The Affordable Care Act’s
Top Five Impacts on
Divorcing Couples
The Affordable Care Act’s
Top Five Impacts on
he Patient Protection and Affordable
Care Act, commonly known as the
Affordable Care Act (ACA) or
“Obamacare,” has ushered in the
most significant regulatory change
to health care in the United States
since the Medicare and Medicaid
programs were signed into law in
1965. On Oct. 1, 2013, the federal
health insurance exchange and
state-based exchanges were
launched, allowing Americans and
small businesses for the first time to
purchase private insurance plans
that went into effect on Jan. 1, 2014.
Among the many benefits the ACA
proposes to provide are lower-cost
insurance for individuals,
guaran-teed coverage for individuals with
pre-existing health conditions and
subsidies for qualifying applicants.
These radical changes to health care
will certainly affect all citizens but
especially those currently going
through the divorce process or
those recently divorced. Following
are the top five issues that are likely
to affect the divorce process and
divorce/matrimonial attorneys.
According to a 2012 study from the University of Michigan, approximately 115,000 women lose their private health insurance each year after a divorce. The study also found that many of these women stay uninsured for more than two years after their marriages end, facing high costs and limited options.
It is believed that as many as one-quarter of all divorcing women who are no longer covered by their former husbands’ health coverage may remain without coverage for at least six months. Many of these uninsured women do not have jobs outside the home or do not have health insurance offered by their employers. While some have been able to take advantage of COBRA plans offered by the ex-spouse’s employer, the duration of this coverage is limited, sometimes for only 36 months.
Divorcing women who have lost their private health care due to divorce should have access to affordable health care insurance through the ACA. This would result in fewer divorcing woman having to go for such long periods without health care coverage.
Affordable Health Care Coverage
for Dependent Women
1
1
In recent years older Americans have been getting divorced more than ever. The National Center for Family & Marriage Research at Bowling Green State University reports that one in four divorces now involve a couple age 50 or older, up from the 1990 rate of one in 10.
Many women in this age group are at a tremen-dous disadvantage relative to their husbands, who usually have been working longer. Typically these women are the dependent spouses who are forced to find affordable coverage and are more vulnera-ble, especially if suffering from pre-existing health conditions. Under the previous system of health insurance in the United States, it was hard or even impossible for these women to get health coverage after divorce. Many times women in this situation were forced to forgo divorce or wait until they
reached the age at which they became eligible for coverage under Medicare.
Once fully implemented the ACA will reduce the high cost of health insurance to divorcing spouses who do not have or will not otherwise be eligible for health insurance coverage through employers. Coverage will also now be fully accessible for everyone, even those with a pre-existing condition that might otherwise have prevented them from finding a reasonably priced health policy after di-vorce. Suddenly, these parties, especially women considering divorce who had been concerned that they might not be able to get health insurance or might be forced to pay an exorbitant amount for continuing health insurance coverage, may now be able to proceed with their divorces.
Under the previous system
of health insurance in the
United States, it was hard
or even impossible [for
older women] to get health
coverage after divorce.
2
2
Divorcing Women with
Pre-existing Conditions
The ACA will reduce the high cost of
health insurance to divorcing spouses
who do not have or will not otherwise
be eligible for health insurance
cover-age through employers.
One of the more important aspects of the ACA is “giving parents greater control over their children’s health care,” as described by the Obama administration. The new law ensures that children will no longer be excluded from health insurance for pre-existing conditions and allows parents to maintain their children under the health coverage offered by a parent’s employer until the age of 26.
In their early years of employment many young adults are doing without health insurance coverage after college due to high
costs or their having no viable options through their employers. Now, even if they have an offer of coverage through an employer but have not yet exercised that option for some reason, these young adults have the alternative of remaining on a parent’s policy.
Whereas this aspect of the law may ease some financial issues during the divorce process, it will likely create other areas of dispute. For example, consider this hypo-thetical situation: A payor spouse in New Jersey could be paying alimony and
contin-uing child support for an undergraduate or even postgraduate child while applying for federal tax credits and possible contri-butions for health insurance costs from the former spouse who is receiving this support. This will likely complicate child support, which historically has involved a simple calculation of both parties’ incomes, and will lead to more discussion and debate over the amount of support to be paid in these types of cases.
Family Health Care Coverage
and Child Support
The ACA should have a significant impact on alimony calculation related to continu-ing health care. Health care costs for dependent spouses can prevent cases from settling or can often cause the divorce process to last much longer than would otherwise be necessary. With greater avail-ability of health insurance at a more pre-dictable, lower cost, the ACA should make it easier to calculate these costs when deter-mining alimony payments. Because health insurance costs will be easily calculable and likely lower than the cost of health insur-ance before the ACA, this could lead to a higher number of cases settling and a short-ened overall settlement time. Divorce and matrimonial attorneys will have more tools in their arsenal to make reasonable and agreeable proposals to their counterparts in these divorce cases and will likely not have to wait for the court to make a final deter-mination regarding the dependent spouse’s ongoing health insurance coverage. Different levels of coverage are available under the ACA (platinum, gold, silver and bronze). It is likely that this could lead to disputes about the level of coverage the payor spouse should be required to provide for the dependent spouse, resulting in chal-lenging alimony agreements. Should the dependent spouse expect to be provided health insurance coverage similar to that which he or she had when married or will the dependent spouse be forced to settle for the lowest-level coverage (bronze) under the ACA? This is one of the important questions that courts may soon be expected to address, and it will have a big effect on alimony calculation.
Divorce and matrimonial attorneys can expect arguments with their opposition in determining who will get the government subsidies for health insurance, which is a key part of the ACA.
Starting in 2014, some spouses who are not covered by health insurance through their employers are eligible for subsidies to assist them in purchasing insurance. Households at from 100 percent to 400 percent of the federal poverty level will be eligible for certain subsidies. So, for instance, a family consisting of a mother and three children reporting household income that is less than or equal to $94,200 would be eligible for a subsidy that would reduce the cost of insurance.
Additionally, payor spouses may be eligible for these subsidies. As payors of alimony, they receive tax deductions for the alimony they are paying. If these deductions reduce their net income below the magic line of 400 percent of the poverty level, the payors would qualify for these same subsidies for the purchase of their own health insurance. Divorce and matrimonial attorneys need to educate themselves fully about the many available options that the ACA provides for clients. We must also be wary of the pitfalls and other problems that the ACA may cause for many of our cases and act accordingly.⚖
• • • • •
Christian Badali is a partner at the Norristown office of Weber Gallagher. He has extensive experience in areas of family and matrimonial law, including divorce, custody, alimony and spousal support, child support, equitable distribution and protection from abuse. He can be reached at 610-278-1518 or [email protected].
If you would like to comment on this article for publication in our next issue, please send an email to [email protected].
Prepare for
How Your
Clients’ Lives
Are Changing
W
hether it’s divorcing couples,employee/employer relationships or Medicare questions, the Affordable Care Act (ACA) has already begun affecting your clients’ health care future. PBI focuses on the topics that matter most to you and your clients. This summer PBI will offer programs explaining how the ACA relates to policies and procedures followed by Medicare and employers. Be the first to know. Discover solutions to an-swer your clients’ questions and gain expertise to respond to trending legal issues.
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July 2014
Employer’s Obligations Under the Affordable Care Act
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