Health Insurance

Is Your Military Retirement Health Insurance A Marital Asset

How much do you value your health insurance? Would you be willing to lose the majority of the assets that you have worked your entire adult life to earn? These are two questions that a service member should ask him or herself when deciding whether or not to file for divorce in Alaska.

Military members that serve for 20 years or more are generally able to receive retirement pay. Active duty retirement pay provides the military member with monthly payments for the rest of his or her life. Health insurance is another benefit that the military member and his or her dependents will receive when the service member retires. In prior articles, we learned that Alaska law classifies the service member’s pension as a marital asset. Health insurance is part of the service member’s pension. This raises the question: Is the service member’s health insurance value considered part of the marital estate in Alaska?

Current Alaska law allows the court to consider the value of a service member’s health insurance retirement benefit as a part of the marital estate.

This means that the court can place a dollar value on the health insurance benefit and add the health insurance value into the total value of the marital estate. The court will grant the full value of the “health insurance” portion of the estate to the service member because he or she cannot split this benefit with his or her spouse. This scenario will likely cause the service member to lose out on a significant portion of other assets in the marital estate. Below is a hypothetical example to illustrate this complex situation.

John and Sue met in high school. John joined the Army shortly after graduating from high school. Soon after he left for basic training. After completing basic training, but before arriving to his first duty station, John married Sue. Shortly after marrying each other, John and Sue had twin girls. John and Sue decided that it would be best for Sue to stay at home with the children because military life is challenging and unpredictable. John served on active duty for just over twenty years. Five years after his retirement, John and Sue decided that they no longer wanted to be married to each other. By this time, the twin girls graduated from college and have their own careers. Sue has fulltime employment as an educational assistant at the local elementary school. John is working fulltime for the post office.

John and Sue’s marital estate consist of a home, personal items, two cars, a Thrifts Savings Plan (401K), and John’s military retirement.

The total value of the estate, less John’s military retirement, is $500K. At trial, Sue’s expert witness testifies that the value of John’s health care benefits is $250K, and the court agreed with Sue’s expert witness. The court decided that the total value of John and Sue’s marital estate is $750K. The court also concluded that it would be fair and equitable to split the estate forty percent to John ($300K) and sixty percent to Sue ($450K). John has a higher earning potential than Sue based upon his training, experience, and current employment, which is why the Court ordered an unequal distribution of the marital estate.

The court is going to award John the health care benefits associated with his retirement because he cannot split or sell his health care insurance. This means that $250K of John’s $300K will consist of health care coverage. The remainder of the $50K will come from personal items, Thrift Savings Plan distribution, or proceeds from the sale of the home. Sue, on the other hand, will receive her $450K from items other than health insurance; e.g., the house, cars, or Thrift Savings Plan. This is not, however, the end of the division of property. The court will likely equally divide John’s military pension between John and Sue.

Health insurance coverage is a significant retirement benefit that a military service member receives when he or she retires.

As you can see in the example above, the value of health care is a major factor in the distribution of property when a retired military couple files for divorce. Both parties have a lot to lose in a divorce. The best approach is to seek qualified legal counsel to help you understand the problems and solutions that are unique to your situation.

Brad is the Managing Attorney at Carlson Law Group, LLC  His practice is focused on providing legal solutions to Alaskans throughout Alaska.  Brad can be reached at 907-264-6721 or