One of the biggest financial hits that can come with divorce is the cost of health insurance for an unemployed spouse. Typically, the unemployed or part-time employed spouse is covered under the health insurance plan offered by the other spouse’s job.
In my practice, I typically see premiums for private policies (policies not provided through an employer) between $500 and $800 per month depending on the plan. This cost can vary greatly and can be reduced to almost nothing if certain government subsidies are triggered by the Affordable Care Act (“Obamacare”).
But, in most cases, a family is looking at a substantial additional expense to cover a spouse with no employer-sponsored health insurance.
So, it typically makes sense for a spouse to stay on the other spouse’s employer-sponsored health insurance for as long as possible to save money.
The question then, is how long can one spouse stay on the other’s health insurance? The answer in North Carolina in the vast majority of cases is until the date of divorce.
There may be language in documentation from Human Resources or in the benefits package documentation that mentions “legal separation”. This language sometimes requires the employee to report a “legal separation” to HR so that benefit eligibility for the spouse can be re-evaluated.
This is where the difference between “legal separation” and “legally separated” comes in. A “legal separation” is a specific legal order by a court that is offered in some states, but not North Carolina. The closest thing North Carolina has to a “legal separation” is called “Divorce from Bed and Board”, or a “DBB”. A DBB has to be obtained from a court in North Carolina. You have to put a lot of time, effort, and legal fees into a DBB. So you will know if you have a DBB.
In North Carolina, “legally separated” is much different than a “legal separation” in some other states. “Legally Separated” in North Carolina means that you are living under separate roofs with the intent for that separation to remain permanent (i.e. not a limited “trial separation”). Being “legally separated” in North Carolina is not a “legal separation” as that term is used in other states. “Legally separated” in this state means essentially that the one-year waiting period for divorce has begun and that some financial issues related to divorce have kicked in (there are other legal impacts of being legally separated, ask a lawyer for a full explanation).
So, if you are separating, or legally separated in North Carolina, you typically do not need to report that separation to an employer-sponsored health plan. And, both spouses can remain on the employer policy until the actual date of the divorce.
That being said, every situation is different, so contact an attorney to determine whether and how being legally separated impacts you or your spouse’s eligibility for employer-sponsored health insurance.
One of the most common points of confusion in my first conversations with clients is helping them understand what constitutes a legal separation in North Carolina.
The legal definition of what it means to be “separated” is different from state to state. So it is crucial to understand what it takes in your state, in my case, North Carolina.
The problem is that the definition is murky. It is easy to know whether someone is legally separated on the ends of the spectrum, but difficult to determine whether that is true for couples somewhere in the middle. Essentially, a couple is legally separated in North Carolina if they are living under separate roofs with the intent (only one spouse need have this intent) for that separation to be permanent. If a couple is living in the same house, then they are clearly not legally separated. If a couple is living in separate homes on different lots with the intention of beginning the 365 day waiting period, then they are physically separated. That sounds simple enough. But what about everything in between?
What is a roof? Which roofs count? How far away does that roof have to be? What if intent for things to be permanent changes over time? When does a trial separation become a permanent separation to start the 365 day clock for a divorce? Do you have to tell everybody that you’re separated? Is some announcement necessary?
And, there is another pesky little aspect that comes into play that is hard to nail down. Roughly speaking the couple can’t seem to be married in the eyes of other people. Or, as the Court of Appeals put it:
“Separation, as this word is used in the divorce statutes, implies living apart for the entire period in such manner that those who come in contact with them may see that the husband and wife are not living together. For the purpose of obtaining a divorce under . . . G.S. § 50-6, separation may not be predicated upon evidence which shows that during the period the parties have held themselves out as husband and wife living together, nor when the association between them has been of such character as to induce others who observe them to regard them as living together in the ordinary acceptation of that descriptive phrase.” Young v. Young, 225 N.C. at 344, 34 S.E.2d at 157. Tuttle v. Tuttle, 36 N.C.App. 635, 244 S.E.2d 447 (N.C. App., 1978)
That last sentence says a lot without clarifying much. But, I interpret it to mean that the separation has to give outside observers the clear indication that the spouses are no longer living together.
There are infinite permutations of a legal separation and many lie somewhere between the obvious ends of the spectrum. So, it often takes an attorney to determine whether a couple has been legally separated for the mandated period in North Carolina and are therefore eligible for a divorce.
If you’re not sure whether your plans to separate or your current separation qualify as a legal separation in North Carolina, call an experienced family law attorney to help you sort it out.