Most couples intend to stay together for ever. That doesn't happen 40 to 50 percent of the time for married couples in America. For those couples, determining child custody and splitting up financial assets are on the top of the list of things to figure out.
Health insurance, particularly under the Affordable Care Act (ACA) -- or Obamacare -- should not be far behind.
Divorcing couples would head into a problem if both parties were on one employer-sponsored insurance play. Most employers don't subsidize the health insurance of an ex-spouse, so the ex who is no longer covered must get new health coverage. If that ex works for an employer who offers insurance coverage, the spouse can just sign up at work.
If not, the ex must find coverage somewhere, and that has not always been easy.
Health care reform brings solutions and here is how Obamacare may affect someone going through a divorce.
How Obamacare Can Affect a Divorce
Chronic Illness Coverage
Health insurance companies could deny coverage, in the past, to people with preexisting conditions. If a person with a chronic, preexisting, illness, got a divorce, they might have found they were helpless to get coverage on their own without their ex's employer plan. Think chink in the law was one of the reasons that people got a legal separation instead of divorce.
The Affordable Care Act makes it unlawful to deny coverage based on pre-existing conditions. Fewer couples will have to opt for separation over divorce.
COBRA Alternative
Previously, divorcees who were no longer eligible under their ex's company sponsored insurance plan have been able to keep the same level of benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). However, anyone choosing coverage under COBRA would have to pick up the tab themselves, a proposition that could be costly.
As there's a limited general-enrollment plan under health care exchanges, a person can apply at other times of the year during special enrollment periods if they've had a "qualifying life event" like divorce, matrimony or the birth of a child.
Money Saved on Health Care Expenses
One of the frequently repeated criticisms about the ACA has been the additional costs it puts on marriage. Under Obamacare, middle and lower-income citizens may qualify for subsidies if they meet certain conditions. Generally, an individual earning up to $45,960 and a family of two with a combined pay up to $62,040 will qualify for subsidies. The burden of cost though is heavier on a two-person family than on two single individuals.
If each party makes $40,000, a joint income of $80,000 would keep them from qualifying for a subsidy -- while married. Each of them would be eligible for a subsidy if they divorced, so there is a financial benefit to getting a divorce.
Some observers scoff at the idea of any couple using the ability to qualify for subsidies as the sole reason to split.
Possible Saving on Alimony
Often, in a divorce, the spouse who was the breadwinner is required to pay alimony to help the ex with costs. The value of the receiving spouse's monthly obligations determines how much alimony is awarded by the courts. The more money the acquiring spouse needs to live, the higher the support might be.
If the receiving spouse can qualify for subsidies under the ACA and pay less for health insurance, the spouse required to pay alimony can make the argument that support should be lower.
More Divorce Because of Obamacare?
Numerous pairs who would otherwise split stay together because they clearly can't afford to survive alone. Sometimes this arrangement is fueled by the cost of health care.
Experts are pointing to a study that says the ACA may eliminate this impediment to divorce for concerned couples. An uptick in divorce could be an unintentional side effect of health care reformation. From a family law view, it's not only plausible -- but expected.
Losing health insurance after divorce is an especially common dilemma for females. As reported in a University of Michigan study in 2012, over 110,000 women forfeit their coverage every year following divorce. Many of these women do not hold jobs outside the house. Of the women with outside work, many serve employers who do not provide coverage. Even when qualified for COBRA under their ex-spouse's plan, often the premiums are not affordable.
The study says that 25% of divorced women, who are dropped from their ex's employer-based health plan, are still uninsured six months later.
As a result, law attorneys are paying attention to sliding scale subsidies offered through ACA state marketplaces.Whether the divorce rate spikes or not, the ACA will complicate the financial aspects of divorce with some being challenged and others benefiting.
Anyone considering divorce in the near future should play it smart. Consultation with a family law attorney knowledgeable of these issues, and specializing in the financial impact of divorce, is mandated.
An investment in professional, experienced advice today could preserve access to health care, ensure fairness and save money in the long term.