All the hullabaloo surrounding the repeal of the Affordable Care Act, better known as Obamacare, raised once again the specter of individuals without access to affordable health insurance. Despite the failure to repeal the ACA, divorcing couples may find their resources further eroded by increased family costs for health insurance. Interestingly, loss of health insurance in divorce often has nothing to do with one spouse’s refusal to provide coverage to their former spouse; more frequently the loss of access is related to the nature of the health insurance carried by the soon-to-be ex-spouse.
Massachusetts’ law provides for continued coverage for divorcing spouses provided the insured party’s employer is not self-insured. Thus although employers who are self-insured, such as MIT and Lowe’s Home Centers, are exempt from providing health insurance coverage to former spouses, many employers in the Commonwealth are not self-insured. Indeed some self- insured companies offer coverage even if not mandated to do so by law.
The message to divorcing couples is clear: Health insurance needs to be given high priority in structuring your divorce agreement. Specifically, you need to consider the following:
If either spouse is providing health insurance through employment, the insured spouse needs to find out if his/her employer is self-insured.
If the answer is “no,” then the employee may extend coverage to the former spouse under the existing policy, after divorce, often without additional cost.
If the employer is self-insured, the employee needs to find out if the employer provides coverage to ex-spouses despite not being under a state mandate to do so.
If the insured spouse’s employer is self-insured and does not cover former spouses, it still pays to ask these questions: Will the employer carry an ex-spouse if ordered by the court to do so? Does the employer carry an HMO alternative coverage that will extend insurance after divorce to a former spouse?Note: If the answer is “yes,” and you have not been covered under the HMO option, you and your spouse might agree to extend the time frame for divorce, in order to change the family’s coverage to the HMO before the divorce is final.
It is important to understand this nuance: The law provides for a continuation of coverage, not a commencement of coverage. As such, it is critical that the soon-to-be ex-spouse is included under the policy before divorce.
Your divorce agreement must include provisions for the extended post-divorce coverage, thus making the continuation of insurance an order of the court.
Let us assume that your employer is not self-insured and that continued coverage for your ex-spouse is available, saving the family a considerable outlay of additional funds.
Are there other questions you and your spouse need to consider? The answer is a resounding “yes.”
How will you handle liability for coverage? Will the family policy be paid by one spouse? And if so, will there be an offset to his or her income in the calculation of support, or will the parties share liability for coverage? Will the shared liability be equal or proportionate to income? Will there be an adjustment for the pre-tax nature of the payment?
Does the employer assess any charge on the ex spouse’s coverage? For example, Harvard University allows coverage for ex spouses, but assesses taxes on the ex-spouse’s coverage as if it is income.
What happens if either spouse remarries?
Is the cost of the children’s coverage considered separately from the cost of the spouse’s?
Is there an end date to providing coverage for an ex-spouse?
What happens if the insured spouse changes employment?
The questions go on and on but remember the key and first questions pertain to access to coverage after divorce. Then the couple needs to explore questions related to responsibility for payment, and how access to/liability for that coverage, will change over time.
At CMDR we approach health insurance, like most other settlement issues, as a problem to be solved through allowing the couple the opportunity to work creatively and productively in reaching agreements that best serve the family. The mediator’s role in facilitating problem solving requires a deep understanding and knowledge of the issues to be tackled as well as the skills inherent in helping couples reach agreement.
Please Call Our Office For Answers To Your Questions – 781.239.1600