By Elizabeth Cox
Marriage is arguably the most comprehensive and complex financial planning tool available. With the words “I do” a couple is granted powers to transfer assets between each other without tax consequences, contribute to spousal IRAs (within IRS limits), and generally gain health insurance coverage through a spouse’s employer. In an America that hails the merits of individualism, marriage is socialism for a party of two.
Consequently, divorce can often lead to far more financial upheaval than simply the results of dividing assets, liabilities, income and expenses. Budgets of dependent or self/part-time employed spouses often have to include painfully expensive allowances for individual health care policies or a steep increase in insurance premiums in an ex-spouse’s employer plan under COBRA (Consolidated Business Reconciliation Act). If a dependent spouse has a pre-existing medical condition, divorce can have devastating consequences. In fact, according to a 2008 New York Times article, one in ten couples cite health insurance as a primary reason they get married to begin with. It is also a reason many couples stay married even when perhaps they would prefer to divorce.
But with the passage of the Affordable Care Act, aka Obamacare, the need to marry for health care coverage and the divorce health care penalty are expected to diminish. In short, the Affordable Care Act seeks to provide quality, affordable health care for all Americans through establishing American Health Benefit Exchanges and prohibiting pre-existing condition exclusions.
While those who receive health insurance coverage through their employers can
continue doing so, individuals without access to employer plans can participate
in Exchanges to be established by each state by 2014. Those in lower income brackets would qualify for refundable tax credits to help pay for the cost of participating in these Exchanges. There are a host of preventive care services that would be available through these Exchanges without any co-pays. The consequence of many of these measures is that individuals without access to employer plans will have more affordable health care options than they do
currently and there will no longer be discrimination against those with pre-existing conditions, including being female. That’s right. In many states including my home state of Connecticut, insurance companies consider being female a pre-existing condition and charge higher premiums accordingly!
The conservative columnist, Ann Coulter, recently appeared on Fox News and said that single women look to the government to be their husbands. While she was referring to government services women utilize for their children ike pre-natal care and pre-school care, her argument could extend to Obamacare. By 2014, Insurance marriages could become a thing of the past.
Elizabeth Cox is President of Cox Financial Services, LLC is a Fee-Only financial planning and Registered Investment Advisory firm headquartered in Westport, CT. She specializes in divorce financial planning, retirement planning, and tax planning and preparation. Ms. Cox is a member of the Garrett Planning Network and the National Association of Personal Financial Advisors (NAPFA).
"Divorce Information Now" is an ongoing column where readers can submit questions about divorce in the comment stream and we will respond in subsequent blogs. Find us at http://www.divorceinformationnow.com/ "