Medical Divorce: Saving Elderly Couples From Financial Ruin

When most couples split up, the most common reasons that come to mind for the divorce are adultery and irreconcilable differences. But today, many elderly couples are divorcing because of medical bills.

Recently, the term “medical divorce” has been making waves in the financial and divorce industries. In fact, medical divorce is now becoming one of the more common causes of divorce among senior couples.

What is causing these divorces? Increased medical expenses drowning couples in debt.

What is a medical divorce?

When one spouse becomes ill or requires extensive medical care, a couple will use their health insurance to cover the costs. But when the illness begins to require care beyond what a couple’s health insurance covers, such as in-home care, long-term care, nursing care, and more, the couple could potentially face hundreds of thousands of dollars in medical expenses and bills. This could lead to financial devastation.

So what happens if a couple makes too much money to qualify for Medicaid, but cannot afford long-term care? If the couple is put in this precarious position, they are often left with limited options: drain their savings to cover the expenses their health insurance policy does not cover, borrow money, or get a divorce. A medical divorce.

Nissa M. Ricafort, Parenting Coordinator and Family Law Group Partner at Broyles, Kight & Ricafort in Indianapolis, Indiana, explains: “Medical divorce has become a last resort for some couples facing a medical crisis and mounting medical bills. When the choice is to stay married at the risk of joint financial ruin or to end a happy marriage to preserve the financial resources of the healthy spouse, some couples are choosing divorce.  It is a difficult choice that often involves a struggle with personal beliefs about the sanctity of marriage and the appropriate reasons for divorce. But with the current cost of long term health care in our country, these couples unfortunately feel that they have no other option.”

Divorcing for Medicaid Eligibility

An elderly couple going through a medical divorce would likely be advised by a financial advisor or lawyer that the only way to afford medical expenses would be to divorce, as this would qualify the spouse who is ill for Medicaid. One spouse would receive the assets from the divorce, allowing the other to qualify. This “divorce on paper” would provide both spouses with financial security, preventing them from dipping into their savings or sinking into crippling debt.

The American Journal of Medicine states that almost two-thirds of people who file for bankruptcy do so because of medical expenses, which would make a medical divorce a tempting option for couples about to experience medical bankruptcy. For many baby boomers, this is starting to become the only alternative to cause the least amount of financial damage possible – preventing possible financial ruin and safeguarding their financial future.

“Health insurance, particularly as we age, can be one of the larger itemed family expenses.  People may be tempted to get divorced so that a low-income spouse can qualify for medical benefits under a state or federally sponsored program. While this may seem like an attractive option, it could severely compromise the low-income spouse trying to reduce his or her income both in terms of spousal support and the division of the community estate.  Even if the parties plan together to get a divorce to reduce income “on paper”, things can go very wrong,” says California family lawyer David M. Lederman from The Law Offices of David M. Lederman.

Preventing Medical Divorce

There are things a couple can do to save themselves from the possibility of a medical divorce, including having an individual policy rather than going under a spouse’s employer insurance plan – but this isn’t cheap, either.

Another way to prevent this is to secure long-term care insurance years before retiring to ensure that financial resources are protected if a spouse’s health begins to deteriorate in retirement. This could cover things like in-home care, nursing home care, and more.

More elderly couples are facing soaring medical expenses as they age. Though most couples would likely consider a medical divorce immoral or wrong – even somewhat of a betrayal to the spouse experiencing the illness – sometimes it is the only option to save a couple from financial ruin.

There is an emotional price to pay – but is the emotional price worth more than a destroyed financial future?