Some unhappy couples stay together for the sake of the kids. Others do it because of religious beliefs or because they can't afford to live apart. And some married couples have put off divorce to avoid one spouse being removed from the other spouse's employer-sponsored health insurance.
With the advent of the Affordable Care Act (ACA), commonly known as Obamacare, the last item on that list might be changing. The ACA has provided couples with a new option that may affect their divorce in ways they didn't expect. Here are some ways the Affordable Care Act might have an impact on your divorce.
Prior to the ACA, a person who had been covered under an ex-spouse's employer-sponsored health insurance could maintain that coverage for a period of time through the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA coverage tended to be expensive, though, and the person requiring continued coverage had to bear the cost. For a stay-at-home spouse who may have been unemployed for several years, the expense of COBRA coverage might have been too much to bear. Then, too, there was the issue of what to do when the allotted period of COBRA coverage expired.
After the ACA, ex-spouses have the option of seeking insurance through the health insurance exchanges in their state. Not only does this expand options for coverage, but eligibility for coverage won't expire and insurance may be less expensive.
In the past, people with serious or chronic health conditions may have been less likely to file for divorce, or more financially devastated if their spouse filed. It was at best prohibitively expensive, and at worst impossible, to find new health insurance coverage with a pre-existing health condition.
The ACA has changed that. The law prohibits health insurers from refusing coverage, or charging more for it, because someone has a pre-existing condition. Many people don't realize that the law also prevents insurance companies for charging women more than men.
What this means is that if you were putting off a divorce because you were worried you wouldn't qualify for insurance, you can go ahead and file if you want to.
As most people are aware, subsidies to purchase health insurance are offered to those who meet income qualifications. However, the way these subsidies are structured are considered by some to penalize those who are married. A single person making $47,080 as of this writing qualifies for a subsidy, as does a household of two with an income of $63,720. That means that if you and your spouse were each earning $35,000 per year as single people living apart, you would both be eligible for a subsidy, but as a married couple in the same household with the same earnings, you would not.
We haven't heard of any couple who was willing to divorce for the sake of receiving a health insurance subsidy, but if you were already considering divorce, this is one financial factor that could nudge you toward filing.
The ACA may also, surprisingly, help spouses who are higher-earning save money on spousal maintenance. Since maintenance is based in part on the receiving spouse's level of need, if a divorced spouse winds up paying less for health insurance through the ACA, and qualifies for a subsidy to boot, the spouse paying maintenance may be able to argue for a lower payment.
To learn more about how the ACA could affect your divorce, contact us for a consultation. To read about other financial issues in divorce, we invite you to check out these articles: