How the Affordable Care Act Affects Divorce

Older Americans, especially those over 50, 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 forgo divorce or at least wait until they have reached an age where they will be able to receive health insurance coverage under Medicare.

How the Affordable Care Act Helps

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 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 be able to proceed with their divorces, 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.

Alimony

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 and the 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 spouse's ongoing health insurance coverage.

Disputes

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 on, and possibly soon, is whether the dependent spouses can and should be able to purchase substantially similar health insurance coverage than they had when they were married, or if they will be forced to settle for the lowest-level coverage (bronze) under the Affordable Care Act.

Another area where family law attorneys can expect arguments is determining who will get the government subsidies for health insurance that is part of the Act. Starting in 2014, some spouses who are not covered by health insurance through their employers 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 insurance under the Act.

Additionally, payor spouses may become eligible for subsidies for themselves by virtue of the fact that as payors of alimony, they get a tax deduction for the amount of alimony they are paying that 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.

Children

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 26. This is true, 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. In New Jersey, where a payor spouse could be paying alimony and continuing child support for an undergraduate or even post-graduate child, that payor spouse may be looking for federal tax credits and possible contributions for health insurance costs 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.

Conclusion

As family law attorneys, we need to educate ourselves fully 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 that the Act may cause for many of our cases, and be guided accordingly.

Christian V. Badali is a partner with Weber Gallagher Simpson Stapleton Fires & Newby. This article also appeared in The Legal Intelligencer, an ALM sibling publication of this newsletter.

On Oct. 1, 2013, Americans without health insurance were for the first time able to buy private insurance by choosing among different levels of plans through the Patient Protection and Affordable Care Act, sometimes referred to as Obamacare. Specifically, beginning Jan. 1, 2014, people 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. 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?

Women and Health Insurance

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 quickly thereafter for a number of reasons. 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 insurance for at least six months. Many of these women who are not getting insurance 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 36 months.

Older Americans, especially those over 50, 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 forgo divorce or at least wait until they have reached an age where they will be able to receive health insurance coverage under Medicare.

How the Affordable Care Act Helps

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 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 be able to proceed with their divorces, 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.

Alimony

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 and the 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 spouse's ongoing health insurance coverage.

Disputes

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 on, and possibly soon, is whether the dependent spouses can and should be able to purchase substantially similar health insurance coverage than they had when they were married, or if they will be forced to settle for the lowest-level coverage (bronze) under the Affordable Care Act.

Another area where family law attorneys can expect arguments is determining who will get the government subsidies for health insurance that is part of the Act. Starting in 2014, some spouses who are not covered by health insurance through their employers 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 insurance under the Act.

Additionally, payor spouses may become eligible for subsidies for themselves by virtue of the fact that as payors of alimony, they get a tax deduction for the amount of alimony they are paying that 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.

Children

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 26. This is true, 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. In New Jersey, where a payor spouse could be paying alimony and continuing child support for an undergraduate or even post-graduate child, that payor spouse may be looking for federal tax credits and possible contributions for health insurance costs 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.

Conclusion

As family law attorneys, we need to educate ourselves fully 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 that the Act may cause for many of our cases, and be guided accordingly.

Christian V. Badali is a partner with Weber Gallagher Simpson Stapleton Fires & Newby. This article also appeared in The Legal Intelligencer, an ALM sibling publication of this newsletter.