HOW DIVORCE MAY AFFECT YOUR FEDERAL PUBLIC BENEFITS

Divorce and Supplemental Security Income

Divorce and SS (Retirement and Survivors Benefits)

Divorce and SS (Disability Benefits)

Divorce and Railroad Retirement Benefits

Divorce and Medicare

Divorce and Medicaid

Divorce and Low-Income Home Energy Assistance Program

Divorce and Food Stamps

Divorce and Veteran’s Benefits

DIVORCE AND SUPPLEMENTAL SECURITY INCOME

 IN GENERAL     

There are two types of issues to consider when a Supplemental Security Income (SSI) recipient is involved in a divorce. First, there will usually be an immediate impact on his or her benefit amount. Second, there are longer-range planning issues to consider when a current or future SSI recipient is involved in a divorce and a settlement is being negotiated.

Since SSI is a needs-based program, the issue of income and resources available to the SSI recipient is of paramount importance. The income and resources of spouses and parents of SSI recipients are deemed (presumed available) to the recipients and affect SSI eligibility and the benefit amount. A divorce will alter the amount of SSI benefits payable by dissolving eligible couple status (if applicable) as well as ending the deeming requirements between an SSI recipient and an ineligible spouse. It may even restore eligibility to someone whose marriage brought enough income to the SSI recipient that his or her benefits were terminated. (This may actually have occurred earlier, at the time of separation.)  

For a general overview, see SSI.

ADVOCACY TIP

If two unrelated persons of opposite sexes are living together in the same household and they lead people to believe they are husband and wife, they are considered married for the purposes of the SSI benefits.  This "marriage" is deemed over if the two people stop living together.

IMPACT ON BENEFITS    

Eligible couple

The termination of a marriage and the termination of couple status are not the same and do not necessarily occur on the same day. When an eligible individual and an eligible spouse divorce, they remain an eligible couple throughout the month of the divorce. Effective beginning with the month following the month of the divorce, each is considered an eligible individual (20 C.F.R. § 416.1830(b); POMS SI 02005.035). Since the eligible-couple combined benefit rate is lower than what two eligible individuals would receive separately, the net effect will be a benefit increase.

The 2008 maximum federal benefit rate is $637 for an individual and $956 for a couple.

The Social Security Administration (SSA) will request a copy of the decree as proof of the divorce (or annulment) but will accept an explanation along with other evidence (20 C.F.R. § 4l6.1835(b)(2)).

SSI recipient and spouse who is ineligible for SSI

In the event that income from an ineligible spouse had been deemed (presumed available) to the SSI recipient, deeming for the purpose of establishing eligibility will cease as of the first month following the divorce (20 C.F.R. § 416.1163(f(2)).

The SSA will deem the income belonging to the ineligible spouse to determine SSI benefit amount for two months after the divorce (20 C.F.R. § 416.1163(f(2),(e)).  A recipient’s SSI benefit level, which had been reduced by deeming, will not be immediately affected in the month following the month of the actual divorce. For example, if Mr. and Mrs. Smith divorce in May, Mrs. Smith’s SSI benefits payable in June will reflect the deemed income of Mr. Smith in April. The July SSI benefit will reflect Mr. Smith’s deemed income in May. The August benefit will be the first check for which the deeming for the ineligible former spouse does not apply.

The SSA will request a copy of the decree as proof of the divorce (or annulment) but will also accept an explanation along with other evidence. 20 C.F.R. § 416. 1835(b)(2).

SSI child recipient and ineligible parent

For children under the age of 18, the rules of parental deeming apply (20 C.F.R. § 416.1165). An ineligible parent’s income may be presumed available (deemed) to the child SSI recipient until the month in which the child reaches age 18.

The critical factor in determining when deeming from an ineligible parent ceases is whether or not the ineligible parent lives in the same household as the child. It is the parent’s moving rather than the divorce that triggers the changes in the deeming procedures.

If the ineligible parent leaves the household, the SSA will stop deeming income in order to determine SSI eligibility in the month following the month in which the parent leaves. However, the effects of the now absent parent’s income upon the amount of the child’s SSI benefit will linger for two months (20 C.F.R. §§ 416.1165(g)(4), 416.420).   The SSA will count the deemed (presumed available) income from the ineligible parent in the second month prior to the current month to determine benefit amount.

For example, Mr. Liscomb’s income was deemed to his daughter, Melissa. Mr. Liscomb leaves the household in September. Melissa’s 551 benefits in October would be based upon deeming Mr. Liscomb’s August income and her November check would be reduced by Mr. Liscomb’s September deemed income. The December check would be the first benefit check that does not factor in Mr. Liscomb’s deemed income.

PLANNING CONSIDERATIONS

SUPPORT PAYMENTS

The SSA defines support payments as cash or in-kind contributions to meet some or all of a person’s need for food, clothing, or shelter. Voluntary and court-ordered payments are counted as unearned income (20 C.F.R. § 416.1121(b)).

