DON’T STOP! (Maintaining Health Insurance During Divorce That Is)

During the initial meetings with a client when a divorce action is being contemplated or has just been filed, he or she often has preconceived notions of what the impact of the divorce filing may have upon their rights and/or responsibilities going forward. Some mistakenly assume that the mere filing of an action for divorce means that they are no longer “married” or that it constitutes a state of “legal separation”. Neither of these assumptions are true – there is no status of “legal separation” recognized in New Jersey (perhaps a Judgment of Divorce from Bed and Board may come the closest), and one does not become divorced or no longer legally married unless and until a Judgment of Divorce is entered by a Judge of the Superior Court. Co-incident with these notions are often the belief that either (1) you are no longer obligated to maintain your spouse (or perhaps even your children) on existing health insurance coverage; or (2) a filing for an action for divorce itself will cause one to lose health insurance coverage. Again, neither of these notions are correct. Furthermore, acting upon these beliefs would not only be violative of the law, it could have expensive if not catastrophic consequences.

Occasionally, if both spouses are employed, each will have their own separate health insurance coverage obtained through their employment. Their children may be designated as a beneficiary on either or both policies depending on the coverage or to maximize benefits. A divorce filing would have no impact upon this coverage. Each spouse would remain in control of their own insurance. The only question would be whether for financial reasons it would be prudent for the children to remain designated as beneficiaries on both policies if that were the case, or should be going forward if they are not. These are also important areas for discussion in allocating responsibility of the children’s health insurance coverage post-divorce. However, more often than not, we are presented with a situation where one spouse is maintaining the health insurance coverage (usually through employment) and the other spouse and children are designated as beneficiaries under that coverage as members of the insured spouse’s “family.” In New Jersey the mere filing of an action for divorce has no impact upon that coverage. Remember, even after a divorce complaint is filed, the parties remained “married” until a Judgment of Divorce is entered. One’s status as “spouse” under family coverage does not change. Certainly it has no impact on the status of the parties’ children under that coverage.

Unfortunately, whether out of ignorance or sometimes spite, one spouse may remove and/or attempt to remove his or her spouse or children as covered beneficiaries under their health insurance. First of all, such an action would be violative of both New Jersey Court Rules and Statute. Under Rule 5:4-2(f), the first pleading of each party (i.e. Complaint, Answer, Counterclaim, Appearance) shall have attached to it an affidavit listing all known insurance coverage of the parties and their minor children, including but not limited to life, health, automobile and homeowner’s insurance, and setting forth details about that coverage, as well as specifying whether any such insurance coverage had been canceled or modified within 90 days preceding its date and any description thereof. Most importantly, that Rule requires that “insurance coverage identified in the affidavit shall be maintained pending further Order of the court”. Similarly, under New Jersey statute N.J. S.A. 2A: 34-23(d):

“Upon filing of a complaint for an action for divorce, dissolution, nullity or separate maintenance, where the custody, visitation or support of a minor child is an issue, the party who has maintained all existing insurance coverage or coverage traditionally maintained during the marriage or civil union, including but not limited to all health, disability, home or life insurance, shall continue to maintain or continue to share in the cost of maintaining the coverage.”

While perhaps less than clear, I submit that the requirements of this Statute apply to spousal insurance coverage, not just that of children. Simply stated, New Jersey law clearly requires that all existing insurance, including health insurance, be maintained during the pendency of a divorce action unless a court order provides otherwise.

What happens if an insured spouse cancels and/or attempts to cancel his or her health insurance or to remove a spouse or children as beneficiaries anyway? Generally, when someone terminates their health insurance coverage and/or removes a covered person as beneficiary, the law requires the insurance company to issue a Notice of Termination. However, more often than not, these notices would go to the insured’s residence. Depending upon who receives or controls the mail, there is a great likelihood that the other party would not get this notice and wouldn’t learn of this termination until after the fact when they attempt to obtain medical services and coverage is declined. By then it may be difficult, if not impossible, to reinstate that coverage. Even if this could be done, what about any medical bills or expenses incurred during a lapse of coverage? Depending upon the illness or injury involved, those medical bills can be expensive, if not catastrophic. This lapse of coverage caused by a lack of judgment, can dramatically alter the divorce. It has the potential of wiping out the parties’ assets, eliminating nest eggs, diminishing funds earmarked for the children’s education, if not forcing the sale of the marital home. More than likely the court will hold the party who allowed for this lapse of coverage to be financially responsible and accountable for his or her actions. But since there is only so much money to go around, its impact will usually end up trickling down to the aggrieved spouse and children in some fashion. Simply stated, the consequences caused by this lapse of coverage will be devastating for the entire family and would unduly and unnecessarily complicate the divorce process itself.

Hence, it is imperative that an attorney counsel his or her client at the outset of the importance of continuing to maintain all existing insurance, and especially health insurance coverage during the pendency of the divorce process. It is not only the law, but not doing so could have catastrophic consequences not only for your client, but for the entire family.