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Divorce Mediation Blog

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.

 

Post-Divorce Health Insurance in Massachusetts: Time to Close the Self-Insurance Loophole?

Wednesday, June 05, 2013

Many years after Massachusetts created significant rights for divorcing families beyond the federal "COBRA" benefits for coverage of ex-spouses, an important loophole remains that undermines objectives of those statutes. In this entry, we will consider one of the exclusion of "self-insured" company medical plans from the scope of these enumerated rights.

In simple terms, our law states that medical insurers cannot exclude unmarried ex-spouses from an employee's family plan coverage post-divorce; and even if the employee-spouse remarries, the insurer must extend "rider" coverage to the unmarried former husband or wife. The insurance carrier may charge for rider coverage, but it may not surcharge. These benefits significantly exceed the so-called "COBRA” coverage provided by federal statute (36 months of maximum coverage at surcharged rates).

Yet, these benefits are not available to everyone with employment medical coverage in the Commonwealth. That is because these statutes do not apply to so-called “self-insured” medical plans (where the employer assumes the risks of employee medical costs, rather than an insurer), leaving their divorcing employees and their families to the lesser federal COBRA benefits. (Worse still, as we will discuss in a later entry, same sex divorcees have no protection at all, since they do not qualify for COBRA at this time.)

The reason for this unfortunate loophole is that these laws are insurance-based. They fall within the insurance statutes, regulating that industry; and the legislature did not extend these substantive family law rights beyond the insurance statutes. Further, what looks like an insurance plan may not be one. Self-insurers often hire insurance companies to serve as “administrators” of the plan, while the risk of loss remains the employer’s. Thus, while the employee may have what looks like an insurer’s coverage card, the law does not apply.

Meanwhile, since the 2006 Health Reform law here, the policy of the Commonwealth is that all residents have medical insurance. Next year, that will be effective federal law, too. The self-insured loophole is certainly inconsistent with these state and federal policies. Moreover, is it not unreasonable to disproportionately burden divorced persons who are unlucky enough to have a self-insured employer? Under current law, they can obtain private coverage, but it is routinely more expensive and/or less comprehensive than group employment coverage.

If the intent of the insurance laws and health coverage reform is to assist divided families, and to protect taxpayers from funding the insurable medical expenses of split dependents, is there any sustainable policy basis for maintaining this gap in the law? As divorce mediators, we grapple with the impact of the self-insured loophole.

Isn't a legislative fix long overdue?

 

Musing On Alimony: Health Coverage Contradiction

Wednesday, May 29, 2013

The inconsistencies generated by Massachusetts’ alimony "reform" are not only internal. The pre-existing alimony and equitable property division statute, known as "Section 34", provides that if one of the parties has access to health care coverage at reasonable cost, it shall provided for the benefit of the other party. Further, the law cautions, the cost to the covered party, shall not cause a reduction in the sum of alimony paid. This statute was neither amended nor repealed with the onset of the new alimony statute on March 1, 2012.

Enter the new alimony law. Much of it is devoted to the required setting of durational payment limits and regulating maximum sums to be paid, as a percentage of the parties' comparative gross incomes. However, the statute also contains provisions that give judges discretion to "deviate" from these provisions, based upon a consideration of enumerated factors. One of those factors that may justify reduced alimony rights is the cost of medical insurance. In other words, the cost of health coverage can reduce alimony paid.

Will the legislature reconcile this conflict?

As divorce mediators, we can only explain that the conflict exists and let the parties determine for themselves which law to follow and which to disregard.

 



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