However, support paid to a child receiving SSI benefits is subject to a special unearned income exclusion. (20 C.F.R. § 416.1124(c)(11)). One-third of the support payment made by an absent parent to or on behalf of a child recipient is not counted. See third-party payments, below.

ALIMONY

Alimony is defined as “an allowance made by a court from the funds of one spouse to the other spouse in connection with a suit for separation or divorce”  (20 C.F.R. § 416.1121(b)). Whether it is provided as cash or in-kind contribution, it is countable as unearned income if it can be or was used to meet some or all of a person’s needs for food, clothing or shelter.

THIRD-PARTY PAYMENTS

Of interest to attorneys drafting divorce settlements in which one party or a child is an SSI recipient is a special provision in the SSI regulations that excludes bills paid by a third party from counting as income to the SSI recipient (20 C.F.R. § 416.1103(g)). The inevitable qualification is that the SSA will count the value of anything in-kind that the SSI recipient receives as a result of the third-party payment if the in-kind item or service provides food, clothing, or shelter (20 C.F.R. § 416.1102 [in-kind income]). The example offered by the SSA describes a payment made directly to a grocer who then provides a recipient with food. The transaction would not be counted as direct income (because the cash was not paid to the recipient) but was counted as in-kind income (because the grocer provided food).

However, there is a range of possibilities that should be examined. If the third party payment is not for food, clothing, or shelter, it is excluded. An example of how this exclusion might apply is offered in the regulations: a brother’s payment to a lawn service is not counted as in-kind income because the mowing cannot be used to meet food, shelter, or clothing needs. Broader or more useful exclusions seem open to the creativity of advocates. For example, payments for social services, vocational, educational, or medical needs do not affect the SSI benefit.

A close examination of the items excluded from income and the definitions used by the SSA to describe in-kind income can be very helpful. For example, the regulatory definition of shelter is very specific.  Shelter is defined to include room, rent, mortgage payments, real property, real property taxes, heating fuel, gas, electricity, water, sewerage, and garbage collection services (20 C.F.R. § 4 16.1130(b)). Therefore, arrangements by a third party (such as a former spouse or family member) to pay a provider directly for a variety of shelter-related items not covered in the shelter definition would fall under this exclusion. The provision of payment for items or services such as telephone bills, water heater replacements home repairs, driveway repairs, etc., might be an option for a divorce settlement without endangering an SSI recipient’s eligibility or benefits.

ADVOCACY TIPS

Medical care and services that are paid directly to the provider by a third party are not considered as income to the SSI recipient (20 C.F.R. § 416.1103(a)(l)). This provision may be useful in situations where Medicaid does not cover a service. A divorced spouse or non-custodial parent could make payments to the medical provider without reducing the 551 recipient’s benefits.

Rental payments on behalf of an SSI recipient by the former spouse may be part of the solution under some circumstances. If only shelter is provided, the SSA will apply the presumed maximum value (PMV) rule in evaluating the third party payments (20 C.F.R. § 416.1140). Under this rule the SSA presumes the value of this in-kind support and maintenance (in this case, the rental payments) to be equal to one-third of the SSI federal benefit rate plus $20. For example, the PMV in 1990 is:

 1/3 of $386      $128.67

                        + 20.00 monthly unearned income exclusion

                        $148.67 presumed maximum value

If the actual value of the rent is less, the SSA will count the actual value of the rent as income. In this event, payment of the rent offers no particular advantage. If, however, the rent is more than the PMV amount, the SSA will only count the PMV as income, not the entire contribution to the rent. Therefore, if the rent payment was $500 month, only $148.67 (in 1990) would be counted as income to the SSI recipient.

EXCLUDED RESOURCES

Another approach to dividing marital assets and/or providing ongoing support is to consider the SSI resource exclusion provisions. The most common excluded resources that should be considered are described below.

The primary asset in most marriages is a house (or mobile home). If the house is the SSI recipient’s principal place of residence, the home will be excluded as a resource regardless of its value (20 C.F.R. § 416.1212). It may be more advantageous for an SSI recipient to be awarded the home than to receive alimony payments that may terminate SSI eligibility without substantially raising the recipient’s standard of living.

For ongoing mortgage payments see the discussion above in third party payments. Consideration might also be given to sharing the house with other adults who pay their pro rata share of the expenses to the mortgage holder. Solutions of this sort are by their nature highly individualistic and require careful consideration of all of the ramifications.

DIVORCE AND SOCIAL SECURITY RETIREMENT AND SURVIVORS  BENEFITS

IN GENERAL

The effect of divorce depends on how long the couple was married and whether the divorced spouse meets other requirements at some time in the future.

If a divorced spouse remarries after divorcing the insured worker, s/he will lose his or her right to benefits. A divorce from the new spouse can lead to reinstatement of lost benefits.

