It is crucial to consider health insurance costs when calculating spousal support after a divorce. During the marriage, if one spouse relied on the other for health insurance, the court may order the supporting spouse to continue to provide health insurance after the divorce. An alimony payment may be included in the divorce settlement to enable the dependent spouse to purchase health insurance.
As such, one spouse may be required to pay the medical insurance coverage of the other spouse as part of a spousal support award. Courts may also increase the amount of alimony so that the supported spouse will have the ability to purchase their own medical insurance.
Rules Regarding Health Insurance and Alimony
Generally, most states treat the issue of health insurance in a similar way to the rules for alimony. If the supported spouse cannot purchase independent insurance or obtain a job that provides medical insurance, the other spouse will typically be responsible for the coverage. The issue of alimony may arise because alimony, by nature, is designed to assist the supported spouse in maintaining a lifestyle after the divorce.
If the health insurance was paid for out-of-pocket or through an employer, the court considers the payer spouse to have provided the other spouse with the health insurance, and the loss of coverage after the divorce is compared to a loss of income. Medical insurance is a complicated issue because the cost of obtaining coverage is prohibitive for recipients who are not covered by a group plan. Under federal law, your employer-sponsored group health insurance plan may be required to continue providing group insurance rates to the supported spouse for up to three years after the marriage ends.
When a divorcee seeks health care coverage that was previously provided through a spouse’s employer, they will likely find three options:
- COBRA coverage extension, which is temporary
- Affordable Care Act (ACA, “Obamacare”) coverage
- Medicare, which has an age requirement
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), if an individual works for a company that has 20 or more employees and provides health care insurance, the individual’s former spouse is eligible under federal law to apply for continued insurance coverage for up to 36 months. The cost of COBRA health insurance coverage, however, is 100% of the premium, plus 2% administrative fees.
Some states have a version of COBRA that applies to companies with fewer than 20 employees who offer health insurance. Employers are required to continue coverage for 18 months. This requirement only applies to hospital, surgical, and major medical insurance. The employer can extend regular medical, dental, and vision plans.
Instead of paying for costly COBRA coverage, most people will turn to the ACA’s Health Insurance Marketplace to find affordable health coverage. It was designed to provide a range of options to those without access to health insurance through their employers.
The ACA Marketplace offers an annual open enrollment period, but special enrollment is allowed within 60 days of losing coverage or if you move but have prior coverage.
Medicare is available to those 65 years of age and older. Medicare Part A, which covers hospital stays, nursing home care, and home health care, is free to those who have contributed to Medicare through payroll taxes for ten years or more. Medicare Part B, which covers the majority of regular doctor visits, had a monthly premium of $148.50 for 2021, with a deductible of $203.
Medicare Part C, or Medicare Advantage, provides coverage equivalent to or beyond Medicare Parts A and B and is purchased through private insurers instead of the government. Medicare Advantage plans typically offer benefits patients would otherwise need to purchase through supplemental insurance, such as Medigap. Medicare Part D provides prescription drug coverage.
Those who receive Social Security benefits must enroll in Medicare Parts A and B. Medicare Parts C and D are optional.
Obligation to Provide Health Insurance in Alimony
In many cases, the supported spouse may eventually be able to provide medical insurance for themselves, but not immediately. This is why the health plans mentioned above have three-year provisions because it gives the supported spouse time to find health insurance through another source before the group plan coverage expires. Alimony agreements may also contain time limits. In some cases, however, alimony-based health insurance coverage may be indefinite if the marriage is long and the supported spouse is unlikely ever to be able to pay their own insurance.
In cases where one spouse has health insurance available through their employer, but the other does not, the spouse with available coverage can expect the divorce order to require them to maintain coverage for their child. If one spouse pays for insurance, the cost may be balanced by adding or deducting from child support or adjusting alimony accordingly. One plan can be designated primary coverage for the child, and the other can be secondary coverage if both parents can enroll their child in group insurance plans.
Divorcing spouses without health insurance through their employer – the dependent spouse – may seek coverage under a separation agreement. They will most likely be granted some assistance if they cannot afford insurance on their own after the divorce if they had insurance before the separation. Such a request from a well-paid estranged spouse whose employer provides health insurance may not be granted.
Ultimately, the spouse who can make health insurance premium payments is likely to be ordered to help the other maintain health insurance if they had it before. It is important to negotiate so that the plan purchased is reasonable in scope and cost. Obviously, this topic becomes more complicated if the dependent spouse has preexisting health conditions.
In most cases, the supporting spouse will be required to maintain coverage equivalent to what was previously maintained. Unfortunately, this cost may rise over time.
Beyond paying insurance premiums, our attorneys will negotiate to have a portion of projected co-payments, deductibles, and out-of-pocket medical expenses rolled into the monthly support payment. Based on the assumption that the dependent spouse will be financially independent after the divorce, the ex-spouse receiving health insurance may be expected to bear some of the costs.
When the dependent spouse reaches age 65, either spouse could modify the divorce order to lower the supporting spouse’s health care payments when Medicare coverage begins.
In any case, medical insurance is an important consideration if you’re contemplating divorce. During the negotiation of your alimony agreement, ensure that your right to healthcare coverage is considered.
What If the Insured Spouse’s Employer Sponsored the Insurance Plan?
Many employers will agree to pay the premiums for an insured spouse’s health insurance plan as an incentive to keep him on the payroll. Under such plans, the insured spouse’s wife is typically a beneficiary under the policy (similar to beneficiaries under a life insurance policy), allowing her to receive the plan’s benefits as well.
After a divorce, since they will no longer be a beneficiary, most courts require the insurance company to continue providing benefits at the same rates as their spouse’s plan for up to three years.
Do I Need An Attorney If I Want To Include Medical Insurance as Part Of My Spousal Support?
Whenever spousal support arrangements are at issue, you should consult with a family lawyer. A competent attorney will not only inform you of your rights but will also preserve any possible legal remedies you may have. Additionally, they will advise you which experts may be required to determine the proper amount of spousal support you should receive.
