Key Takeaways
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Federal benefits are often subject to division after a divorce, but specific rules apply to different benefits like pensions, health insurance, and Social Security.
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Understanding how divorce impacts your benefits can help you better prepare for financial stability post-divorce.
Divorce and Federal Benefits: What Happens?
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What About My Federal Pension?
If you’re a federal employee or retiree, your pension could be affected by divorce, especially if your spouse is entitled to a portion of it. Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS) pensions are considered marital assets in most states. This means that your ex-spouse could be entitled to a portion of your pension, depending on how long you were married and the specifics of your divorce settlement.
The division of federal pensions after divorce is governed by a court order known as a Court Order Acceptable for Processing (COAP). This legal document tells the federal government how much of your pension should go to your ex-spouse. The percentage can vary, but typically, it reflects the portion of your service during the marriage.
If you’re still working and haven’t retired yet, the pension is considered “not matured,” but your ex-spouse can still be awarded a share. Once you retire and start receiving your pension, that share will then be paid out to them.
Do I Lose My Health Insurance?
Health insurance is another big benefit to think about. If you’re covered under the Federal Employees Health Benefits (FEHB) program, divorce can change things dramatically. After a divorce, your ex-spouse will generally lose coverage under your FEHB plan. However, there are some ways they might maintain health coverage.
Temporary Continuation of Coverage (TCC)
If your ex-spouse is covered by FEHB at the time of the divorce, they may be eligible for Temporary Continuation of Coverage (TCC). TCC allows for up to 36 months of continued health insurance coverage, but they’ll have to pay the full premium—both the employee and employer shares—plus a small administrative fee. This can get expensive quickly, so it’s something to plan for if health coverage is important to your ex-spouse.
Spouse Equity Act
Additionally, if your ex-spouse meets certain criteria, they could be eligible for Spouse Equity Act coverage, which allows them to maintain coverage for life, as long as they don’t remarry before age 55.
What Happens to Social Security After Divorce?
Social Security benefits can also be affected, but the rules here are a little different. If you were married for at least 10 years, your ex-spouse could be entitled to Social Security spousal benefits based on your work history. The good news is, this won’t affect your own benefits. Your ex-spouse’s claim to spousal benefits does not reduce what you receive.
Eligibility for Spousal Benefits
Your ex-spouse can collect spousal benefits if they are at least 62 years old, unmarried, and their own Social Security benefit is less than what they would receive based on your record. It’s important to note that they don’t need to wait for you to start collecting Social Security. As long as you’re both at least 62 and eligible for benefits, they can start collecting based on your work record, even if you haven’t filed for Social Security yet.
Survivor Benefits: Can My Ex Still Get Them?
Survivor benefits can be another area of concern during and after a divorce. If you’re a federal employee or retiree, your ex-spouse may still be entitled to a portion of your survivor benefits, which are benefits paid to a surviving spouse after the death of a federal retiree.
Under FERS or CSRS, your ex-spouse can receive survivor benefits if your divorce decree includes a court order that specifies this. If you’re still working or if you’ve already retired, your retirement paperwork will need to reflect any obligations to provide survivor benefits to your ex-spouse.
Impact of Remarriage
One key point is that survivor benefits are reduced from your monthly pension while you are alive. If you remarry, your new spouse may also be entitled to a portion of those benefits, which can complicate things further. However, unless the court orders otherwise, your ex-spouse can still receive survivor benefits even if you remarry.
What About My Thrift Savings Plan (TSP)?
The Thrift Savings Plan (TSP), which is similar to a 401(k) in the private sector, is another asset that could be divided in a divorce. Like your pension, TSP accounts are considered marital assets and can be split between you and your ex-spouse. A court order is required to divide a TSP, and this order must specify how much of the account should be allocated to your ex-spouse.
How Is the TSP Divided?
The division can be either a percentage or a specific dollar amount. One thing to note is that this money can be rolled over into an IRA, which could provide tax advantages for your ex-spouse. It’s also important to know that your TSP account will be frozen once the court order is received, which prevents you from making withdrawals or loans from the account until the division is complete.
How Do I Know What Benefits My Ex is Entitled To?
Every divorce is different, and the division of federal benefits will depend on several factors, including how long you were married, when you earned the benefits, and the terms of your divorce settlement. Generally, the longer you were married, the greater your ex-spouse’s share of your benefits will be.
To avoid surprises, it’s crucial to review your benefits early in the divorce process and consult with an attorney who understands federal benefits. In some cases, you may want to negotiate the division of benefits as part of a broader divorce settlement. For example, you might offer other assets, such as property or savings, in exchange for retaining a larger share of your pension or TSP account.
Important Deadlines to Remember
After a divorce, there are several important timelines and deadlines that you need to keep in mind. For instance, any court orders that divide your pension or TSP must be submitted within a certain timeframe after the divorce is finalized. If you’re late, your ex-spouse may lose their claim to those benefits.
Additionally, if your ex-spouse wants to maintain health insurance under TCC or the Spouse Equity Act, they must apply within 60 days of the divorce. Missing this window could result in a loss of coverage, so it’s important to act quickly.
Protecting Your Financial Future
Divorce can upend your life, but by understanding how it affects your federal benefits, you can make smarter financial decisions moving forward. Whether it’s your pension, health insurance, or Social Security, knowing the rules and acting early can help you secure your future.
