The divorce rate in America is estimated to be at 40 to 50 percent. For those couples going through the divorce process, among the most pressing matters to sort out are child custody agreements and division of financial assets. Health insurance, especially under the Affordable Care Act (aka “Obamacare”), is also among the important issues for families to address as part of the divorce process.
In the event both parties to a divorce are on one person’s employer-provided insurance plan, problems may arise. This is because most employers do not subsidize the health insurance of a former spouse-- meaning the ex who was once covered under a plan must seek new health care coverage entirely. If the former spouse is employed, and their own employer provides healthcare coverage, the former spouse may sign up there. If this is not the case, seeking independent healthcare coverage can become a process for the former spouse to sort out. Obamacare however, has brought reforms to healthcare in the way of solutions to this very process.
First, Obamacare cured the problem of health insurance companies being able to deny coverage to those with preexisting or chronic conditions. Couples with a spouse who fit this description may have once sought legal separation instead of divorce (in order to keep the chronically ill/preconditioned spouse on the ex’s employer’s plan). Now, The Affordable Care Act (ACA) prohibits insurance companies from denying coverage based on pre-existing conditions. Thus, fewer couples will have to opt for legal separation versus divorce for this reason.
Obamacare has also created somewhat of a financial benefit to getting divorced in that each party (depending on their income level) may become eligible for a subsidy that they would not otherwise qualify for (due to combined marital incomes). Under Obamacare, lower and middle-income citizens may be able to qualify for subsidies if they meet certain guidelines. For example, if each spouse makes around $40,000 a year, a combined income of $80,000 prevents the married couple and their family from qualifying for a subsidy. Yet, each spouse would be eligible for a subsidy if they divorced. This change could translate into possible savings on alimony payments for the bread-winning spouse (if the receiving spouse qualifies for subsidies and now has a lower health insurance monthly payment, the payor required to pay alimony may argue that support payment should be lower).
Changes brought from Obamacare mean that those couples who stay together merely because they cannot afford to live apart may find some relief—at least in the cost of health care.
Any family considering divorce should become as informed and well-advised as possible. Consultation with a family law attorney with knowledge and experience on these issues is a wise first step. Investing in professional, sound advice from the get-go could preserve access to health care and save money for your family in the long run.
Please contact the domestic team at Feldmann Nagel Cantafio & Song PLLC for assistance with all of your family’s legal needs.