ELIGIBILITY

SPOUSE’S BENEFITS

If their marriage did not last 10 years, a spouse can no longer receive benefits based on the worker’s earnings recorded once the marriage is terminated except as described below (20 C.F.R. §§ 404.330 to 404.332). For a general overview of these benefits, see Social Security Spousal Benefit.

ADVOCACY TIP

The SSA strictly adheres to the 10-year rule. If a spouse was divorced before the 10 years, even if only by a few months or days, s/he will not be entitled to benefits on the wage earner’s record. When advising a client who is considering divorce and who has been married close to 10-years (even as short as eight years), counsel the client on the importance of staying legally married, if at all possible, until the 10 year requirement has been met. This does not mean that the spouse must live with the worker. In determining the eligibility of a divorced spouse, the Social Security Act only focuses on the existence of the legal marriage and its termination. The requirement is that the applicant was married to the insured for at least 10 years immediately before their divorce became final (20 C.F.R. § 404.33l (a)(2)). Therefore, it is important to advise the client not to secure the final divorce until after the 10 year requirement has been met.

DIVORCED SPOUSE’S BENEFITS

A divorced spouse may be eligible for benefits based on the worker’s earnings record when the worker becomes entitled to retirement or disability benefits if the divorced spouse meets the following requirements: the marriage lasted at least 10 years; the divorced spouse is not currently married (to the worker or someone else); the divorced spouse is age 62 or older; or the divorce from the worker was at least two years ago.  

For a general overview of these benefits, see Divorced Spouse - Social Security.

ADVOCACY TIP

Even if the worker is not yet entitled to benefits, but is at least age 62, a divorced spouse will still be entitled to benefits if s/he otherwise meets the conditions described above (20 C.F.R. § 404.331).

BENEFITS AS DIVORCED SURVIVING SPOUSE

A divorced spouse does not lose his or her potential eligibility for survivors benefits on his or her former spouse’s work record if the marriage lasted at least 10 years. But entitlement will depend on meeting the following requirements for benefits at the time his or her former spouse dies: the marriage lasted at least 10 years; the surviving divorced spouse is at least age 60 or age 50 and disabled; and the surviving divorced spouse is unmarried or remarried under certain conditions (20 C.F.R. § 404.336).

MULTIPLE SPOUSES

It is possible for there to be more than one divorced spouse receiving benefits on the wage earner’s record, so long as each was married to the wage earner for at least ten years. In addition, it is possible for a divorced spouse and the widowed or current spouse of the worker to both be receiving benefits on the same record at the same time.

BENEFITS AS DIVORCED MOTHER OR FATHER

If a deceased worker and spouse were divorced, the former spouse will be entitled to mother’s or father’s benefits on the worker’s earnings record if s/he is unmarried; s/he is parent of the worker’s child; and s/he has care of the worker’s child (under age 16 or disabled) in care and the child is eligible for child’s benefits. (20 C.F.R. § 404.340).

BENEFITS

FAMILY MAXIMUM

Divorce has no direct effect on the amount of retirement or survivors benefits a person receives. However, if the marriage did not last 10 years and the spouse was receiving benefits which terminated after the divorce, benefit amounts received by other persons based on the same worker’s record may increase if they had been previously reduced for exceeding the family maximum (20 C.F.R. §§ 404.403 to 404.406).

Benefits paid to a divorced spouse or divorced surviving spouse do not count against the total payments limited by the family maximum (POMS RS 00615.730).

DIVORCED SPOUSES’ BENEFITS

Excess earnings of an insured are not chargeable against the benefits of a divorced spouse as long as the couple has been divorced for at least two continuous years since the divorced spouse electedto receive benefits at age 62 even if the worker has not yet claimed his or her retirement benefits. However, the divorced spouse is subject to a reduction in his or her divorced spouse’s benefits because of his or her own excess earnings (20 C.F.R. § 404.416(a)).

DIVORCE FROM SPOUSE OTHER THAN WORKER

WORKER’S WIDOW

The divorced spouse of a recipient who lost widow(er)’s benefits when s/he remarried may have those benefits reinstated after divorcing the new spouse, provided all other requirements for entitlement are met (20 C.F.R. § 404.335(e); Social Security Handbook § 406, (1988)).

WORKER’S DIVORCED SURVIVING SPOUSE

Termination of the subsequent marriage of a worker’s divorced surviving spouse whose benefits (or potential entitlement to benefits) ended at the time of his or her remarriage may lead to reinstatement of those benefits, provided all other conditions for entitlement are met (20 C.F.R. §404.336(e), Social Security Handbook, § 406 (1988)).

CHILD’S BENEFITS       

The entitlement of a child whose benefits ended at the time of his or her marriage may be reinstated if the marriage was annulled or declared void and all other requirements for child’s benefits are met (20 C.F.R. §404.350; Social Security Handbook § 1854 (1988)).

