In 2009, prior to the enactment of the Patient Protection and Affordable Care Act, also known as Obamacare, the New York Times told the heart-wrenching story of a woman and her husband with early onset dementia. The focus of the story was not the relationship between the two, although she still loved him dearly. Instead it centered on the mounting medical bills related to the Husband’s care, and the options available to the Wife, of which there were two: destitution or divorce.
Prior to Obamacare, many states put a ceiling on the assets a married couple could hold before they would qualify for Medicaid coverage. Under the first option, destitution, the Wife would be required to spend down all of their savings, including her own 401(k), so that eventually her Husband would qualify for Medicaid. This option would make for a bleak retirement for the Wife with neither her Husband nor her savings. Under the second option however, Wife could divorce Husband and therefore shield her assets while her Husband qualified for Medicaid. In the end, she chose divorce.
Under Obamacare, the Medicaid expansion component removed asset limits and extended Medicaid coverage to adults under 65 with incomes up to 138% of the poverty line. As long as the sick spouse had low income, he or she could qualify for Medicaid and the other spouse could hold onto their retirement savings. So did this new option have any effect on the divorce rates among baby boomers? Maybe. A Supreme Court decision in 2014 made it optional for states to expand Medicaid in this way, therefore a recent study compared 20 states that opted for the expansion against 20 states that did not. In the end, the study concluded that the states that expanded Medicaid saw a 5.6% decrease in the divorce rate among people ages 50-64 relative to the states that did not.
With health care reform once again in flux, it will be interesting to see its effect on medical divorce. This area of the law is constantly changing and it is important to know how the distribution of assets in a divorce may affect your options in the future. If you or someone you know needs assistance with this aspect of your divorce, please contact LaMonaca Law at (610) 892-3877.