Health and Life Insurance and Divorce
During the pendency of divorce, people often wonder what rights or obligations they have in regard to health and life insurance. It is a common scenario that one spouse receives health insurance through their employer and the other spouse is included on the health insurance plan. When parties separate, a concern arises as to what the uninsured spouse will do for insurance, especially if they are not employed or not offered health benefits by an employer.
During the time period after filing for a divorce but before the divorce is finalized, courts will require the status quo to remain and insure the other spouse. Even though there is no express law that requires the continuation of health insurance coverage, if the parties were on the same health insurance plan during the marriage, one spouse will not be allowed to unilaterally take the other spouse off the plan during the divorce proceedings. If a spouse unilaterally removes the other from health insurance, 750 ILCS 5/501(a)(3) is often the cited statute requesting relief, which provides that “appropriate temporary relief” be provided to a spouse. After divorce, that spouse loses their health insurance benefits but they have a right to insurance through COBRA, or the Consolidated Omnibus Budget Reconciliation Act. COBRA provides health benefits that would otherwise be terminated due to a “qualifying event.” Divorce constitutes a qualifying event and therefore through COBRA, health insurance can remain in place for a former spouse for up to thirty-six (36) months.
For the sake of convenience and reducing payments for all parties, it would be prudent for parties to coordinate to make all pending or necessary appointments on an expedited basis to occur while the current health insurance coverage is in place. It is also wise to search for new insurance as soon as possible, in order to ensure that there is no lapse in coverage and it can be determined whether new healthcare providers will be necessary given the change in insurance.
Life insurance also raises questions during divorce proceedings. If a life insurance policy that existed during the marriage becomes an area of contention during the divorce, 750 ILCS 5/504(f)(1) allows for the Court to allocate death benefits, the right to assign death benefits, or the obligation for future premium payments between the parties as it deems just. This provision also allows for a judge to exercise discretion to require a party to obtain or maintain a life insurance policy in order to secure the amount of maintenance that is owed to the ex-spouse.
Similar to maintenance and life insurance, life insurance can also be used to secure child support. 750 ILCS 5/505(a-3) states, “at the discretion of the court, a child support obligation … may be secured, in whole or in part, by reasonably affordable life insurance on the life of one or both parents on such terms as the parties agree or as the court orders.” This provision allows for the court to either order a party to continue to maintain a current life insurance policy until the support obligation terminates or require a new life insurance policy to be put in place to secure the obligation.
Parties are also able to enter into agreements as to who will be the beneficiary of the policy going forward. If after divorce, an individual holding a life insurance policy fails to change the beneficiary, the ex-spouse will still not be considered to be the beneficiary under the policy unless the judgment designates the ex-spouse as the beneficiary, after the divorce beneficiary is changed back to be the ex-spouse, or the ex-spouse is to hold the policy in trust for another. Oftentimes, when parties have children, they will be renamed the new beneficiaries of the life insurance with the other party named as the trustee.
The Law Office of Erin M. Wilson is available to provide guidance regarding the nuances of health and life insurance and additionally has a number of referrals for brokers that we can connect you with to help you explore your health and life insurance needs and options. Call the Law Office of Erin M. Wilson to schedule a consultation at 312-767-4220.
NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.