PLANNING CONSIDERATIONS

DOCUMENTATION      

In any divorce decree or settlement agreement (or, if agreed by the parties, in a separate document), it is important that an individual secure the spouse’s Social Security number. It may also be a good idea to secure a copy of the birth certificate. This will vastly simplify the task of applying for benefits on the former spouse’s record, particularly if they are no longer in contact.

ADVOCACY TIP

While not common, there have been cases where the worker left, changed his or her name, and secured another Social Security number. This can create problems for the first wife and children when they need to establish eligibility on a record that is really two records under two (or more) names. To try to avoid these problems, it is key that the spouse retains as much identifying information about the worker as possible. It may be possible to do this informally. The more evidence there is to tie the person to the two different names, the higher the likelihood that the matter can be corrected.

TIMING OF THE DIVORCE

One concern for some spouses, particularly older women, is how they will support themselves after the divorce. If a woman is 62 years old or older and she has been divorced for at least two years, she may receive benefits on the worker’s record even if he continues to work (20 C.F.R. § 404.331(f)). The key, however, is the time of the divorce. If the woman waits until she is age 62 to secure the final divorce, she will not be eligible under this provision until she is age 64. Therefore, where a client seeks advice early about such plans, it is important to incorporate this rule into the advice which is provided.

CORRECTING EARNINGS RECORDS

One very serious gap in Social Security coverage is the absence of disability insurance benefits for the current or former spouse of a worker when the spouse becomes disabled and has an insufficient work record to qualify for disability on his or her own. In some marriages, it is common for the couple to have worked together at their business: farming, the corner grocery store, the accounting office, the gas station. All too frequently, however, the earnings have been reported as the husband’s and therefore his earnings record has been credited. At the time of a divorce, if the wife is disabled or in ill-health, consider attempting to correct the records in order to establish her eligibility for disability on her own record. This is not an easy process, however it may be easier to accomplish as part of the divorce since all of the necessary tax records and other evidence can be secured from the husband.

Advocates must also consider the possibility of negative consequences to both parties if the ex-wife secures entitlement to disability coverage, through shifting earnings to her record. When each retires, the former wife and the worker husband may be entitled to lower benefits because the worker’s PIA (with some of the earnings deleted) is likely to be lower. Additional taxes may be owed when earnings are shifted to the wife’s record if the earnings originally reported on his record had exceeded the ceiling on taxable wages. If so, when the wages are divided, more earnings will fit below the ceiling (on two records) and additional taxes may be owed. It should also be noted that, in order to make these changes the person must meet the time rules (including numerous exceptions) (42 U.S.C. § 405(c); 20 C.F.R. § 404.820 to 404.831).

DIVORCE AND SOCIAL SECURITY DISABILITY BENEFITS

IN GENERAL

For current beneficiaries, divorce has no direct effect upon the amount of benefits unless it terminates them.  For a general overview on receiving a spouse's disability benefits, Social Security Spousal Benefit. However a divorce may effect future eligibility for benefits of those who are not yet eligible.

In addition, divorce may re-entitle someone whose benefits were terminated by divorce. And benefits reduced under the family maximum rule may be increased.

BENEFICIARY CURRENTLY RECEIVING SPOUSE’S BENEFITS

A person receiving spouse benefits on the record of a disabled worker will lose those benefits after the divorce unless they were married for at least 10 years (20 C.F.R. § 4l6.332(b)(2)). If the marriage lasted 10 years or more and the divorced spouse is age 62 or older, s/he may be eligible for divorced spouse benefits two years after the divorce (20 C.F.R. § 416.331).

ADVOCACY TIP

A divorced spouse who was married at least 10 years and is age 62 or older is entitled to Social Security benefits even if the insured worker upon whose record s/he is drawing is not yet entitled. The insured worker who is not entitled to benefits must be at least age 62 before the divorced spouse becomes eligible (20 C.F.R. § 404.331).

FUTURE SPOUSE’S BENEFITS

In order to be eligible for divorced spouse benefits, the marriage must have lasted at least 10 years (20 C.F.R. § 404.33 l(a)(2)).

If an individual has been divorced several times and appears eligible for divorced spouse benefits on the work records of more than one insured worker, the SSA will pay the highest benefit due if applications have been filed on all of the work records and other eligibility criteria have been met (20 C.F.R. § 404.407(e)).

RE-ENTITLEMENT TO BENEFITS TERMINATED BY MARRIAGE

A divorced spouse who lost benefits due to remarriage may be entitled to benefits once again if the new marriage was dissolved (20 C.F.R. § 404.331(2)(c)). An individual who lost child’s benefits due to marriage may be entitled to benefits again if the marriage ends and s/he meets all other requirements (20 C.F.R. 416.350).

