What You Need To Know About the Affordable Care Act
One of the many critical issues for divorcing couples is health care coverage. Prior to 2014, many clients were left without affordable health care once the divorce was final. In some cases, couples agreed to a Judgment of Separate Maintenance to remain married and allow a spouse to continue with family health coverage. Other clients were forced to extend the divorce as long as possible, especially with pre-existing health issues. With a past client, a Judge dismissed the case only two months past the filing date when we requested 30 more days before entering a signed Judgment to allow unexpected medical treatment while still covered by family insurance. The case was later reinstated after treatments were completed to finalize the divorce but the client suffered additional stress from being at the mercy of the ex-spouse changing employment and temporary property restraining orders were terminated. The client had to remain married to qualify for health coverage because of the cost of COBRA coverage and the client's pre-existing condition limited insurance options at that time.
Previously, many clients had to consider COBRA coverage through their ex-spouse's insurance at higher monthly rates. COBRA is available only if a former spouse's employer has at least 20 or more employees. However, COBRA is limited to 36 months and the monthly premium typically costs 102% of the group rate without any discount. Clients that later developed health issues while on COBRA were further limited with pre-existing issues when again losing coverage after 36 months. Clients now have additional medical coverage options with the Affordable Care Act (ACA). The ACA prevents insurance companies from rejecting coverage for pre-existing conditions.
The ACA website, www.healthcare.gov, refers to "Marketplace coverage" for health insurance with limited discounts and reduced rates based on income, family size and age. Although ACA extends credits for discounted health care for qualifying clients; there are critical restrictions and income limits that must be taken into consideration for divorcing clients. Once the divorce is final, the client must sign up for health insurance within 60 days or they will not qualify for ACA discounted insurance until the next open enrollment period. If the client does not have health insurance, they will have to pay a penalty with certain exceptions once taxes are filed.
Some divorcing couples may achieve a financial gain with reduced health care costs because the ACA limits combined income for 2 at $62,040 compared to 1 person at $45,960 for lower rates ($45,960 x 2 = $91,920 if single, a difference of $29,880 from $62,040 if married).
The following chart may be used as a reference for settlement agreements and as a handout for clients. It is based on information from www.healthcare.gov and is subject to change.
Affordable Care Act & Health Insurance Summary Chart
Important Dates for Open Enrollment
March 31, 2014: 2014 Open Enrollment ends
November 15, 2014: Proposed date for 2015 Open Enrollment to start
February 15, 2015: Proposed date for 2015 Open Enrollment to end
Qualifying Life Events for Special Enrollment Period Coverage
60 day limit after specific life events, i.e. divorce, marriage, childbirth/adoption or loss of other health coverage.
Job-based plans generally allow special enrollment periods of 30 days
General Estimate for reduced rates
A single person can make up to $45,960 or $94,200 for a family of 4
Plans types include: Bronze, Silver, Gold and Platinum, typically the higher the monthly premium, the lower the annual deductible.
Income higher than 400% above poverty level will not qualify for subsidized rates.
"There is a chart to determine income eligibility and household size at
www.healthcare.gov/how-can-i-save-money-on-marketplace-coverage
Age Groups
"Under 30 or hardship exemptions qualify for lower monthly catastrophic health plans with protection against very high medical costs, i.e. a single 29 year old living in Wayne earning $25,000 per year may pay $96/month with a $6,300/yr deductible
30 – 64 should review the ACA website for rates, and a helpful rate tool available at
http://kff.org/interactive/subsidy-calculator/ along with COBRA & private rate options
65+ refer to Medicare health plans that are separate from ACA Marketplace plans
Fine or Penalty (and still required to pay 100% of medical costs)
1% of yearly household income or $95 per person ($47.50/child) with an increase each year: 2% in 2015 or $325 a person, 2.5% in 2016 or $695 a person.
Exemptions: homeless, evicted in past 6 months or facing foreclosure, received shut-off notice from utility company, experienced domestic violence, recently experienced death of close family member, income below $10,150 a year, uninsured less than 3 months, member of a federally recognized tribe, recognized religious sect with objections to insurance, incarceration in some cases, damage to property from fire/flood or other human caused disaster, filed for bankruptcy in last 6 months, high medical expenses in past 24 months, expenses from aging family member, and a few other specifics.
The fine is collected once tax returns are filed or deducted from future refunds, there are no liens, levies or criminal penalties if the fine is not paid.
If income is too high to qualify for lower costs, there are four ways to buy a health plan
Directly through a private insurance company
Insurance agent or broker -agents typically offer single health insurance company coverage while brokers offer plans from multiple insurance companies for comparison
Online health insurance seller
ACA Health Insurance Marketplace (even if you don't qualify for lower costs)
Minimum required coverage options
Marketplace plans, or any individual insurance, employer plan (including COBRA), Medicare, Medicaid, Peace Corp Plan or college student plans
Signing up for ACA
To apply, complete the Marketplace applicaion at www.healthcare.gov
For local assistance, go to localhelp.healthcare.gov to search by zip code
Children's Health Insurance Program (CHIP) / Medicaid
As of April 2014, Michigan Medicaid program is expanding coverage for households with incomes up to 138% of the federal poverty level, i.e. one person earns up to $16,105 a year or $32,913 annually for a family of 4.
Qualified enrollment is permitted anytime and coverage begins immediately
To apply, fill out the Marketplace application at www.healthcare.gov for automatic referral to the state agency for assistance completing enrollment.
For enrollment and general information regarding the Affordable Care Act, please visit www.healthcare.gov, or call 1-800-318-2596 for
the Help Center.