Ex Cleared out HSA before divorce finalized

[pzve]

What is the name of your state (only U.S. law)? Washington

We legally separated in mid-December. My divorce was finally finalized on 4/8. I wasn’t aware I could remove my ex from my health insurance prior to divorce – seems I should have done it at time of legal separation. My fault for not doing so. While changing my employment benefits, I found out my ex effectively cleared out my HSA account a week prior to divorce finalization with expenses related to her pregnancy with another man. Obviously, I’m not happy about this on many fronts. The HSA was intended to fund any necessary bills for my daughter and myself.

Do I have any recourse here? I have a signed & notarized Property Separation Agreement from December indicating I would be “clear of any claims by her against any and all rights derived as a result of my employment…including insurance.” Granted, it’s my fault for not removing her from my insurance in December when I should have – I just didn’t realize separation was a qualifying event, I was misinformed that divorce was necessary.

Advice would be appreciated.

 

[Proserpina]

What is the name of your state (only U.S. law)? Washington

We legally separated in mid-December. My divorce was finally finalized on 4/8. I wasn’t aware I could remove my ex from my health insurance prior to divorce – seems I should have done it at time of legal separation. My fault for not doing so. While changing my employment benefits, I found out my ex effectively cleared out my HSA account a week prior to divorce finalization with expenses related to her pregnancy with another man. Obviously, I’m not happy about this on many fronts. The HSA was intended to fund any necessary bills for my daughter and myself.

Do I have any recourse here? I have a signed & notarized Property Separation Agreement from December indicating I would be “clear of any claims by her against any and all rights derived as a result of my employment…including insurance.” Granted, it’s my fault for not removing her from my insurance in December when I should have – I just didn’t realize separation was a qualifying event, I was misinformed that divorce was necessary.

Advice would be appreciated.

Don't confuse separation with legal separation - the latter requires a court action. So did you or did you not actually file for a legal separation?

If you did not - and I'm going to assume you didn't, just because it's simply more paperwork in this state than is necessary - then the question is moot.

 

[pzve]

we legally separated in December

I filed for divorce in December. My lawyer filed a "petition for dissolution" that was received by the court on 12/8. I was given a case schedule for the divorce. We agreed on Property Separation and Parenting Plan during Jan-Mar - divorce finalized first week in April.

my lawyer said I was separated as of 12/8 - not sure if that counts as "legal" separation or not.

How does it matter? My notarized property separation agreement indicates she wouldn't have rights to claim against my insurance.

 

[cbg]

I wasn’t aware I could remove my ex from my health insurance prior to divorce – seems I should have done it at time of legal separation.

That actually depends on the health insurance plan document. Some plans allow it at legal separation; others require that you wait till the divorce is finalized. In either case you have a 30 day window, starting from the date of the separation/divorce, to take action. It's also possible to remove him during the annual open enrollment period.

However, I work in the Benefits office of a major university so this is an every day question for me. We recommend - we can only recommend, it's up to the employee ultimately - that they not use the legal separation date even though our plan allows for it. Reason; at least in our neck of the woods, it's not uncommon for it to be part of the divorce decree that the employee continue to cover the ex even after the divorce is final. And our plan document says that once you remove that ex, you can never, ever, ever, court order or no, put the ex back on. If you've taken your ex off the policy and you get ordered to continue coverage, you have to find alternate coverage somewhere unrelated to the university - it is illegal for us to violate our plan document, and a court cannot order us to violate the law. The requirement that they provide health insurance for the ex is binding on them, not on us.

So even though it turned out badly, you actually did make a good decision. In hindsight, it might have been better to go the other way but your decision was a defensible one. I know it doesn't help much; I know that wasn't really what you were thinking, but it's the best I can do.

I doubt there's anything you can do about the HSA. Since she was covered on the plan and had a valid medical issue, she was entitled to claim in. You can't pre-designate funds on an HSA - "This is to be used for x and nothing else". But it can't hurt to run it by your attorney, who is able to read your property agreement (something I can't do).

 

[Proserpina]

I filed for divorce in December. My lawyer filed a "petition for dissolution" that was received by the court on 12/8. I was given a case schedule for the divorce. We agreed on Property Separation and Parenting Plan during Jan-Mar - divorce finalized first week in April.

my lawyer said I was separated as of 12/8 - not sure if that counts as "legal" separation or not.

How does it matter? My notarized property separation agreement indicates she wouldn't have rights to claim against my insurance.

A legal separation is a procedure like a divorce - it needs to be filed, served and dealt with just as you would (did) a petition for dissolution. As it is, your property settlement becomes effective the day the divorce was finalized.

Have you asked your attorney if you have any wiggle room?

I can't see you coming out of this with what you want. Did you address the matter of your wife's child in the divorce?

 

[pzve]

That actually depends on the health insurance plan document. Some plans allow it at legal separation; others require that you wait till the divorce is finalized.