POSSIBLE INCREASE IN BENEFIT AMOUNT DUE TO THE FAMILY MAXIMUM RULE

The Social Security Administration limits the total amount of monthly benefits payable on the record of one disabled worker. If family members are entitled to benefits based on one worker's record and payments have been reduced through application of the family maximum rule, a divorce that results in ineligibility for the former spouse may increase individual monthly benefits for the others (20 C.F.R. §§ 404.403 to 404.406, 404.304(d)).

DIVORCE AND RAILROAD RETIREMENT BENEFITS

IN GENERAL

The divorced spouse of a qualified railroad worker may be eligible for an annuity under certain circumstances. For a general overview see Medicare.

DIVORCED SPOUSE BENEFITS

RETIRED WORKER

The divorced spouse or a retired railroad worker may receive benefits if:

·         The marriage lasted at least 10 years

·         Both spouses are aged 62; and

·         The divorced spouse is not married at the time of the application for benefits (45 U.S.C. § 231a(c)(4); 20 C.F.R.     §§ 222.20 to 222.22).

If divorce ends a tier II benefit, the divorced spouse may still be eligible for divorced spouse benefits equal to his or her former tier I payment if the above qualifications are met (45 USC § 231a(c)(4).

The divorced spouse benefit will end:

·         upon his or her remarriage (435 U.S.C. § 231d(c)(3))

·        when the divorced spouse’s own Social Security retirement or disability benefit payment is greater than or equal to the divorced spouse railroad annuity (45 U.S.C § 231 a(c )(i)(1)).

DISABLED WORKER

The divorced spouse of a disabled railroad worker may receive benefits if:

·         the marriage lasted at least 10 years;

·         both the worker and former spouse are aged 62; and

·         the divorced spouse is not married at the time of application for benefits (45 U.S.C. § 231a(c)(4).

If the divorce terminates a tier II spouse’s benefits, the divorced spouse may be eligible for divorced spouse benefits equal to his or her former tier I payment if the above qualifications are met (45 U.S.C. § 231d(c)(4).

REMARRIAGE

Remarriage of a divorced spouse will terminate any benefits to his and her former tier I payment if the above qualifications are met 45 U.S.C. § 231d(c)(4).

DECEASED WORKER

A divorced surviving spouse may be eligible for a reduced survivor annuity equivalent to what Social Security would pay if the following conditions are satisfied:

 ·         the marriage lasted for at least 10 years

·         the survivor is aged 60 or older, or aged 50 if disabled; and

·         the survivor is unmarried or remarried at age 60 or older (or age 50 or older if disabled) (45 U.S.C. § 231a(d); 20     C.F.R. § 222.20, 222.23).

REMARRIAGE

Remarriage of a surviving divorced spouse will terminate his or her survivor annuity if the divorced surviving spouse remarries before reaching age 60, or before age 50 if s/he is disabled 45 U.S.C. §231 c(d).  Partial benefits may be payable to a divorced surviving spouse of any age who is remarried if such former spouse is caring for the worker’s child who is entitled to a child annuity because s/he is under age 18 or disabled (45 U.S.C. § 231 a(d)(v); 20 C.F.R. pt. 216, subpt. F, §§ 216.236, 216.237).

DIVORCE AND MEDICARE

IN GENERAL    

Medicare entitlement often depends on a person’s status as spouse or widow(er) of a worker who is entitled to Social Security retirement disability benefits, Railroad retirement or disability benefits or who died fully insured.

When the couple divorces, the claimant will not necessarily lose entitlement to Medicare based on the marriage.

If marriage terminated a person’s Social Security benefits and, hence, Medicare eligibility, divorce may lead to reinstatement of Medicare eligibility if the divorce results in reinstatement of monthly cash benefits.

ELIGIBILITY OF DIVORCED SPOUSE          

A person aged 65 or older may be eligible for Medicare as the divorced spouse of a worker under certain conditions:

 ·         validly married under state law;

·         married at least 10 years before the divorce was final;

·         unmarried, or if remarried, did so after reaching age 60; and

·         not entitled to monthly Social Security retirement or disability benefits on his or her own record that are greater than one-half those benefits payable on the account of the former spouse. (20 C.F.R. § 404.331; 42 C.F.R. §     406.10)

The worker’s spouse must be at least age 62 but does not need to be entitled to Social Security retirement benefits if the couple has been divorced at least two years.

ELIGIBILITY OF SURVIVING DIVORCED SPOUSE

The surviving divorced spouse of a fully insured worker may be entitled to Medicare coverage at age 65 or older (or age 50 if disabled) under specific conditions:

 ·         valid marriage under state law;

·         married for at least 10 years; divorced;

·         unmarried, or if remarried, did so after age 60 (or after age 50 if disabled) and after the worker’s death; 

and

·         not entitled to Social Security retirement benefits greater than those benefits s/he would receive on the   record of the deceased former spouse (42 U.S.C. § 402(e),(f); 20 C.F.R. § 404.335; 42 C.F.R. § 406.10).

