Insurance After Divorce: Health, Auto, Home, and Life
Divorce touches every insurance policy you have — health, auto, home, and life. Missing a deadline or forgetting to update a beneficiary can leave you uninsured, financially exposed, or paying for coverage that benefits your ex. Here is a complete guide to every insurance change you need to make, when to make it, and how to avoid costly gaps.
Health Insurance: Your Most Urgent Priority
If you are on your spouse's employer health plan, you will lose that coverage when the divorce is finalized. This is often the most time-sensitive insurance issue in a divorce because a gap in health coverage can be financially devastating. You have several options, and the right one depends on your situation.
Do not wait until the divorce is final.
Start researching your health insurance options as soon as divorce proceedings begin. Some options have strict enrollment deadlines that you cannot extend once they pass.
Option 1: COBRA Continuation Coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to stay on your former spouse's employer health plan after divorce. This is often the simplest short-term solution because you keep the same doctors, network, and coverage you already have.
- ✓Duration: Up to 36 months for divorce (longer than the 18 months for job loss)
- ✓Cost: Up to 102% of the full premium — the employer's share plus your share plus a 2% administrative fee. This typically runs $600 to $2,000+ per month
- ✓Election deadline: You must elect COBRA within 60 days of losing coverage
- ✓Applies to: Employers with 20 or more employees. Smaller employers may be covered by state “mini-COBRA” laws
- ✓Retroactive: COBRA can be elected retroactively — if you have a medical event during the 60-day window, you can elect COBRA and it covers you back to the date you lost coverage
COBRA is expensive because you are paying the full premium that your spouse's employer used to subsidize. For many people, it is a bridge — use it for a few months while you arrange longer-term coverage.
Option 2: ACA Marketplace (Healthcare.gov)
Divorce is a qualifying life event that triggers a 60-day special enrollment period on the Affordable Care Act marketplace. You can enroll in a new health plan even outside the annual open enrollment window.
Premium Tax Credits
Your post-divorce income (not your married income) determines your subsidy eligibility. Many newly divorced individuals — especially stay-at-home parents re-entering the workforce — qualify for significant premium tax credits that can reduce monthly costs to $50–$200.
Cost-Sharing Reductions
If your income falls below 250% of the federal poverty level, you may also qualify for cost-sharing reductions that lower your deductibles, copays, and out-of-pocket maximums. These are only available on Silver-tier plans.
60-Day Window
Your special enrollment period begins on the date of your final divorce decree. Mark this deadline — if you miss it, you may have to wait until the next open enrollment period (November–January) unless another qualifying event occurs.
Option 3: Your Own Employer Plan
If you have a job that offers health insurance, divorce is a qualifying life event that allows you to enroll in your employer's plan outside the normal open enrollment window. Contact your HR department immediately after the divorce is filed or finalized. This is often the most cost-effective option because employers typically subsidize 50–80% of the premium.
Option 4: Medicaid
If your post-divorce income drops significantly — which is common, especially for stay-at-home parents — you may qualify for Medicaid. In states that expanded Medicaid under the ACA, individuals earning up to 138% of the federal poverty level (approximately $20,783 for a single person in 2024) are eligible.
Medicaid has no enrollment deadline.
Unlike COBRA and the ACA marketplace, you can apply for Medicaid at any time. If your income qualifies, coverage can begin immediately and can even be retroactive up to three months.
Removing Your Spouse from Your Health Plan
If you are the one who carries the health insurance, you will need to remove your ex-spouse after the divorce is finalized. Important rules:
- 1.Do not remove them early. Most courts issue automatic temporary restraining orders (ATROs) that prohibit removing a spouse from insurance during pending divorce proceedings. Doing so can result in contempt of court.
- 2.Notify your employer within 30 days of the final divorce decree. Provide a copy of the decree to your HR department or benefits administrator.
- 3.Your ex gets COBRA rights. Once removed, your former spouse is entitled to a COBRA election notice. The employer is required to send this — but follow up to make sure it happens.
- 4.Your premiums may decrease. Removing a spouse from a family plan can lower your monthly premium, though the reduction varies by plan.
Children's Health Insurance
Children's health coverage is almost always addressed in the divorce decree. Courts take this seriously — no child should lose health insurance because of a divorce.
Court-Ordered Coverage
The divorce decree will specify which parent is responsible for maintaining health insurance for the children. This is typically the parent with the better (or more affordable) employer plan.
