health insurance

Hi there,

Here’s the second half of the excellent piece on taxes and health insurance by my colleagues Ron Barriere and Jen Green. Just in time for tax season, too.

Best,

Nancy

 

Ronald Barriere Attorney
Ronald Barriere
Jennifer Green Attorney
Jennifer Green

With most Massachusetts health insurance plans, provided he/she has not yet remarried, an employee with at least one dependent child can add a former spouse to the coverage for no additional cost, so there is no additional cost to the employer either. In these situations, one would presume that no income should be imputed to the employee because the employer is not required to pay the insurer any additional premium for the benefit of continuing coverage of a former spouse. Unfortunately, not all human resource departments share this view. Some human resource departments are deciding that the former spouse is receiving a benefit that is equal to the value of the employee’s own individual coverage and, thus, are imputing the fair market value of that coverage to the employee on his/her Form W-2.… Keep reading

Another Tax Trap: Imputed Income and Health Insurance in Divorce Settlements, Part 1

Hi there,

April 15th is creeping up on us. I find doing my taxes while its snowing, AGAIN, a real insult.

This week and next week’s post were written by my terrific colleagues, Ron Barriere and Jen Green. They highlight a tricky complexity in the new health insurance laws for divorcing couples.

Best,

Nancy

Jennifer Green
Ronald Barriere

Divorcing spouses have many issues to consider in negotiating the terms of a divorce agreement. One of the seemingly “easier” issues for divorcing spouses and their counsel is health insurance. While the issue of health insurance coverage is typically included within the divorce agreement, the federal tax implications are often overlooked. Recent interpretations of federal tax law underscore the need for divorcing spouses to use skilled divorce counsel and tax practitioners in negotiating the terms of their divorce agreements.

It is commonplace for a divorce agreement to contemplate one spouse continuing to provide health care coverage through his/her employment for an ex-spouse. Under the Affordable Care Act (ACA or “Obamacare”), the IRS will require reporting by the employer of the cost of such coverage of employer-sponsored insurance. In some instances, the reporting requirement may facilitate the apportionment of the cost … Keep reading

Hi there,

Folks who are getting a divorce need life insurance for the same reason they needed it during the marriage: to protect a stream of income.  This need is the same in an intact family as in a divorced one.  The big difference is that married folks can ignore that need, but most divorcing folks cannot, as either their spouse’s attorney or the court will make sure there is coverage.  Of course if there isn’t enough money to put food on the table there probably won’t be money for life insurance either.  In my experience, the courts recognize this and in such a case, may not require life insurance.

The amount of insurance needed is calculated by looking at what insurance the intact family had, what the education requirements, less savings, are likely to be, and what the support and health insurance costs will be for the payor.  We then calculate the time value of money and the tax consequences in order to determine what a reasonable insurance replacement for the income stream will be.  Also, it is perfectly fair to have the insurance reduced annually to reflect that the support has one year less to go.… Keep reading