Divorce and the Affordable Care Act
On October 1, 2013 Americans without health insurance were for the first time able to buy private health insurance by choosing among different levels of plans through the Affordable Care Act sometimes referred to as “Obamacare.” Specifically, beginning on January 1, 2014, persons with pre-existing health conditions will not be denied coverage as health insurance providers will no longer be permitted to refuse to insure an individual or even to charge insureds with pre-existing conditions higher premiums for health insurance coverage. The question is how do these radical changes to health care law in the United States affect its’ citizens who are currently going through the divorce process or are recently divorced.
According to a study from 2012 done by the University of Michigan, approximately 115,000 women lose their private health insurance each year as a result of divorce. The study also found that most do not get health insurance for a number of reasons quickly thereafter. It is believed that as many as one-quarter of all divorcing women who are no longer covered by their former husband’s health coverage may remain without coverage for at least six months. Many of these woman who are not getting insurance or are remaining uninsured did not have jobs outside the home or work at positions where health insurance is not offered. Others are able to get continuing coverage through COBRA plans offered by their ex-spouses employers, but often cannot afford the cost and the duration of this coverage is limited, sometimes only for thirty-six months.
A trend that has become prevalent in divorce is that is that older Americans, especially those over fifty years of age are getting divorced much more frequently than they had historically. Once again, many women in this age group had been at a tremendous disadvantage to their spouses, who more often had been working at positions for a longer number of years. Often these women are the dependent spouses, who are forced to find affordable coverage, and are even more vulnerable because they may suffer from pre-existing conditions that make it hard or even impossible to get health coverage after divorce under the previous state of health insurance in the United States.
Many times, women in these situations, either forego divorce all together or at least wait until they have reached an age where they will be able to receive health insurance coverage under Medicare.
Once fully implemented, The Affordable Care Act will reduce the high cost of health insurance to divorcing parties who do not have or will not be otherwise eligible for health insurance coverage through employers. Coverage will also now be fully accessible for everyone, even those who have suffered pre-existing conditions that might have otherwise prevented them from getting health insurance post-divorce. Suddenly, parties, especially women considering divorce, but holding off on proceeding may now be able to proceed with their divorce, without being concerned that they may not be able to get health insurance or may be forced to pay an exorbitant amount for continuing health insurance coverage.
Another area of divorce law that will be affected by the Affordable Care Act is alimony. As is the case now, health care costs for dependent spouses often prevent cases from settling or at least often can cause the divorce to last much longer than would otherwise be necessary. Now having health insurance readily available andthe cost of such insurance a more known quantity under the Affordable Care Act, will make it easier to figure out what if anything must be tacked onto the alimony payments to cover this cost. Because these health insurance costs will be easily calculable and likely cost much less than the cost of health insurance would have been before the act, this could lead to many more cases settling and those that do to settle much more quickly. Divorce and matrimonial attorneys will have more tools in their arsenal available to make reasonable and agreeable proposals to their counterparts in these divorce cases and will often not need to wait for the Court to weigh in on whether or not their clients may need to contribute to a dependent spouses ongoing health insurance coverage.
Of course the Affordable Care Act will likely also lead to more disputes over the different levels of coverage available (Platinum, Gold, Silver and Bronze) and what level the payor spouse should be required to pay for on behalf of the dependent spouse. One of the questions Courts may be expected to weigh in upon, and possibly soon, is whether the dependent spouse can and should expect to be able to purchase substantially similar health insurance coverage than they had when they were married or will they be forced to settle for the lowest level coverage (bronze coverage) under the Affordable Care Act.
Another area where divorce and matrimonial attorneys can expect arguments with their opposition is determining who will get the government subsidies for health insurance that is part of the Act. Starting in 2014, some spouses that are not covered by health insurance through his/her employer will be eligible for subsidies to assist them with purchasing insurance. Households at 400% of the federal poverty level will be eligible for certain subsidies. So, for instance, a family consisting of a mother and three children, where the household income is $94,200 or less would be eligible for these subsidies that would reduce the cost of their insurance under the Act.
Additionally a payor spouse may become eligible for subsidies for his/herself by virtue of the fact that as a payor of alimony they get a tax deduction for the amount of alimony they are paying which could reduce their net income to a point where they are below the magic point of 400% of the poverty level, and therefore qualify themselves for these same subsidies for their own purchase of health insurance.
One of the more important aspects of the Affordable Care Act is as the Obama Administration has classified it: “giving parents greater control over their children’s health care.” Children will also no longer be excluded from health insurance for pre-existing conditions. Additionally, and very important to young adults many of whom are doing without health insurance coverage in their early years of employment after college due to costs or who are without health coverage available to them on their own through any employer, will be able to remain on a parent’s health coverage, being offered by the parent’s employer until the age of twenty-six. This is even if they have an offer of coverage through their individual employers but have not yet exercised that option for any reason.
This aspect of the Act will likely create other disputes in the realm of divorce, as where a payor spouse, who is paying alimony and/or continuing child support, especially in states like New Jersey, where child support could still be an issue for children in undergraduate or even post-graduate education programs to be looking for credits and contributions from the former spouse who is receiving this support. This will cause these child support disputes to be more than just a straight calculation of both parties income and will lead to more discussion and debate of the amount of support to be paid in these types of cases.
As divorce and matrimonial attorneys, we need to fully educate ourselves about the many available options that the Affordable Care Act provides for our clients. We also must be wary of the pitfalls and other problems which this Act may cause for many of our cases and be guided accordingly.