ELIGIBILITY FOR MOTHER’S OR FATHER’S BENEFITS AS A SURVIVING DIVORCED SPOUSE

The surviving divorced spouse of a fully insured worker who is entitled to mother’s or father’s benefits may also be entitled to Medicare coverage at age 65 or older under certain conditions:

 ·         valid marriage;

·         divorced;

·         parent of the worker’s child or was married to the worker when the child was adopted;

·         unmarried;

·         not entitled to widow(er)’s benefits or to retirement benefits equal to or larger than a full mother’s or father’s benefits; and

·         have a child in care, under age 16 or disabled, who is the natural or adopted child and is entitled to child’s benefits on the insured person’s record (20 C.F.R. §§ 404.340, 404.348).

If the recipient of mother’s or father’s benefits is also disabled, the recipient may be deemed entitled to Medicare at age 50 (42 C.F.R. § 406.12(c)).

PLANNING CONSIDERATIONS

Since eligibility for Medicare is generally linked to eligibility for other benefits and is not means-tested, there are no real issues in structuring a divorce settlement except for the caveat that an individual who is close to the 10 year mark in a marriage may wish to postpone the final decree until after the tenth anniversary of the marriage--thereby providing the divorced spouse the opportunity to apply at a later date for Social Security benefits on the worker’s earnings record.

DIVORCE AND MEDICAID

IN GENERAL

Divorce may affect Medicaid eligibility.  After divorce, various spousal deeming rules and transfer-of-assets exceptions may no longer apply. For a general overview of Medicaid, visit the Department of Mental Health and Hygiene.

AFFECT ON INCOME AND RESOURCES DEEMING BETWEEN SPOUSES

INSTITUTIONALIZED SPOUSE

In cases where an institutionalized spouse was transferring income to a community spouse, court-ordered alimony or the spousal impoverishment rules. 

In a nursing home coverage situation, court-ordered payments should not be counted against both the payee and payer for the purpose of determining Medicaid eligibility if the payments are actually made.  However, there is still considerable controversy at the state level on this issue.  The payments should be deducted from the payer's income and added to the payee’s income. 

SEPARATION

Deeming in Supplemental Security Income-related cases will likely follow Supplemental Security Income (SSI) rules.  Effective October 1990, deeming of income of separated spouses ended.  In the month after the month of separation, spousal income will no longer be deemed even if the couple was not yet divorced.  However, a recipient can request that the provision take effect immediately after separation (42 U.S.C. § 1382c(b)).

TRANSFER-OF-ASSET RULES

Certain exceptions to transfer-of-asset penalties involve transfers to a spouse.  Divorce may eliminate the availability of these exceptions.  See Program Summary, section H, Medicaid.  However, a court-ordered transfer as part of a divorce decree may not trigger the transfer of assets rule. 

LIENS AND RECOVERIES

Existence of a spouse prevents Medicaid estate recoveries and lien impositions.  Divorce will eliminate those exceptions as well.  See chapter 13, Death, section H, Medicaid. 

AFFECT ON FAMILIES WITH CHILDREN

Divorce has no effect on women and children eligible for Medicaid unless the divorce results in a household member leaving the home. 

Divorce may result in Aid to Families with Dependent Children (AFDC)- and therefore Medicaid eligibility for the child and the custodial parent if financial eligibility requirements are met because the child will be considered dependent.  Furthermore, individuals who lose AFDC eligibility due to increased collection of child or spousal support are entitled to four months’ continued Medicaid coverage (42 U.S.C. § 606(h)).

ADVOCACY TIP

Any straight cash payments will affect eligibility for cash assistance programs and other bases of Medicaid eligibility, and it is possible that attempts to cover certain medical care will simply confuse the state Medicaid agency, leading to denial of eligibility and coverage altogether.  However, a great deal depends on the mix of options a state has chosen to cover.  Simply because mandatory categorically needy coverage is not available does not preclude other Medicaid coverage options.  See section A, Aid to Families with Dependent Children, and section B, Supplemental Security Income, above, for planning considerations relevant to those programs.

DIVORCE AND THE LOW-INCOME HOME ENERGY ASSISTANCE PROGRAM

IN GENERAL

Divorce may have three effects on eligibility to Low-Income Home Energy Assistance Program (LIHEAP) benefits:

 ·         change in household size;

·         change in household income; and

·         change in eligibility for Aid to Families with Dependent Children (AFDC), Supplemental Security Income (SSI), food stamps, or veterans programs.

CHANGE IN HOUSEHOLD

Divorce, or at least separation, decreases household size. Whether this affects LIHEAP benefits depends on its effect on the ratio of income to household size. Because the size diminishes, that ratio may exceed LIHEAP limits, resulting in a loss of eligibility.

CHANGE IN HOUSEHOLD INCOME

Total income will either decrease or remain the same after a divorce.  However, the ratio of income to household size will change and may have the same effect on the household as an increase in income. The same income spread over a smaller-size household may result in ineligibility for LIHEAP benefits, whether it is based on categoric eligibility or is state income tested. If household income decreases, the decrease may help the household qualify for LIHEAP benefits if it does not already receive them.  

