During the dissolution of a long-lasting marriage, Virginia baby boomers may find themselves facing an uncertain future as retirement and insurance plans are brought to the table for distribution. Here are a few important financial items seniors should consider in order to maintain health coverage and quality of life after divorce.
To avoid a loss of coverage after divorce, Forbes recommends that spouses over 50 keep in mind five crucial types of insurance: health, life, disability, home and car. Among these, health plans are of primary concern. An ex-spouse cannot continue to be a dependent on his or her significant other’s health insurance but must obtain a separate policy. One option is to take over the payments to continue to receive coverage under an existing workplace plan.
Alternative options include purchasing an individual policy from a different insurance company or applying for coverage through one’s own workplace. It is extremely important to make this shift as soon as possible to avoid the possibility of being without coverage during a health emergency.
Though ex-spouses must seek their own health insurance after divorce, they may remain on life insurance policies in certain circumstances. If neither party is required to provide financial support to the other following divorce, ex-spouses may be removed from a life insurance plan. However, if spousal support is mandated, a life insurance payout may be used in lieu of alimony in the event of an ex-spouse’s death.
Retirement funds can also evaporate after a gray divorce, according to U.S. News & World Report. After they are equitably split, assets that were intended to provide support for decades may dwindle to nothing, particularly when pensions are used to minimize alimony payments or circumvent them entirely. Before choosing this option, it is important for spouses to take into account two factors. First, courts are likely to make a provision for lifelong alimony at the end of a long-lasting marriage. Second, alimony counts as taxable income for the recipient, but retirement plans may be tax-favored.