Typically, couples can continue coverage through health and life insurance when separated. However, some policies terminate upon legal separation. Others allow dependents to stay on their spouse’s plan until the divorce is final.
Some divorcing couples remain amicable and allow their former partner to receive benefits through a policy they had while married. Whether your spouse can stay on your insurance plan and for how long depends on the insurance company’s terms and the stipulations in your divorce order or separation agreement.
How Does Insurance Work After Divorce?
Some health insurance carriers in Canada terminate coverage immediately after a couple files for legal separation. However, this is not always the rule. Some insurers allow a former spouse to stay on the policy as a named insured until they receive a copy of the divorce order, court order or separation agreement requiring the removal of an ex.
Typically, a judge will ask a spouse to keep their ex on the plan for as long as the insurer allows if they have health coverage or significantly better coverage than the other spouse could obtain. The obligation no longer applies when the duration of spousal support ends.
Sometimes, couples agree to keep a former partner insured during separation. They might stipulate that their ex won’t receive benefits through the plan if they remarry or obtain coverage from an employer.
Benefits from life and health insurance come with various costs. One person might be financially responsible for premiums, deductibles, copayments, and coinsurance. The other might be unable to pay for their own policy. Financial dependence can continue even after the marriage ends. That is why negotiating who pays for which insurance is crucial during a divorce and negotiation of separation terms.
Understanding Life Insurance and Divorce in Canada
Separated couples often stay connected due to shared assets, minor children, and spousal support obligations. The dependent spouse asking the supporting spouse to continue providing for them is not uncommon in divorce proceedings.
Life insurance is a frequently discussed topic in divorce. In a marriage, it is customary for the non-insured spouse to be the named beneficiary of the other spouse’s life insurance.
A different beneficiary designation allows a trust to hold the policy for the children’s benefit. A designated trustee will transfer life insurance proceeds from the trust to the children named as beneficiaries. They might receive one lump-sum payment or smaller payments on a schedule, depending on the instructions the policyholder wrote into the trust documents for the trustee to obey.
Determining the required death benefit to support an ex is straightforward whether the supporting spouse has a life insurance plan through their employer or a private insurance carrier. The amount the beneficiary should receive depends on the amount and duration of spousal support. However, the policy does not have to match the total obligation.
A judge might ask one spouse to apply for life insurance if they have an ongoing financial obligation to the other and the means to pay for a policy. Other options are available if they cannot obtain coverage.
One alternative is to provide a lump sum payment for the partial or full amount of the support obligation. That way, the supported spouse has sufficient funds if the person they are dependent on dies during the obligation period.
The supporting spouse might not have enough money to offer a lump sum payment. In that case, they can make their ex the beneficiary of a registered savings plan.
A supported spouse can protect their financial security if circumstances change by creating a separation agreement. For example, the parties can agree and include in their written agreement that if the paying spouse dies, the balance of owed spousal support or a designated amount of life insurance is the first obligation against the estate. The agreement can also protect a person if they no longer receive support, life insurance is no longer available through employment, or monthly premiums increase significantly.
Can I Stay on My Ex-Husband’s Health Insurance in Canada?
It depends. A spouse with health insurance might have to keep their ex on the policy until spousal support ends or as long as the insurance company allows continued coverage. However, applying for an individual health insurance plan may be necessary if your ex-husband does not owe you financial obligations.
You should talk to your ex during divorce proceedings. Determine when your coverage ends and discuss whether your ex will keep you on their policy. Typically, a non-insured spouse must apply for a new plan within 60 days of being removed from their former spouse’s plan. If 60 days pass, your new insurance company may not cover your pre-existing conditions.
Some policies do not require medical information from a non-insured spouse with pre-existing medical conditions. However, coverage can be limited, and premiums are often high. You might get better benefits by applying for individual coverage that doesn’t require medical information if you are relatively healthy. More options and better coverage are likely.
You should consider the effects of a health insurance policy on your children. Even if your ex removes you as a named insured, maintaining your kids on the plan should not be an issue. Typically, children can receive benefits from a parent’s health insurance carrier until they turn 25 as long as they are in school full-time.
If both you and your ex have health insurance plans, coordinating benefits according to whose birthday comes first during a calendar year is possible.
Insurance Refund Checks
Some former spouses encounter a problem when a non-insured spouse pays for medical expenses and files a claim with the insured spouse’s health insurer. Typically, insurance carriers send the funds to the insured’s bank account or issue a physical check in the insured’s name, even if their spouse paid the bill.
Sometimes, insurance plans allow a refund to go directly to the non-insured spouse. If you share children with your ex and want to continue their coverage, opening a joint credit card or bank account might streamline the process of paying for expenses and receiving reimbursement checks. However, not all divorced or separated couples are amicable enough to use this method.
If you and your ex are not on good terms, a legally enforceable separation agreement can include a clause to require the insured to send refund checks to the non-insured spouse for medical expenses paid during the financial obligation period.
Can I Keep My Ex on My Health Insurance After Divorce?
After finalizing your divorce, you can face challenges if you want to keep your ex on your health insurance plan. Some plans terminate coverage upon separation, and others allow a former spouse to remain on the policy until the divorce is final.
You must review your policy before filing for legal separation or divorce. Once you determine the benefits options, take the necessary steps to keep your ex-insured under your plan. That might mean delaying a petition for divorce until your ex can afford to pay for their own health insurance.
Contact GDH Family Law, LLP
GDH Family Law, LLP, has years of experience handling complicated divorce-related issues for clients in Canada. If you’re wondering how insurance works after a divorce, reach out to us immediately. An experienced divorce lawyer can review your situation and determine a plan that works for everyone.
Call us today at (416) 535-6944 if you’re going through a divorce and want to learn more about your health and life insurance coverage options with a former or soon-to-be-ex-spouse.