Don't Overlook Health Insurance Costs When Determining Alimony (Spousal Support)
If you are seeking a divorce in North Carolina, it is important to consider health insurance costs when determining the appropriate amount of spousal support. If one spouse depended on the other for health insurance during the marriage and will be unable to afford it after the divorce, the court may require the supporting spouse to continue to provide health care coverage. The divorce settlement might include an alimony payment that enables the dependent spouse to buy health care insurance.
Whether you are seeking alimony or are likely to pay spousal support after your divorce, you may need to consider the cost of health insurance coverage as you negotiate a separation agreement. A divorce lawyer at Charles R. Ullman & Associates can advise you about alimony and health insurance costs and negotiate a settlement that protects your financial interests.
To learn more about ensuring that health care coverage in place now remains available or is equitably replaced as part of a separation and divorce, contact us today. Our family law firm represents clients throughout Raleigh and Wake County.
Rules Governing Health Insurance and Divorce
Most people purchase health insurance through their employer. In many marriages, one spouse is covered through the other spouse’s employer-sponsored health insurance program. In a divorce, a previously covered spouse who does not have health care coverage available through their employer or other means to obtain coverage may seek help with insurance as part of the divorce settlement.
Few employers provide health care coverage to employees’ former spouses. When they do, it is much more expensive than coverage for immediate family members.
A divorcee seeking health care coverage that was previously provided through a spouse’s employer has three likely sources of coverage:
- 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. However, the cost of COBRA health insurance coverage is 100% of the premium, plus a 2% administrative surcharge.
North Carolina has a version of COBRA, which applies to companies that have fewer than 20 employees and offer health care insurance. It requires employers to offer continued coverage for 18 months. But it only applies to hospital, surgical, and major medical insurance. The extension of regular medical, dental, or vision plans would be up to the employer.
Most people will turn to the ACA’s Health Insurance Marketplace to find affordable health care coverage instead of paying for costly COBRA coverage. The ACA Marketplace was designed to provide a range of options to those who don’t have access to health insurance through employer-sponsored plans.
The ACA Marketplace offers an open enrollment period each year, but special enrollment is allowed within 60 days of losing coverage or if you move to a new address but had prior coverage.
For persons age 65 or older, Medicare coverage is available. Premiums for Medicare Part A, which includes hospital stays, skilled nursing facility care, and home health care, are free for those who made Medicare contributions for 10 or more years through payroll taxes. For Medicare Part B, which covers most regular doctor visits, the standard monthly premium for 2021 was $148.50, with a $203 deductible.
Medicare Part C, or Medicare Advantage, is coverage equivalent to or beyond Medicare A and B, which consumers buy from private insurers rather than through the government. Many plans provide benefits that original Medicare patients would otherwise need to purchase via supplemental insurance, such as a Medigap plan. Medicare Part D offers supplemental prescription drug coverage.
Anyone who receives Social Security benefits is required to enroll in Medicare Parts A and B. Parts C and D coverage is optional.
Providing for Health Insurance in Alimony Payments
There is no legal requirement in North Carolina for anyone to provide health care insurance to a former spouse. However, N.C. General Statute 50-13.11 and the North Carolina Child Support Guidelines direct the court to order one parent or the other to obtain and maintain health insurance coverage for a child if it is available at a reasonable cost.
If one spouse has health insurance available through their employer and the other does not, the spouse with insurance coverage available can expect the divorce order to require them to maintain coverage for their child. Depending on which spouse is paying for insurance, the cost may be balanced by adding to or deducting from child support payments or adjusting alimony payments accordingly. If both parents can enroll their child in group insurance plans, then one plan can be designated primary coverage for the child and the other can be secondary.
A divorcing spouse without health insurance available to them through an employer – the dependent spouse – may seek coverage as part of the separation agreement. If they have had insurance coverage prior to separation, they will most likely be granted some assistance if they will be unable to afford insurance on their own after the divorce. Conversely, such a request from a well-paid estranged spouse whose employer offers health care coverage may not be granted.
In the end, the spouse more capable of making health insurance premium payments is likely to be ordered to help the other maintain health care insurance if they had it before. What matters is negotiating to ensure the plan purchased is reasonable in scope and cost. If the dependent spouse has existing health conditions, of course, this topic becomes more complex.
In most cases, the supporting spouse will be required to pay for coverage equivalent to what has been previously maintained. Unfortunately, this cost may increase over time.
Beyond paying insurance premiums, our attorneys would negotiate to have a percentage of the cost of projected co-payments, deductibles, and out-of-pocket medical expenses rolled into monthly support payments. Assuming the dependent spouse will have some level of financial independence after the divorce, the ex-spouse receiving health insurance as part of spousal support may be expected to bear a portion of the costs.
As the dependent spouse approaches the age of 65, either spouse could seek a modification of the divorce order to reduce the supporting spouse’s health care payments when Medicare coverage begins.
How a Raleigh Spousal Support Lawyer Can Help
As your divorce attorneys, Charles R. Ullman & Associates would review your financial situation and the health care coverage you and your spouse hold. We would review your estranged spouse’s financial capabilities. We would discuss with you what your goals are for insuring yourself and/or your spouse. We would then seek a path to meet your goals while protecting you financially.
The easiest transition to make is for there to be no change in health care coverage, and then for the two spouses to negotiate a fair share of premium costs and other out-of-pocket expenses. This can be written into the separation agreement and become part of alimony payments.
When applicable, an agreement may be written to specify that the supporting spouse will pay for health care premiums or a portion of the premiums until the dependent spouse obtains a job with health care benefits.
Typically, the dependent spouse will have to obtain new health care coverage through the ACA Marketplace. It is best for this to be done quickly to avoid a transition period with high COBRA costs.
As your attorneys, our role will typically be to:
- Ensure the plan obtained is at a reasonable cost. Because we regularly consider health insurance costs when determining alimony demands and agreements, we maintain current information and knowledge about the health care insurance market.
- Help negotiate your portion of premium payments as well as co-payments, deductibles, and other out-of-pocket medical expenses.
- Maintain a calendar to notify you when to begin proceedings to have your divorce order modified as the dependent spouse approaches age 65 and Medicare eligibility.
- Advise you about having your divorce order modified if your financial circumstances change and you cannot comply with alimony payment requirements or other facets of your separation agreement.
Contact Our Raleigh Spousal Support Lawyers
Alimony can be a major issue in a divorce, and health care costs can be a major financial burden following divorce. It is crucial that the projected cost of health insurance and each spouse’s financial capability are taken into account if alimony payments are to include the cost of health care insurance and other medical expenses.
A spousal support lawyer at Charles R. Ullman & Associates can ensure your best interests are protected while helping you negotiate a fair and appropriate alimony agreement. Our experienced divorce attorneys understand the issues you are facing and how North Carolina law can be applied to help you. We have helped numerous Wake County residents, including clients from Raleigh and Cary, who were in situations like yours.
Contact us to speak with an experienced North Carolina divorce attorney from our firm today.