If the Republican plan to replace the Affordable Care Act (ACA) becomes law, it could not only affect people’s health insurance but possibly their marriages as well.
It all depends on what happens with Medicaid, the federal health plan for low-income Americans ages 65 and younger. Under the ACA, Medicaid was expanded in 31 states and the District of Columbia to cover individuals and families making 138 percent of the poverty line ($34,000 for a family of four), regardless of their assets.
The Medicaid expansion helped all kinds of adults gain or retain health-care coverage. It particularly helped couples where one spouse was well and the other sick, so that the sick person’s health-care costs would not bankrupt the couple of all their assets or make it difficult to maintain health insurance. Before the Medicaid expansion, to qualify for Medicaid, the sick person had to show no assets or income.
In these situations, some couples were faced with a difficult choice: They could slowly draw down assets such as retirement accounts or home equity to pay their medical bills; or they could go through what’s called a “medical divorce,” splitting up legally so that the sick partner could enroll in Medicaid and the other person could retain their assets. Typically, these couples remained “together” and continued to care for one another; the divorce was merely on paper.
Cassandra Perry and her husband are one of those couples who made the difficult decision to divorce for the sake of their health care. When Perry married her husband in 2008, she no longer qualified for Medicaid. This worked fine until her husband’s job folded and they couldn’t afford COBRA benefits. “I was turned down for insurance due to preexisting conditions,” she said in an interview.
Perry has four preexisting conditions: Ehlers-Dalos Syndrome, a condition affecting the skin and joints; memory impairment with cognitive decline; narcolepsy; and complex PTSD. She takes 19 medications and has had at least one major surgery, hospitalization or procedure every year for the past 10 years.
After the ACA passed, she was able to buy a plan on the Maryland health exchange. However, as her health has declined, she became too sick to work and couldn’t even purchase insurance under the most affordable ACA plan. Yet her husband’s income disqualified her for Medicaid. In 2014, she and her husband decided to divorce. “My husband was greatly against it,” she says, but her health was in jeopardy, so she insisted.
According to a new study published by the National Bureau of Economic Research (NBER), the ACA’s Medicaid expansion removed some of the incentive to divorce. Researchers analyzed data from the Current Population Survey and compared divorce rates in people age 50 to 64, from 2008 to 2011 — before the Medicaid expansion — and from 2014 to 2015, after it took effect. They found that, in the states that expanded Medicaid, medical divorce reduced by nearly 6 percent. Danielle Pelfrey Duryea, director of the Health Justice Clinic at the State University of New York at Buffalo, said that medical divorce mostly affects the disabled and older patients in need of long-term care.
However, the Republican plan, the American Health-Care Act, would cut Medicaid by $880 billion over 10 years and would kick millions of people off the program starting in 2020. A person’s assets will also once again be factored into their eligibility. This could contribute to a rise in these medical divorces once again.
The design of Medicaid creates “a perverse incentive” to divorce so that people can avoid bankruptcy, explains lead author of the NBER study, David Slusky, assistant professor of economics at the University of Kansas. “As someone’s economic situation improves, they end up having to give back these benefits or not get them any more,” he says.
So it’s possible that the forthcoming ACA replacement, particularly the discontinuation of the Medicaid expansion, may once again force people to choose between their health care and their legal marriages. “The point of health insurance is not just to pay for things I already have. The point is to make sure I still get to eat and live no matter what happens to me,” Slusky says.
Under the Republican plan, enrollment in ACA health-care exchanges would be frozen until they’re disbanded altogether by 2020. This would mean that people whose financial situation changes may also lose health insurance or find it difficult to keep. For instance if a person were to lose a job, and the health insurance that goes with it, his chances of qualifying for Medicaid will be steeper under the AHCA due to the huge cuts in Medicaid funding. And if someone is already on Medicaid, he could lose his insurance if his eligibility lapses for two or more months in a row. The Congressional Budget Office (CBO) estimates that if the AHCA passes, by 2024 more than 95 percent of Medicaid enrollees will essentially be back where they started before the expansion: unable to get health insurance.
Medical divorce is not a choice anyone makes easily. Lisa Neeley, an elder law attorney in Massachusetts, says it’s a difficult conversation to have with her clients. “It’s just something they can’t fathom. A lot of them would rather spend down their money before they get divorced,” she says.
Some people don’t have that option. Neeley cites a scenario where the husband in a family suffered a debilitating traumatic brain injury in his 50s and had to be moved into a care facility. The couple had two teenage sons and a retirement account and owned a home. “If they had not been divorced, the retirement fund would have been completely depleted on the husband’s nursing home care costs, leaving nothing for his wife or children,” Neeley said. If they divorced, the man’s ex-wife could then use the funds to maintain her residence and also eventually pay for the educational expenses of her children. So that’s what the couple did. Even after divorcing on paper, she continued to make daily visits to the nursery home where the man she still considered her partner was living.
Yet unexpected illness and disability strike people at all stages of life, not just those eligible for Medicaid. When 48-year-old Jeff Trump went to the doctor after two months of feeling run down, he expected to receive antibiotics, not a diagnosis of acute, end-stage renal failure. He was hospitalized that day and now receives dialysis treatment three times per week, four hours at a time. “They give me Medicare and Social Security because I’m technically disabled,” he says. A supplemental insurance through the American Kidney Fund pays for his remaining costs.
Trump and his wife are self-employed, running an advertising business in California, and they own a small home in Hawaii. With Republicans threatening to privatize Medicare and his wife’s health care fate unclear under the replacement plan, he’s worried about losing the health insurance that keeps him alive and keeps them from having to liquidate their assets. “If I lose insurance, it would wipe me out,” he says. He and his wife are ready to consider a medical divorce that would keep their house in his wife’s name. “I would be financially ruined on paper, but not her, and they wouldn’t take her stuff,” he says.
If they do decide to divorce, he says, “it would make me angry, but I don’t feel like our marriage is based on a piece of paper.” He considers it “playing the game.”
For anyone considering medical divorce, Chicago-based divorce and family lawyer Joshua Stern recommends first visiting an elder law attorney, who are most likely to be versed in Medicaid laws; an estate planner, who might be able to assist with putting assets into a protected trust; and then a divorce lawyer. He cautions that a medical divorce will not remove liability for debt. “Divorcing doesn’t change your obligation to third parties,” he says. For those who can’t afford lawyers, Duryea recommends seeking out free legal services available to those with low income.
Even if a couple goes through a medical divorce, they could always remarry once their financial situation improves. “It’s important that we preserve the relationship for these people who care about each other, so they’re just divorced on paper,” Stern says.