For a general overview of the Maryland Energy Assistance Program (MEAP), visit the Department of Human Resources page.

ADVOCACY TIP

The effect on LIHEAP eligibility should be considered when designing a divorce settlement. Check state income requirements for LIHEAP as well as how state regulations treat lump-sum cash settlements. It may be that a lump-sum property settlement will have a different effect on eligibility than will monthly support payments and that difference may turn on whether it is considered an asset under the state scheme. Also note that the effect of child support payments on household eligibility (for both categorical programs and LIHEAP) may be different from the effect of spousal support. Child support may leave the household ineligible for AFDC but the income level may still be sufficiently low to qualify for income-tested LIHEAP benefits.

CHANGE IN CATEGORIC ELIGIBILITY

AID TO FAMILIES WITH DEPENDENT CHILDREN

A household may become eligible for Aid to Families with Dependent Children (AFDC) after a divorce. AFDC is payable only to low-income households that include a child who is deprived of parental support.  Divorce of the child’s parents may lead to AFDC eligibility even if the non-custodial parent pays child support as long as the support level is low enough.

ADVOCACY TIP

Even if income is over the level for AFDC eligibility, check state income standards for LIHEAP benefits.

SUPPLEMENTAL SECURITY INCOME

Since Supplemental Security Income (SSI) applies to low-income persons who are aged or disabled any change in income can affect eligibility. Divorce may affect eligibility. If divorce reduces income, eligibility may be established or continued. If income remains the same, eligibility will not change so long as the household total is below SSI levels. If total income for household size increases after a divorce, SSI eligibility may be lost.

ADVOCACY TIP

Check state LIHEAP income standards for eligibility regardless of 551 income requirements. If a person establishes SSI entitlement as a result of decreased income and resources after divorce, apply for categoric LIHEAP benefits.

ADVOCACY TIP

SSI eligibility also depends in part on having minimal resources. A divorce settlement that includes an award of resources exceeding SSI limits may have no effect on LIHEAP eligibility based on state income standards.

FOOD STAMPS

The food stamp program is also a low-income program that uses income and resources to test eligibility. Changes brought about because of divorce can leave a household eligible for food stamps, have no effect, or cause the household to lose food stamp benefits.  

For a general overview of this program, see Food Stamps.

ADVOCACY TIP

If the household is ineligible for food stamps after divorce, check state LIHEAP income standards as an alternative basis for benefits. If the household becomes eligible after a divorce, apply for categoric LIHEAP benefits.

VETERANS PROGRAMS

Veterans nonservice-connected disability pension benefits are also based on need and may be affected by divorce if income and resources change. Dependency and indemnity compensation for parents of a deceased veteran are only paid to those whose income and resources are below established levels.  If the divorce changes an individual’s income or resources, entitlement to benefits and indirectly, entitlement to LIHEAP, benefits will also be affected. If veterans benefits are endangered as a result of divorce, check state LIHEAP income levels as an alternative basis for benefits. It may be possible to establish categoric eligibility for LIHEAP benefits.

DIVORCE AND FOOD STAMPS

IN GENERAL

The divorce and separation of household members who were married to one another (assuming the divorced couple no longer lives together) will be handled as a change in household composition for the person remaining in the original food stamp household.  The person moving from the food stamp household must reapply for food stamps as a separate household if s/he wishes to continue receiving benefits. 

The actual timing of the breakup of the household will affect use of food stamps for the month in which they separate.  Food stamps should be split between the couple for the month of separation since the person who leaves to become a new household cannot receive an allotment until the month following separation. 

The primary consideration for food stamp eligibility in a divorce involving a child is the designation of a home for a child.  The child is eligible for food stamps as a part of the household of the parent who maintains the home (7 U.S.C. § 2012(i)(2)).  Unlike AFDC, the parent who no longer lives in the household may visit daily, provide maintenance, physical care and guidance without affecting food stamp eligibility. 

CHILD SUPPORT OR ALIMONY

Child support or alimony payments made directly to the household count as unearned income.  Moreover, alimony or support payments legally obligated to the household but that are diverted to pay for a household’s expense (such as shelter expense) count as income and are not excluded as vendor payment (7 C.F.R. § 273.9(b)(2)).

PROPERTY SETTLEMENT

Frequently, divorced partners own property together.  For food stamp purposes, resources jointly owned by separate households are considered available in their entirety to each household. 

ADVOCACY TIP

Households are allowed to demonstrate that jointly owned resources are either unavailable or are only partially available to the household.  In this way, only the value of the portion of the resource actually available counts.  The resource is considered totally inaccessible if the resource cannot be practically subdivided and the household’s access depends on the agreement of the co-owner who refuses to comply.  Advocates should take care in entering into property settlements in order to protect food stamp entitlement (7 C.F.R. § 273.8(d)).

