This post is from Tracy Stewart, CPA, PFS, CFF, CFP, CDFA, a College Station and Houston-based financial planner and Collaborative Law Institute of Texas board member.
In many households, health insurance is covered with a policy that is tied to one of the spouses. If the other spouse is a homemaker, or employed where no health insurance is provided, that spouse needs to find replacement health insurance. Prior to the Patient Protection and Affordable Care Act (the Healthcare Reform Bill), the only health insurance options in this situation were private policies and the policies made possible by the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA.
COBRA coverage for former spouses provides continuation of health insurance for up to 36 months. COBRA coverage is more expensive than employer-subsidized premiums, but at least it is continuation of existing coverage. One of the risks of COBRA is the chance that this spouse will develop a health issue during those 36 months. If that happened, the health issues could be considered a pre-existing condition when applying for a private policy. Many people don’t realize that even with the Healthcare Reform Bill, COBRA coverage may not be an option for some couples.
The President and CEO of the National Center for Policy Analysis, John C. Goodman, recently noted in a Wall Street Journal editorial that employer-sponsored health insurance may be a thing of the past, when employers calculate how much they can save by dropping their employer-provided insurance and, instead, paying the fine of $2,000 per employee. He notes, “[E]mployers are quickly discovering that it may be cheaper to pay fines to the government than to insure workers.” If that happens, employees would have to decide whether to buy the government-subsidized health insurance in the new health insurance exchange, to purchase private insurance, or to pay a penalty on their tax return.
During the litigated cases in which I have consulted, there was minimal discussion of how spouses would get health insurance coverage. So minimal, in fact, that the only thing said was “Go get yourself insurance” or “Just sign up for COBRA.” There was no concern over the long-term arrangements for health insurance coverage.
In collaborative cases, each spouse’s need for long-term health insurance coverage is taken seriously by the entire collaborative team. I have been on cases where the final decisions were postponed while the non-insured spouse made definitive arrangements to obtain the right health insurance coverage without any time lapse. This is just one of many important issues showing how collaborative law provides the flexibility and innovation to allow for individualized solutions.