It appears my plan would have allowed it b/c when I went in to change my benefits, the "qualifying event" for change was listed as "separation/divorce."

Regardless, I feel like my PSA declaration that she had no rights to claim against my insurance would be worth something. Even if she were on her own insurance, she would be paying those bills out-of-pocket herself until her deductible were met. As it stands now - she's benefiting by using my HSA property to fund her expenses. Even if she argued that the HSA were still communal property - shouldn't she only be able to use half the HSA amount available?

Not sure if this has any weight, but after child support, alimony and basic expenses (mortgage, food, etc.), I'm actually in the red $2K/month. So her depleting the HSA actually impacts my ability to provide healthcare for my own daughter. Would a court consider that in this situation? Will the signed/notarized PSA outweigh my oversight of not taking her off the insurance in December?

 

[Proserpina]

It appears my plan would have allowed it b/c when I went in to change my benefits, the "qualifying event" for change was listed as "separation/divorce."

Regardless, I feel like my PSA declaration that she had no rights to claim against my insurance would be worth something. Even if she were on her own insurance, she would be paying those bills out-of-pocket herself until her deductible were met. As it stands now - she's benefiting by using my HSA property to fund her expenses. Even if she argued that the HSA were still communal property - shouldn't she only be able to use half the HSA amount available?

Not sure if this has any weight, but after child support, alimony and basic expenses (mortgage, food, etc.), I'm actually in the red $2K/month. So her depleting the HSA actually impacts my ability to provide healthcare for my own daughter. Would a court consider that in this situation? Will the signed/notarized PSA outweigh my oversight of not taking her off the insurance in December?

I live in WA, and am suffering through an HSA too. While there's a personal deductible for both spouses, the family deductible can be used by one, both or neither. You can't pre-allocate her "share".

 

[pzve]

As it is, your property settlement becomes effective the day the divorce was finalized.

This is the wording of the PSA:
III. STATUS OF AGREEMENT
Notwithstanding that it is the intent of the parties that this Agreement be included and merged into any Decree of Dissolution if one is obtained, it is also the intention of the parties that this Agreement retains its status independently as a contract between the parties. Each spouse may enforce his or her rights as they arise from this Agreement by contract law as well as through those remedies available for the enforcement of judgments and under dissolution law, specifically including the use of the contempt power of the court. It is understood and agreed by the parties that this Agreement is a fair and equitable agreement and that it shall be final and binding upon both parties, whether or not a Decree of Dissolution is obtained. This Agreement may be terminated and modified only by a written document signed by both of the parties.


So it would seem to me the PSA is effective the day it was signed/notarized (December) and not contingent upon divorce finalization (April). Am I mistaken?

Have you asked your attorney if you have any wiggle room?

I'm waiting to hear back, but my attorney is extremely slow (free work benefit)

Did you address the matter of your wife's child in the divorce?

The final dissolution documents stated the kid wasn't mine and that the proper paperwork would be filed upon the child's birth (6 or so months from now).

 

[Proserpina]

Let me ask you something, first.

Mom is currently what.... 3 months pregnant? Which puts her time of conception after the agreement was signed, yes?

 

[cbg]

We cannot interpret the terms of a PSA by reading only a small portion of it. You're going to have to wait for your attorney.

 

[pzve]

Let me ask you something, first.

Mom is currently what.... 3 months pregnant? Which puts her time of conception after the agreement was signed, yes?

correct - conception is sometime in January.

separation and PSA agreement signed in mid-December.

 

[stealth2]

I agree that your lawyer is the only one who can give you a proper answer and how to (re)act. No one here wants to be responsible for having you act on our input (w/o speaking to your atty) and having it blow up in your face.

 

[single317dad]

Not sure if this has any weight, but after child support, alimony and basic expenses

Is your alimony paid to the woman you just divorced? If so:

Were you paying her alimony during the separation?

Does your decree say anything about cohabitation?

Why did you agree to pay alimony to your ex who was obviously pregnant out of wedlock with another man's child?

How was the unborn child addressed in the divorce?

Regardless of the answers to these questions, I also agree that discussion of these topics with your lawyer is far more important than an internet forum. However, if this divorce went the way I imagine from the info provided so far, I think you might do better with another lawyer.

 

[Proserpina]

To be perfectly honest I believe this OP is out of luck no matter what.

If the separation agreement is enforceable - and I have my doubts there - then all his ex is going to do is amend it to allow for her pregnancy related costs which she didn't need when she actually signed the thing. Why do I say this? Well, she signed that document not knowing she was pregnant and then both parties agreed that the documentation would be provided after the birth of the child. She has two options now. The first is to just leave it alone, because it's a done deal. The second is to assist the OP in submitting the final documentation relating to the child... and in doing so, modifying the agreement to reflect that when she signed she had no knowledge of the pregnancy hence the agreement should be changed anyway.

OP, I strongly doubt you're going to win this one.