Navigating Insurance After a Divorce

When you go through the divorce process, you probably have essential issues such as dividing marital assets, alimony, and child support payments on your list. Insurance matters probably aren’t the first issues that come to mind after a divorce. However, you need to consider them. You may need to change health, auto, and life insurance policies to ensure continued coverage and ensure your beneficiary designations reflect your wishes.

It can be stressful to change your insurance after a divorce. However, it’s necessary for your financial well-being. If you have questions about how divorce impacts your insurance, an experienced local insurance agent can help.

Understanding Insurance Changes Post-Divorce

Divorce proceedings will affect many aspects of your life. One aspect that may require additional attention is your insurance policies. You may need to check your health care coverage, life insurance, auto insurance, and homeowners insurance to ensure your coverage options reflect your new status or agreements dictated by the divorce decree.

Health Insurance Considerations

Often, a married couple is covered by health benefits provided by a spouse’s employer. Employer-sponsored health insurance coverage is common. Usually, one spouse’s health insurance will be the best option for the family’s health insurance plan needs.

Divorce changes things if both spouses get health insurance benefits on one of the spouse’s plans during the marriage. Both spouses can stay insured on the spouse’s plan during the divorce process. However, once the divorce is final, the former spouse (non-policyholder) is no longer considered a family member and isn’t covered. Children can remain on the insurance company’s policy regardless of the divorce.

Non-policyholder spouses must find new coverage and pay the premium for new health insurance. If you need health coverage following a divorce, you have options that include the following.

Your Current Employer

Coverage offered by your employer may provide a good option. A change in marital status may be considered a qualifying life event that would provide eligibility for employer-sponsored coverage outside of the open enrollment period. Your premiums through your workplace will likely cost less out-of-pocket than other types of health insurance coverage.

Talking to your employer about coverage options is a good option to pursue. If you cannot obtain health coverage through your employer, consider seeking short-term or private insurance. An insurance agent can help you discover options for health coverage.

COBRA

The federal Consolidated Omnibus Budget Reconciliation Act (COBRA) allows workers and their families to continue participating in a group health plan after losing benefits due to a qualifying life event, which includes divorce.

For COBRA coverage, you have 60 days to decide on coverage, and you can stay on the plan for up to three years. However, the downside to COBRA is the cost. Coverage under COBRA is too costly for many people’s budgets.

The Health Insurance Marketplace

Health insurance through the health insurance marketplace (ACA) may be an option for health insurance after your divorce. Outside of the open enrollment period, you can only enroll in a marketplace plan if you are eligible for a special enrollment period. Divorce qualifies you for a special enrollment period if you lost health insurance coverage through a divorce.

You may want to apply for Medicaid if you cannot afford health insurance after exploring other options. Medicaid offers low-cost coverage, but you are limited to providers who accept Medicaid.

Adjustments to Your Auto and Homeowners Insurance

Once your divorce agreement is finalized, you’ll want to make the necessary policy adjustments. For example, change coverage if you no longer need your ex-spouse on your auto insurance policy. Or, if you no longer have coverage through your spouse, seek coverage immediately. If you remained in the family home following the divorce, ensure your homeowner’s insurance meets your needs.

Updating Beneficiaries

Regarding life insurance, you’ll want to adjust your coverage to an amount that will bring peace of mind. If your life insurance policy has a cash value, you must ensure it’s accounted for as a marital asset.

For life insurance, you can determine whether you want to remove your ex-spouse as a beneficiary for the death benefit of your life insurance policy if this no longer reflects your wishes.

Making Informed Insurance Decisions

Once your divorce settlement or divorce decree is finalized, you’ll need to ensure that every type of insurance you have meets your current needs. You’ll want to evaluate your entire financial picture to ensure you have adequate coverage.

Get help exploring your insurance options to ensure you make informed decisions. Speak with a local divorce lawyer to learn how your divorce impacts your insurance coverage.