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Divorce Mediation Blog

Health Insurance In Section 34 And Alimony Reform - Part 2

Sunday, February 16, 2014

In the last blog entry, we introduced this topic and explored the first sentence of the health insurance portion of MGL, chapter 208, section 34, which we set forth in its entirety. It is apparent that a trial judge must make inquiry into spousal health insurance coverage that is available to an alimony payor . On close reading, it is difficult to understand exactly what the meets and bounds of that inquiry are, but plainly it places a priority on providing coverage. This is unsurprising in the current era of health care reform, despite the fact that the section 34 language preceded both the state and federal the individual mandates.

Here, we consider section 34’s relationship to MGL, chapter 208, sections 53 (eff. 3/1/12), which it also preceded. To do so, we take on the third sentence of section 34’s health insurance provision. It says:

    In no event shall the order for alimony be reduced as a result of the obligor’s cost for health insurance coverage for the spouse.

And, it remains good law. Yet, the new alimony law, states that:

    (e) In setting an initial alimony order, or in modifying an existing order, the court may deviate from duration and amount limits for general term alimony and rehabilitative alimony upon written findings that deviation is necessary. Grounds for deviation may include: …
    (3)whether the payor spouse is providing health insurance and the cost of health insurance for the recipient spouse…

So, which law prevails? The one that says that alimony cannot be reduced by reason of costs for health insurance or the one that states that it may?

Previously, we observed how little the health insurance provision of section 34 has been litigated. This statutory conflict may well change that. As divorce mediators, we help our clients address these matters practically, but as divorce arbitrators, we await, and now need, appellate clarification.

 

Health Insurance in Section 34 And Alimony Reform - Part 1

Wednesday, February 12, 2014

IT NEVER HURTS TO RE-READ A STATUTE!

Divorce lawyers, mediators and arbitrators: when was the last time you actually read M.G.L., chapter, section 34? We read it every once in a while, because some particular need; and we are often surprised when we do.

During a recent lawyer-attended divorce mediation, we were addressing the impact of the wife's loss of medical coverage due to her husband's employer being self-insured, and thus, exempt from the Massachusetts spousal insurance continuation rules. We all knew that section 34 had something to say about it, but none of us were 100% sure of its substance. It was pretty clear that we were at risk of conflating section 34 with the new alimony statute's provisions (eff. 3/1/12) on point.

So, we cracked the "green book" (ours is actually maroon) and scanned the statute until we found this:

    When the court makes an order for alimony on behalf of a spouse, said court shall determine whether the obligor under such order has health insurance or other health coverage available to him through an employer or organization or has health insurance or other health coverage available to him at reasonable cost that may be extended to cover the spouse for whom support is ordered. When said court has determined that the obligor has such insurance or coverage available to him, said court shall include in the support order a requirement that the obligor do one of the following: exercise the option of additional coverage in favor of the spouse, obtain coverage for the spouse, or reimburse the spouse for the cost of health insurance. In no event shall the order for alimony be reduced as a result of the obligor’s cost for health insurance coverage for the spouse.

Over two blog entries, we will break the first and third sentences of this provision down, by clause, beginning with sentence one:

    1) When the court makes an order for alimony on behalf of a spouse,
    2) said court shall determine whether the obligor under such order has health insurance or other health coverage available to him through an employer or organization
    3) or has health insurance or other health coverage available to him
    4) at reasonable cost that may be extended to cover the spouse for whom support is ordered.

The first part is clear: the obligations that follow in clauses 2-4 only arise in conjunction with an alimony order. But, we have to ask the question, why? Where section 34 authorizes a judge to award property in lieu of alimony, is health insurance somehow less of a priority? With the “new” mandatory cut-off of alimony by term or payor retirement age (subject to deviation), and the quasi-mandatory termination or suspension for cohabitation, alimony recipients are plowing new ground in seeking greater property shares to mitigate alimony limits. If they seek extra property in lieu of alimony, are they then foregoing valuable medical insurance benefits?

Second, in light of Massachusetts and federal health insurance reform, what does "health insurance or other health coverage available to him through an employer or organization" mean? (Don't get caught up in the legislative gender choice!). Since first reference is made to "employer" coverage, does this exclude the self-employed? If so, are sole proprietors, partners and LLC shareholders exempt?

Are health care exchanges "organizations"? If so, is individual coverage available to a former spouse via private coverage "available" to the alimony payor? If it is deemed "available" to the payee only because only he or she can contract for it, does this mean that the court lacks the funding authority of clause 4? Should it? And, what is the difference between "health insurance" and "health coverage" anyway?

Is there any place in this scheme for comparing the alimony recipient's coverage through his or her own sources at all? Or comparative costs? From among personal employment, self-employment and private coverage, there may be no need for the funding section of clause 4, yet the language throughout this part of section 34 appears to be mandatory. Does this conflict with the "needs" limitation to alimony?

Finally, what really is "reasonable cost"? Especially now, health insurance is judged on a matrix of costs and benefits, together denominating value. ACA and MA law both encourage a sophisticated approach to evaluating coverage by consumers. Is reasonableness to be judged by catastrophic coverage standards, by comprehensiveness, by co-pays, by deductibles? Is reasonableness somehow related to the appellate definition of "need", i.e., comparability the coverage enjoyed during the marriage. Is it bound by the payor’s ability to pay?

As divorce mediators our job is to know what the law says, give information about it and then plumb the practical solutions to the problem of health care and support. As divorce arbitrators, we have to be more concerned with, just what does this provision mean? It is surprising how little litigation this interesting and complex part of section 34 has spawned over the years. Our next blog entry highlights an area that may just change all of that.

 

Dependency Exemptions After Divorce: A Good Reminder From the Appeals Court

Wednesday, June 12, 2013

In a recent case, the Massachusetts Appeals Court revisited the federal tax code’s provisions on the allocation of child dependency exemptions between divorced parents. In upholding a probate judge’s decision to award a child’s exemption to the non-custodial but child support-paying father, over the mother’s objection, the appellate court reviewed current tax regulations and concluded that state courts continue to have the power to direct the exemptions as deemed appropriate.

But, but that since the court’s judgment alone is insufficient to satisfy the IRS’ requirement that the custodial parent “release” the exemption, the appellate opinion clarified that the trial court must also specifically order the custodial parent to sign [and presumably deliver] an IRS Form 8332 release to make the assignment effective. The failure to sign or deliver the form, then, becomes the state court enforcement (contempt) trigger.

At first glance, we wondered: “why did they bother?” Most divorce lawyers are familiar with Form 8332 and its effect. Then, we asked why she bothered. The mother appeared to have no financial stake in the outcome of her own appeal (for which she presumably paid legal fees), since her income was too low to have the exemption save her any tax dollars, even if she did wrest the exemption back from the father. Perhaps, the associated federal tax credits made the exercise worthwhile, or maybe her motivations were non-financial.

Then, on second thought, we realized that the case is a useful reminder to all family law drafters. This includes Massachusetts divorce mediators who write separation agreements, lawyers who draft proposed judgments for judges and suggested awards for divorce arbitrators, and for arbitrators themselves, that best practice dictates that dependency exemption provisions make reference to Form 8332 and place an affirmative obligation on the releasing party to sign and deliver. Otherwise, a client who does have a discernible stake in the having the dependency exemption just may not get it.

 



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