Will the Affordable Care Act Complicate your Divorce?

Do you know what health insurance will be available to you after your divorce? If you are going to lose health insurance coverage through your divorce, the time to find out is now.
Knowing the options available to you and your children before dividing your marital estate and before creating a parenting plan can save both you and your soon to be ex money and lots of frustration.

Rip that bandaid off and RIP COBRA. It used to be COBRA was the go-to choice for the newly divorced (especially those with pre-existing conditions), allowing long term decisions for health care to be postponed until the divorce dust had settled. Not anymore. Although the Affordable Care Act (the ACA) has no direct impact on the Consolidated Omnibus Budget Reconciliation Act (COBRA), it does seem to have rendered the ultra-expensive and short term bandaid insurance pretty useless. The up side to the ACA is that COBRA is no longer your only option with preexisting conditions and can be cheaper than COBRA. Also, the ACA offers a long term solution to a long term problem instead of borrowing sorrow from tomorrow. The downside is, no more driving on auto-pilot through divorce. If you weren’t engaged in the finances and insurance details during your marriage - it is officially time to tune in.

Is insurance available through your employer? If you are employed, find out if insurance is available to you through your employer, what it costs, and what the coverage consists of. This will give you a point of comparison to use when reviewing options through the Health Care Marketplace at healthcare.gov. So far, it appears that in most cases, employer provided health insurance still trumps health insurance through the market place.
To market, to market to buy a fat … policy. If you are not currently employed or do not otherwise have access to employer provided health insurance, you can now check out the Health Care Marketplace at healthcare.gov. Even if you have the option of employer provided health insurance, loss of health insurance from a divorce qualifies as a “special enrollment” event, allowing you to enroll for marketplace health insurance. The Marketplace is not for the timid. If you have questions (and you will have questions), ask and keep asking until you get the answers you need. Read the site; call the 800 number; call and speak to agents from every health insurance company in your state. Fortunately (or unfortunately, depending on how you look at it), most states don’t have all that many health insurance companies to choose from so this won’t be nearly as daunting as it sounds.

Get the numbers. Whether employer provided or ACA Marketplace insurance, find out not just how much your monthly premiums and out of pocket expenses will be, but what exactly will be covered. Chances are, not all of your medical needs and the needs of your children will be met. Dental coverage is only required for children and vision is elective at any age. Necessary yet uncovered medical expenses can and should be accounted for when dividing your marital estate.

Special considerations with children. Dividing child tax exemption privileges is particularly common for families with multiple children (i.e. Dad claims child #1 each year and Mom claims child #2 each year). This looks like a fair solution on the surface, but if the insurance obligation falls to one parent in the divorce decree, such a division could create sour grapes down the road. How? Well, let’s say parents divorce with two children and dad is required in the decree to maintain the children’s insurance through his employer. Also in the decree, mom gets to claim child #1 as an exemption every year and dad gets to claim child #2 every year. Fast forward several years, dad loses his employer provided insurance. If he has to purchase health insurance through the marketplace, he’ll have to do so for himself and two children, but only receive tax credits for himself and one child. If mom won’t give up her precious tax deduction for child #1, dad will get saddled with another $100 or more a month in expenses while mom continues to receive a win fall of money. Best solution? Whoever is required to provide health insurance claims all the children as deductions. The take away here is you have to pay attention to the details BEFORE finishing your divorce or pay the price later.

A rose by any other name … Rumor has it that “many” divorcing couples are now opting for legal separations instead of a divorce in order to maintain their current health insurance. While we really have no way of determining how many couples are doing this, it is worth mentioning that some health insurance companies treat a legal separation the same as a divorce and therefore will not continue coverage for a separated spouse. Read = Ask lots of questions before making decisions.

So will the ACA complicate your divorce? No way! Because you aren’t going to let it. You are going to tune in, check your options, ask, ask, ask, do a little planning and move on to the next totally awesome and totally covered next chapter of your life!