Splitting Uncovered Costs
Most decrees also specify how parents split out-of-pocket medical costs (deductibles, copays, prescriptions, orthodontics). Common arrangements are 50/50 or proportional to income.
Dental and Vision
Do not overlook dental and vision coverage for children. These are often separate policies from medical insurance. Specify in your agreement who carries these policies and how uncovered expenses (braces, glasses, contacts) are divided.
CHIP (Children's Health Insurance Program)
If neither parent has employer coverage and income is modest, your children may qualify for CHIP, which provides low-cost or free health coverage. Income limits vary by state but are generally more generous than Medicaid.
Auto Insurance After Divorce
If you and your spouse shared an auto insurance policy, you will need to separate into individual policies. This is straightforward but has timing and cost implications you should understand.
- •Get your own policy first. Before being removed from your spouse's policy, make sure you have your own coverage in place. Driving without insurance — even for a single day — is illegal in most states and creates a gap that future insurers will penalize.
- •Multi-car discounts disappear. If you had two cars on one policy, splitting into separate policies typically costs more than the combined rate. Budget for a 10–25% increase.
- •Update vehicle titles. If a car is being transferred as part of the settlement, update the title and registration first, then get insurance in the new owner's name.
- •Rates may actually decrease. If your ex had accidents or tickets on their driving record that inflated your joint premium, your individual rate could be lower.
- •Teen drivers. If you have teenage children who drive, decide which parent's policy will cover them. The parent with primary custody often carries this, but it should be specified in the agreement.
Homeowners and Renters Insurance
What happens to your home insurance depends on what happens to the house. There are several scenarios:
One Spouse Keeps the Home
The spouse who keeps the house should update the homeowners policy to their name only. Remove the departing spouse as a named insured. Review coverage amounts — if you refinanced or the property value changed, your coverage limits may need adjustment.
The Home Is Sold
Keep the policy active until the sale closes. After closing, cancel the policy. Both spouses will need new coverage — either homeowners for a new purchase or renters insurance for an apartment.
The Spouse Who Moves Out
Get renters insurance immediately when you move into a new place. It is inexpensive (typically $15–$30/month) and covers your personal belongings, liability, and temporary living expenses if your rental becomes uninhabitable.
Valuable Personal Property
If high-value items (jewelry, art, collectibles, musical instruments) were divided in the settlement, update your policy's scheduled personal property riders. Items you no longer own should be removed; items you received should be added to your coverage.
Life Insurance: The Most Overlooked Issue
Life insurance is one of the most commonly overlooked — and most important — insurance issues in divorce. It serves two critical purposes: securing support obligations and protecting your children's financial future.
Court-Ordered Life Insurance
Courts frequently order the paying spouse (the one who pays alimony or child support) to maintain a life insurance policy that names the receiving spouse or children as beneficiaries. This ensures that if the paying spouse dies, the financial support does not disappear.
- ✓Policy amount: Typically matches the total remaining alimony and/or child support obligation. If you owe $3,000/month in alimony for 10 years, expect a policy requirement of approximately $360,000.
- ✓Decreasing coverage: Some agreements allow the policy amount to decrease over time as the remaining obligation shrinks. This can lower premiums.
- ✓Policy ownership: The receiving spouse should ideally be named as the owner of the policy — not just the beneficiary. This prevents the paying spouse from quietly canceling or changing the policy.
- ✓Proof of coverage: Your agreement should require annual proof that premiums are being paid and coverage remains in force.
Term vs. Whole Life Insurance
For court-ordered policies that secure a finite obligation (alimony that ends in 10 years, child support until age 18), term life insurance is almost always the better choice. It is significantly cheaper and matches the time frame of the obligation. Whole life insurance makes sense only when the obligation is permanent or when there is a cash value component that is part of the marital estate.
Irrevocable Life Insurance Trust (ILIT)
In high-net-worth divorces, an irrevocable life insurance trust (ILIT) may be used to hold the court-ordered life insurance policy. The ILIT owns the policy, preventing either spouse from modifying or canceling it. The trust distributes the death benefit according to its terms — typically to the children. An ILIT also keeps the death benefit out of the insured's taxable estate. This is a tool for complex situations and requires an estate planning attorney to set up.
Changing Beneficiaries
If you have existing life insurance policies that name your spouse as beneficiary, update them after the divorce is final — unless the divorce decree requires you to keep your ex as beneficiary. Common new beneficiaries include your children, a trust for your children, your parents, or a new partner.
Warning: Some states have automatic revocation laws.
About half of US states automatically revoke an ex-spouse as beneficiary upon divorce. But not all do — and federal benefits (like employer group life insurance governed by ERISA) may override state law. Do not assume your ex is automatically removed. Explicitly update every beneficiary designation.
Disability Insurance and Umbrella Policies
Two types of insurance that are often forgotten in divorce but can have major financial implications:
Disability Insurance
If you are paying alimony or child support, your ability to earn income is what funds those obligations. Disability insurance protects that income if you become unable to work. Some courts will order the paying spouse to maintain disability coverage. Even if not court-ordered, it is a wise investment — you are statistically more likely to become disabled during your working years than to die.
Umbrella Liability Policies
If you had a joint umbrella liability policy (which provides extra liability coverage beyond your auto and home policies), you will need to separate it. The spouse keeping the home and cars should get their own umbrella policy. Coverage of $1–2 million typically costs $200–$400 per year and is especially important if you have assets to protect or teenage drivers.
FSA and HSA Considerations
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are often overlooked in divorce negotiations, but they have real money in them and specific rules that apply.
- •HSAs are individually owned. Unlike most marital assets, an HSA belongs to one person. However, the balance accumulated during the marriage is typically considered a marital asset subject to division. An HSA can be split via a transfer incident to divorce without tax penalties.
- •FSAs are use-it-or-lose-it. Funds in a healthcare FSA generally must be used by the end of the plan year. Coordinate with your spouse to use remaining FSA funds for eligible expenses before the divorce is finalized or the plan year ends.
- •Dependent Care FSAs. If you have a Dependent Care FSA, your eligibility and contribution limits may change based on your new filing status and custody arrangement. Single parents with primary custody may actually be able to contribute more.
- •HSA eligibility requires an HDHP. If your new health plan is not a High Deductible Health Plan (HDHP), you can no longer contribute to an HSA — though you can still use existing funds for qualified medical expenses.
The Beneficiary Audit: Update Everything
Beyond insurance policies, divorce requires you to review and update beneficiary designations across your entire financial life. Beneficiary designations override your will — if your ex is still named as beneficiary on your 401(k) and you die, they get the money regardless of what your will says.
- ✓Life insurance policies (all of them — employer, individual, accidental death)
- ✓Retirement accounts (401(k), 403(b), IRA, Roth IRA, pension). Note: ERISA-governed plans like 401(k)s require spousal consent to name a non-spouse beneficiary while married — but after divorce, update immediately
- ✓Bank accounts (payable-on-death designations)
- ✓Brokerage and investment accounts (transfer-on-death designations)
- ✓HSA beneficiary
- ✓Annuities
- ✓Trust documents (revocable living trusts should be amended or revoked and rewritten)
- ✓Power of attorney and healthcare proxy — these likely name your spouse. Revoke them and designate someone else immediately
Insurance Timeline Checklist
Use this timeline to make sure nothing falls through the cracks:
- 1.When divorce is filed: Research health insurance options (COBRA cost, ACA plans, employer enrollment). Do not cancel or change any policies yet — ATROs likely prohibit it.
- 2.During negotiations: Include life insurance requirements, children's health coverage responsibility, and cost-splitting for uncovered medical expenses in the settlement agreement.
- 3.Within 30 days of final decree: Notify your employer to remove ex-spouse from health plan. Elect COBRA if needed. Enroll in ACA marketplace or employer plan within the 60-day special enrollment period.
- 4.Within 60 days of final decree: Separate auto insurance policies. Update homeowners or get renters insurance. Obtain court-ordered life insurance policy.
- 5.Within 90 days of final decree: Complete the full beneficiary audit (life insurance, retirement accounts, bank accounts, POA, healthcare proxy). Update or establish disability and umbrella coverage.
- 6.Annually: If you are the receiving spouse, verify that court-ordered life insurance is still active. Request proof of premium payment. Review your own coverage amounts as your life circumstances change.
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Legal Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or insurance advice. Insurance laws, COBRA regulations, and ACA marketplace rules vary by state and are subject to change. The information above provides general guidance but your specific situation may differ.
Always consult with a licensed insurance agent, financial advisor, or family law attorney in your state for advice specific to your circumstances. If you are in immediate danger, call 911. For crisis support, contact the National Domestic Violence Hotline at 1-800-799-7233.