By Donald A. Hayes, Attorney at Law
Losing health insurance following divorce is a significant problem for women. Many women do not hold employment outside the home, or work for employers who do not provide insurance. It is a fact that many couples who would like to get divorced simply stay together because of fear they will lose their spouse’s health insurance coverage and may not be able to get their own either because they have pre-existing conditions or simply cannot afford it on their own. Typically those people sought a legal separation rather than a divorce so they could stay on the spouse’s coverage. It worked until the spouse carrying the insurance wanted to get remarried, then the problem re-emerged anew.
Starting January 1, 2014, the Affordable Care Act “ ACA” mandates that no insurance carrier can refuse to insure someone due to pre-existing conditions; and generally speaking, the insurance company cannot charge more for the insurance due to the pre-existing condition.
Could successful implementation of the Affordable Care Act (ACA) remove this barrier to divorce for affected couples, making an increase in divorce an unintended side effect of healthcare reform? From a family law perspective it’s not only possible but also likely. Whether or not the divorce rate spikes in the aftermath of the ACA, without a doubt the ACA will complicate the financial aspects of divorce, benefitting some and challenging others.
Family law attorneys will need to pay attention to sliding-scale subsidies offered through the state marketplaces complicating the calculation of taxable income and support. Households qualify for subsidies if members make up to 400 percent of the federal poverty level, which is $45,960 for a single person. A spouse who might normally not qualify for a subsidy, may now find that since paying alimony is tax deductible, that by paying alimony they could become eligible for a subsidy since alimony is tax deductible. The other side of the coin: since support is counted as taxable income by the recipient, it could make him or her ineligible for subsidies.
The Medicaid program will expand its income eligibility requirement in many states under the ACA.. It could become available to some divorced people who wouldn’t have qualified before at no cost at all.