ADVOCACY TIP

Resources jointly owned by residents of shelters for battered women and children and other members of their former household are automatically considered inaccessible if access to the resource is dependent on the agreement of the joint owner who still resides in the former household.  Shelter residents are not required to prove co-owner refusal to comply.  Advocates need to take advantage of this protection for safety of battered women and children (7 C.F.R. § 273.8(d)).

DIVORCE AND VETERANS  BENEFITS

IMPACT OF DIVORCE

SERVICE – CONNECTED DISABILITY COMPENSATION BENEFITS

Veteran

A divorce or annulment terminates the veteran’s eligibility for increased dependents allowance effective the last day of the month of the divorce (38 U.S.C. § 301(b)(2)).

Survivor

If the surviving spouse of a veteran lost his or her dependency and indemnity compensation (DIC) eligibility by remarriage, the surviving spouse’s subsequent divorce or annulment from the new spouse may restore DIC benefits (38 U.S.C. § 103(d)).

For a general overview see, Veterns' Compensation Benefits.

NON-SERVICE CONNECTED DISABILITY PENSION BENEFITS

Veteran

Divorce terminates the veteran’s entitlement to extra dependents allowance under the improved pension plan.  The veteran must report his or her divorce to the VA Regional Office.  Entitlement to increased dependents pay ends effective on the last day of the month of the divorce or annulment (38 C.F.R. § 3.501(d)).  Late reporting or failure to report a divorce will create an overpayment leading to debt collection by benefit offset.

ADVOCACY TIP

Determine exactly which pension program the veteran is on.  Under 38 U.S.C. § 306 and old-law pension plans, termination of the extra payment for dependents is not made effective until the end of the calendar year in which the divorce occurred (38 C.F.R. § 3.501(d)).

Survivor

A surviving spouse receiving death benefits loses his or her entitlement upon remarriage.  A subsequent divorce or annulment may restore death benefits (38 U.S.C. § 103(d)).  

For a general overview, see Vetern's Disability Pension Benifits.

Non-veteran spouse

Final decree of divorce terminates the eligibility of a non-veteran spouse for veterans benefits because this person no longer meets the definition of spouse.  However, dependent children of the marriage may remain eligible for veterans benefits. 

PLANNING CONSIDERATIONS

DEPARTMENT OF VETERANS AFFAIRS

Child support

If the veteran is the non-custodial parent and fails to provide child support, the children may apply directly for apportionment at the nearest VA Regional Office.  There is no VA form; a letter identified as a request for apportionment with details of children’s financial need will suffice (38 U.S.C. § 3107, 38 C.F.R. §§3.450 to 3.461).

Children are not limited to the amount of the dependents allowance; the regulations target 20 to 50 percent of the veteran’s benefit payment as child support, depending on the circumstances. 

Apportionment is considered a “contested case” and all the time limits for appeal are shortened:  60 days for filing a notice of disagreement and 30 days for filing an appeal (38 C.F.R. § 19.145).

Statutes bar garnishment of veterans benefits directly, even for child support. 38 U.S.C. § 3101.  However, courts can consider the amount of veterans benefits in awarding child support.  Rose v. Rose, 481 U.S. 619 (1987).  The VA will honor a state court order to garnish VA compensation payments for child support where the veteran has waived receipt of military retirement benefits in order to receive VA compensation.

ADVOCACY TIP

In negotiating a divorce decree in which child support is being provided, the non-veteran spouse may want to obtain an agreement from the veteran that the veteran will not contest an application by the children for an apportionment of the veteran’s benefits.  Such an agreement which is necessarily worked out prior to filing an application with the VA-should include a specific dollar amount that the children will seek and an affirmative statement to the VA by the veteran that the veteran’s financial needs are met by the remainder of the non-apportioned benefits.  Although the VA is free to decide the appropriate amount, if the veteran does not appeal, and in fact supports the apportionment, there should not be any questions raised by VA.

Alimony

Veterans compensation benefits are not available to the divorced spouse, nor are other benefits that are based on the veteran’s disability. 

MILITARY SERVICES

A veteran having served 20 years or more in armed forces is entitled to military retirement and retirement pay.  Unlike former spouse’s ability to access veterans benefits, former spouses have some access to pay and services after the divorce, depending on the circumstances, such as length of marriage and how much of the marriage overlapped with military service.  If the retired military spouse served 20 years, the veteran’s former spouse is entitled to one-half the veteran’s retirement pay after a divorce.  A former spouse may be entitled to PX and health services, as well as a portion of the veteran’s military retirement pay.  See Uniformed Services Former Spouses’ Protection Act, 10 U.S.C. § 1408; 32 C.F.R. pt. 63.

Retirement pay can be garnished for alimony and child support.

Pay on active duty can be garnished for alimony and child support (32 C.F.R. pt. 54).