Negotiating an equitable divorce agreement can be complicated. There are many issues to consider. In my experience, an often neglected or overlooked area is the insurance needs of both individuals, post-divorce.
Both individuals will likely need medical, automobile, homeowner’s/renter’s, life and ideally, long-term care insurance. And if there are any children involved, their insurance needs should also be closely considered.
The crisis in medical insurance coverage in the United States continues to be a political hot potato. Just as millions of Americans were settling into plans and coverage under the Affordable Care Act (ACA), another presidential election has turned this entire issue upside down once again. And at this writing, no one knows what will happen next as the Congress debates repealing the ACA. For this reason, I am recommending that those who stand to lose their medical coverage after divorce because they were covered under a spouse’s plan, sign up for a COBRA extension with their spouse’s healthcare insurance provider. Under Texas divorce law, this will offer medical coverage for up to 36 months following divorce. Now, COBRA can be expensive, so make sure you consider this as part of your settlement agreement, if possible. The 36 months should give you ample time to secure a job for yourself that offers medical insurance.
Minor children must be covered under Dad’s medical insurance. If mom’s coverage is best, then the cost of that coverage is added to the child support payment.
Addressing the possibility that you could require long-term care is an important part of retirement planning. Yet, too many people hope for the best and don’t give this much thought. Our rapidly aging population, lengthening longevity and unpredictable health care costs highlight the need for long-term care insurance. So, couples getting a divorce should definitely explore getting long-term care insurance.
Statistics show that 70 percent of those who reach age 65 will need long-term care at some point before they die. In addition, many people should realize that Medicare does not cover long-term care. And Medicaid only kicks in when you’ve exhausted most of your assets. It is also quite possible that these two institutions may also face changes under the current administration.
For these reasons, considering some method of long-term care insurance or savings has become a key strategy for preserving assets, especially for women. So, adding a line item in your agreement for this coverage might be worth fighting for. Also, do your homework on plans, features and companies; read and understand the fine print of policies; and choose a reputable company.
For those who haven’t yet bought a long-term care policy, keep in mind that premiums for long-term care insurance increase as you age. And since there is a discount for purchasing while married — no one checks to see if you remain married — it is in your best interest to establish coverage prior to a divorce settlement.