Divorce  Takes Away Many Women’s Private Health Insurance

study by the University of Michigan deprives thousands of women of their health insurance coverage. The study, which will appear in the December issue of the Journal of Health and Social Behavior, analyzed data from women between the ages of 26 and 64 between 1996 and 2007. It finds:

  • 115,000 U.S. women lose their private health insurance in divorce each year as they either: 1) no longer qualify as dependents under their partners’ policies; or 2) can’t afford private insurance.
  • Many women remain uninsured or under-insured for more than two years.
  • The Federal COBRA law allows people in most employers’ plans to maintain their health coverge after divorce, but  COBRA coverage only lasts only up to 36 months.

The Huffington Post draws attention to several of the financial problems around divorce that can be of grave concern to women:

The Takeaway: Hard economic times can create marital strains leading to divorce and separation, and when that happens, women and children often find themselves without health insurance coverage.

Why the ACA Is a Boon to Women and Families

The Affordable Care Act of 2010 (ACA) provides invaluable benefits to mitigate the health care risk that women and their children face in hard economic times and divorce.  It provides security to millions of working age people who are currently uninsured or underinsured or may lose job-based health insurance.  It is especially responsive to the needs of low- and moderate-income people. The Congressional Budget Office estimates that the ACA will cover some 32 million uninsured people over the next ten years, 94% of legal residents. Of the 23 million people who will still lack health insurance, one third are projected to be undocumented residents, who are ineligible for coverage under the law.

Here are some of the provisions that help low- and moderate-income individuals and families gain access to affordable, comprehensive health insurance.

Medicaid expansion: Beginning in 2014, the ACA expands eligibility for Medicaid for all legal residents to 133%  of the federal poverty level (about $14,404 for a single adult or $29,327 for a family of four.) Currently, while several states have expanded eligibility for parents of dependent children, eligibility thresholds are usually well below the federal poverty level, and and adults without children are not currently eligible for Medicaid regardless of income in most states.

State exchanges: The Affordable Care Act provides for the establishment of state or regional health insurance exchanges for individuals and small employers. New insurance market regulations governing health plans will prohibit:

  • Rating on the basis of health.
  • Limits on how much premiums can vary based on age.
  • Lifetime or annual limits on what a plan will pay.
  • Rescission of coverage when someone becomes ill.

 Availability: The exchanges will provide a regulated marketplace in which people without access to employer-sponsored coverage who meet affordability and coverage standards can purchase insurance.

Choice: People purchasing coverage through the exchanges will have a choice of the essential benefit package with four different levels of cost sharing – Plans can cover:

  • 60% of an enrollee’s medical costs (bronze plan).
  • 70% of medical costs (silver plan).
  • 80% percent of medical costs (gold plan).
  • 90% percent of medical costs (platinum).
  • Out-of-pocket costs are limited to $5,950 for single policies and $11,900 for family policies.

Subsidized Premiums for Low to Middle Income Families and Individuals: Sliding-scale premium credits will be available to people with incomes up to 400% of poverty who purchase health plans through the exchanges. The credits will be tied to the silver plan and will cap premium contributions for individuals and families to:

  • 3% of income at just over 133% of poverty ($14,404 for a single adult or $29,327 for a family of four)
  • Gradually increasing to 9.5% at 300% to 400% of poverty ($43,320 for a single person and $88,200 for a family of four.)

Subsidized Coverage for Low to Middle Income Families and Individuals: Cost-sharing credits and lower annual out-of-pocket limits will limit cost-sharing for low- and middle-income individuals and families.  Credits will limit cost-sharing,  increasing the silver plan coverage (70 percent of costs covered) to:

  • 94% for those with incomes up to 150% of poverty.
  • 87% up to 200 percent of poverty.
  • 73% up to 250 percent of poverty

Out-of-pocket expenses will be capped for families earning between 100% and 400% of poverty on a sliding scale ranging:

  • From $1,983 for individuals and $3,967 for families,
  • Up to $3,967 for individuals and $7,933 for families.

Comprehensive Coverage: Qualified health plans sold through the exchange and in the individual and small group markets will be required to provide a federally-determined essential benefit package.  The essential benefit package, the new insurance market regulations, out-of-pocket limits, and cost-sharing subsidies will also help reduce the number of people who are underinsured, ensuring that people have comprehensive health plans that both encourage the use of timely, preventive services and protect against catastrophic costs in the event of a serious accident or injury.

The Individual Mandate: Beginning in 2014, all U.S. citizens and legal residents will be required to maintain minimum essential health insurance coverage through the individual insurance market or an insurance exchange, a public program, or their employer or face a penalty.  There are some exemptions:

  • Individuals who cannot find a health plan that is less than 8% of their income net of subsidies and employer contributions.
  • People who have incomes below the tax-filing threshold ($9,350 for an individual and $18,700 for a family).
  • People who have been without insurance for less than three months.
  • Other circumstances such as religious objections.

Individuals not exempt from the mandate, who cannot demonstrate on a tax form that they have health insurance, will be required to pay a penalty equal to the greater of

  • $95 or 1% of taxable income in 2014,
  • $325 or 2% of taxable income in 2015,
  • $695 or 2.5% of taxable income in 2016
  • Up to a cap of the national average bronze plan premium.

Families will pay a penalty of half the amount for children up to a cap of $2,085 per family.

Conclusions

Women who face losing the health insurance coverage provided through a spouse’s employer due to divorce or due to the loss of work and other economic hardships now have options for themselves and their children. The ACA will mitigate the barriers to coverage that people now face due to loss of employment, preexisting medical conditions and economic difficulty.

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