Health and life insurance are costly and the obligation to pay for it can be an issue in divorce. Under New York law, the provisions for insurance differ from other expenses encompassed within child support and spousal support. As a result, couples should be aware of their obligations and their ability to negotiate certain aspects of insurance.
Insurance included in child support
As discussed in a previous post, child support obligations are divided into 2 types: basic child support and add-on expenses. Basic child support covers food, clothing and shelter. Add-on expenses are everything else, including the cost of life and health insurance. However, insurance has some unique rules.
Typically, add-on expenses are discretionary. The parties can agree to what expenses are covered or litigate it in court. Generally, they are not mandatory. However, in the case of health insurance, the court can require the spouse paying child support to pay for health insurance. The children’s premiums must be shared pro-rata between the parents based on their respective incomes. Any unreimbursed medical expenses, such as co-pays, are included as an add-on expense and also shared pro-rata.
The court may also order a party to purchase, maintain or assign an accident or life insurance policy and designate either the former spouse or children of the marriage as irrevocable beneficiaries during a period of time fixed by the court. The purpose of this insurance is to secure payment of support in the event the payor spouse dies during the term of the support obligation.
In the case of both life and health insurance, the parties only have to maintain the insurance during the period they are obligated to provide child support.
Insurance included in spousal support
As with child support, the court may order a party to purchase, maintain or assign a health insurance policy for the former spouse. However, more often a party must obtain his/her own insurance and pay for it using spousal support. When a court determines the amount of spousal support, one of the factors considered is the spouse’s loss of health insurance benefits because of the divorce and the cost of obtaining replacement insurance. As a result, the spouse may receive a higher award because he/she will need to pay for health insurance coverage.
In the case of life insurance, a spouse may be required to pay for life insurance and name the ex-spouse as beneficiary to secure payment of spousal support in the event the payor spouse dies during the term of the support obligation.
If paying for insurance is required, the period must be fixed in duration, and cannot exceed the length of spousal support payments.
It should be noted that the recipient spouse should ask for proof of insurance in the settlement agreement. The recipient may also want to select and pay for the policy and seek reimbursement from the payor spouse in order to ensure good coverage and that the policy does not lapse.
Whether we are talking about insurance for the spouse or child, the payor spouse is not required to apply for the insurance unless the payor spouse has it available through his or her employer. Even in that circumstance, the payor spouse need only provide the necessary paperwork to the recipient spouse.
If you are considering divorce, please contact us to learn how we can help you resolve your support and other divorce disputes.