Understanding how the dissolution of a marriage affects such things can help put parents on solid footing after the split<\/h2>\n
Feb 14 2018, 4:04 PM<\/p>\n
Share<\/a>\n <\/div>\n Even when it\u2019s clear that divorce<\/a> is the best option, dissolving a marriage can be an anxiety-provoking process. Decisions about where parents will live or who will have custody of their kids can turn into heated battles.<\/p>\n And then there\u2019s the challenge of handling the financial fallout. It\u2019s not just alimony<\/a> and child support parents need to think about. Inevitably, the divorce will tear or strain the safety net one used to share with their spouse \u2014 including health insurance. Understanding how the dissolution of a marriage affects those products can help put parents on solid footing after the split. Here\u2019s how adults in the midst of a divorce can continue to protect their income and save for the future.<\/p>\n Health Insurance<\/strong><\/p>\n In most states, divorcees cannot stay on their ex\u2019s workplace health plan. So those who used to get coverage that way are now on their own. If parents are fortunate enough to have a job that subsidizes their premium, that might not be such a big deal. Divorce counts as a \u201cqualifying life event\u201d that enables one to purchase coverage outside the open enrollment period.<\/p>\n But, according to Colleen Haddow<\/a>, a Fairfax, Va.-based partner with the DiPietro Family Law Group, timing is critical. With most plans, employees have to notify their employer within 30 days of a signed divorce decree, or that window closes. \u201cIt\u2019s really important to get a copy of the order in your hands as soon as you can and get it to HR,\u201d she says.<\/p>\n For stay-home parents or those who work for a smaller employer without an insurance plan, options aren\u2019t as rosy. One possibility is to sign up for a continuation of their former spouse\u2019s workplace plan through COBRA. After a divorce, the law allows parents to stay on their plan for up to 36 months.<\/p>\n There\u2019s a catch, though. His or her employer won\u2019t be subsidizing your coverage, so parents will pay the full price of the premium \u2013 plus a two percent administrative fee. That usually makes it an expensive way to go. \u201cI rarely see recommend COBRA as a good financial idea,\u201d says Haddow.<\/p>\n Shopping for individual coverage on an exchange is often a better alternative. Parents can search through different tiers \u2014 gold, silver,\u00a0and bronze \u2014 to match their budget. Rates have been rising over the past couple years, but if parents meet federal income guidelines, they may qualify for tax subsidies that will help offset their expenses.<\/p>\n Maintaining coverage for children is usually an easier proposition. The Affordable Care Act allowed parents to keep children<\/a> on their employer\u2019s plan until they reached age 26, which is typically a cheaper option than shopping on an exchange.<\/p>\n Some states have strict guidelines on how the parents will split the cost of that coverage. Otherwise, it needs to be clarified in the settlement agreement<\/a>.<\/p>\n \u201cNinety-nine percent of the time, parents want to make sure their kids are insured,\u201d says Haddow. \u201cThey realize that if their 21-year-old has a major medical issue and they\u2019re not insured, they\u2019ll be the ones footing that bill.\u201d<\/p>\n Life Insurance<\/strong><\/p>\n Often, life insurance is just as important after a divorce as it is during the marriage. If parents are depending on alimony or child support to make ends meet, they\u2019ll want a safeguard in case their ex- passes away prematurely. In fact, some states will order the bread-winning spouse to have a policy that names their former spouse as the beneficiary<\/a>.<\/p>\n Haddow advises clients who provide financial support to stipulate the amount of time they need to maintain coverage. Such limitations are especially helpful when parents depend on a workplace policy to meet their insurance obligation. Should parents lose their job at a later date, they could find themselves having to buy comparable coverage that\u2019s now much more expensive because of age. \u201cYou could be stuck paying an extremely high premium,\u201d she says.<\/p>\n For that same reason, those who already have a term policy should make sure their obligation doesn\u2019t exceed the length of their policy. If, for instance, a parent\u2019s term ends after 18 years, they don\u2019t want the obligation to maintain coverage for 20 years.<\/p>\n At that stage of parents\u2019 life, premiums will be a lot steeper. And if they\u2019re tight on cash, they risk falling out of compliance with the insurance provision. \u201cThat\u2019s when the court can step in and start imposing sanctions,\u201d Haddow explains. \u201cYou don\u2019t want that to happen.\u201d<\/p>\n Things are a little different for spouses who previously took out whole life insurance, which includes a cash account along with a death benefit. In cases where there\u2019s a significant balance in the account, couples may want to simply dissolve the policy and cash it out. Depending on the language of the settlement, the supporting spouse may be able to take out a less expensive term policy to satisfy their responsibility.<\/p>\n Not every agreement put the onus on the alimony provider to get coverage, however. In some cases, the lower-earning spouse may simply decide to take out a policy on their ex and handle the premium payments themselves. It\u2019s all part of the negotiation, so parents will want to talk with their attorney about the options at their disposal.<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n Understanding how the dissolution of a marriage affects such things can help put parents on solid footing after the split Feb 14 2018, 4:04 PM Share Even when it\u2019s clear that divorce is the best option, dissolving a marriage can be an anxiety-provoking process. Decisions about where parents will live or who will have custody … <\/p>\n![\"\"](\"https:\/\/images.fatherly.com\/wp-content\/uploads\/2018\/02\/divorce-insurance.jpg?q=65&w=1200\")
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