protection of alimony payments
- Protection of child support payments
- Protection of pension or retirement benefits to which you are entitled
In the end, the judge will decide whether you can include life insurance as part of your divorce agreement. Your divorce lawyer is the best person to advise you on that.
Divorce does not automatically change the terms of your life insurance policy. If you want to make any changes such as the beneficiary, you will need to do that through the insurer. In most cases only the policyholder is authorized to change the beneficiary. However, if you named your ex-spouse as an irrevocable beneficiary, it will be necessary for them to approve their removal and any other policy changes. Divorce also does not require your ex-spouse to remove you from a life insurance policy.
It is possible for the judge to order your ex-spouse to maintain life insurance as part of your financial payments. If this happens in your divorce, it’s essential to do it right away because the process can take 5-6 weeks to complete.
Divorce and Auto Insurance
You need to notify your auto insurance carrier any time there are changes in the ownership of a vehicle or to insured drivers. You want to make sure to separate the policies if your partner moves to another location. In the event your partner continues to pay for your auto insurance after divorce, make sure the insurer has your contact information. This is important so the company can contact you if payments cease. If your policy covers teen drivers with whom you share custody, make sure there is appropriate coverage. All residents of the household are customarily covered, but if the children are primarily members of another household, it may be necessary to cover them under that parent’s policy.
Divorce and Homeowners Insurance
When a couple separates or divorces, this usually means the possessions that each owns will be divided. Most often one of the parties will move to another residence. It is necessary to make sure your insurer is made aware of any changes in your residence and status of your possessions. This is to guarantee you are still protected in case of fire or theft.
Divorce and Dental Insurance
If you were covered under your ex-spouse’s employer-sponsored insurance plan, you may be unable to remain on the plan as a dependent after the final divorce is granted. Some health insurance companies even consider legal separation in the same manner as divorce, which prevents you from remaining a dependent on your spouse’s insurance plan. Even though your ex may be legally obligated to continue dental coverage for your dependent children, you will need to provide coverage for yourself.
Divorce and Disability Insurance
The continuation of existing disability insurance policies following divorce requires some consideration during this settlement phase. The details that surround the purposes for which the coverage was initially purchased may change with a divorce. This may have a negative effect on the insured partner’s ability to continue maintaining those policies.
What Do I Do If I’m On My Spouse’s Health Insurance Policy?
Once your divorce is finalized, you will lose your status as a dependent under your partner’s health insurance. What this means is you are no longer eligible for coverage under that health insurance plan.
Under most health insurance plans a legal separation is treated the same way as a divorce. In other words, if you are granted a legal separation, you are no longer considered a dependent of your spouse under the provisions of the health insurance policy. On the other hand, if your spouse has a government plan such as Tricare, it is possible you can remain a dependent on the health coverage. You will need to call the company to confirm this under the plan.
Can My Ex Be Forced to Pay for My Health Coverage?
You can certainly ask the court to make health insurance coverage a part of the divorce settlement. However, there is no guarantee your ex will be ordered by the court to pay for your health insurance coverage.
How Long Can You Stay on Your Partner’s Health Insurance After Divorce?
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), an ex-spouse can remain insured under the other party’s health insurance for up to 36 months. If the ex does not elect this option, coverage will cease as soon as the divorce is final.
Effects of Divorce on Insurance for the Self-Employed
If you are self-employed and were covered under a plan through your ex-spouse’s employer or a private plan, that coverage will cease when the divorce is granted. You will need to seek private coverage for yourself. You can do this through the Affordable Care Act or through another plan. You may find plans that are available specifically for the self-employed.
How Can I Apply for Free Healthcare?
Quite often large hospitals offer this option for those having surgery, diabetics, oxygen users, dialysis patients, and others. Some of the other sources that may be of help include:
- Get updates & see if you can still get a health plan
- Medicaid & CHIP coverage
- Who is eligible for Medicaid?
- North Carolina Medicaid Program
- Pennsylvania Health Care
- Medicaid Provides Access to Free and Low-cost Medical Care
- Guide to Minnesota’s Public Health Care Programs
- Medicaid & CHIP
- Find out if you’re eligible for free health insurance
- Apply for Medicaid
Divorce can have a disastrous effect on several types of insurance if you aren’t aware. Before you file for divorce, do some research so you know what to expect. Most people know divorce affects health insurance and even car insurance, but sometimes they don’t think of the other types that could be affected.
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