Obamacare, Divorce and Health Insurance Subsidies

Posted by Steven D. Eversole | Feb 07, 2014 | 0 Comments

As the Affordable Care Act (ACA), also known as “Obamacare” begins to take effect, families will be forced to weigh their health care options and decisions in accordance with the new law. Whether you are single, married, or considering divorce, it is important to have a clear understanding of how your status may impact your access to health care. In the event of a divorce, you will lose access to benefits through your spouse. Then again, new reportsindicate that divorce may boost health insurance subsidies after divorce, giving you additional options when purchasing health care.

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Health care is a complicated issue for anyone, especially as ACA unfolds in Alabama and nationwide. Our Birmingham divorce attorneysunderstand that our clients face difficult financial situations before, during and after divorce. Having a clear understanding of your rights and obligations can help you protect yourself in the event of divorce. We are dedicated to protecting our individual clients and staying abreast of state and federal legal issues that may impact your rights.

According to an article in the Atlantic Monthly, a Brooklyn couple was considering divorce to save money on health insurance. Under the Affordable Care Act insurance exchanges, the couple realized that they would both qualify for subsidies if they were divorced. Both were either running out or could not afford COBRA from their former employer plans and were desperately trying to make it as freelancers in New York City. Together their income was $62,040, more than 400% of the federal poverty level, meaning that they did not qualify for subsides under Obamacare.

After doing initial research, the couple learned that if they divorced, they could each earn up to $45,960 ($92,920 total) and qualify for subsidies through the New York exchanges. Comparatively speaking, New York has more expensive insurance and subsidy eligibility is based on poverty level, family size and price of state plans. With their current income they would not qualify for any subsidies when buying insurance.

The couple learned that by divorcing, or applying as individuals (after divorce) with the same income, they could collect nearly $4,000 in subsidies towards the purchase of a plan. Marriage penalties may apply in health care as well as when paying taxes. When facing divorce it is important to consult with a financial adviser who can help you assess your tax rights and liabilities after divorce. While every case is unique, it may be also the case that individuals who do not currently qualify for subsidies while married in Alabama, may also qualify for Obamacare subsidies after divorce.

Analysts predict that part of the reason for this gap is that married people are not as likely to enter the system. Only 15.4 percent of married people were uninsured in 2012, according to the Kaiser Family Foundation. Individuals who are single or divorced are much more likely to be without insurance. For those considering divorce, finding insurance may be a concern. However, even if you did not qualify for subsidies while married, you may be able to qualify for additional support after your divorce.

If you are seeking a divorce in Birmingham, contact Family Law Attorney Steven Eversole at (866) 831-5292.

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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