The staggering number of individuals who have experienced a job loss, pay cut, or reduced hours over the last few months due to COVID-19 has resulted in unemployment levels not seen since the Great Depression.
After the initial shock of being furloughed or fired wears off, employees have a number of practical issues to consider, not the least of which is finding new health insurance coverage (which becomes even more critical during a global pandemic). The same is true for small business owners, many of whom have seen their revenue stream plummet.
These pressing logistics become even more complex for divorced couples who are part of a settlement that based financial responsibilities going forward on their economic positions pre-coronavirus. Suddenly, many former partners are experiencing the reality that their alimony, child support, or health insurance arrangement is no longer tenable. The payor may truly want to meet his or her financial obligations, but a job loss or pay cut makes that impossible.
What Part of a Divorce Settlement is Negotiable?
There is no easy answer to this kind of quandary. The parties involved cannot plant or access a money tree, nor is the economy likely to recover at lightning speed. They will need to arrive at a solution together that will either be temporary to get them through these challenging times, or else will become their “new normal.”
In the eyes of the Court, both the payor and payee, as well as any children, must have a roof over their heads, working utilities, food on the table, and running automobiles, regardless of any pay cut or job loss. These areas are non-negotiable.
It is important for both parties to approach the situation in the spirit of transparency and clear communication. Everybody involved should expect to face some belt-tightening in the days and weeks ahead. If possible, now would be the time for the payee to step up and help in the situation if circumstances allow. Technically, the payor cannot legally reduce the payment amount without a Court order, which is extremely difficult to obtain right now since most Courts are operating under restrictions and only seeing emergency cases. If both parties are able to come to an agreement about a payment reduction or other adjustment, they should at least put their decision in writing if they are unable to get it approved by the Court.
The economic impact payments being sent out to most Americans right now ($1,200 for each adult and $500 for each qualifying child) could be used in financial negotiations, but that amount of money will not stretch very far for most families’ needs.
Additionally, it is important to realize that any immediate modifications may only be short-term. If one party is currently receiving unemployment (which right now includes an additional $600 from the federal government on top of state unemployment), that is due to expire in the near future. Those who have lost jobs in recent weeks may be hired back once the economy begins to pick back up. This means that what feels like an overwhelming financial burden at the moment may be alleviated relatively soon, or could become worse once unemployment runs out.
Health Insurance Modifications
For those who find themselves out of work right now, one of the scarier aspects is the loss of health insurance, especially with a pandemic raging. If possible, the divorced party who has not been providing health insurance for the former spouse and/or children should see if health insurance is available through his or her work. Other options are the Massachusetts Health Connector, Medicaid, or group or employee-subsidized plans. (If you belong to a professional organization, it may offer subsidized health insurance for its members.) Every effort should be made to take advantage of these kinds of programs. While COBRA (the continuation of one’s former health insurance for 18 to 36 months, with the employee now paying 102% of the coverage) is always an option, it should generally only be used as a last resort because it is so expensive.
Many individuals do not realize that there can be a deadline for applying for new coverage. Those who lost health insurance in the coronavirus shutdown have a 60-day “special enrollment” period to qualify for fallback coverage under the Affordable Care Act. Taxpayer-subsidized health insurance is available and affordable (sometimes even free), but many in need of coverage are not aware of the programs available.
Those with children should be able to get coverage for their children even if the adults are not covered. The federal-state Children’s Health Insurance Program and Medicaid covers children even in families that are above the poverty level.
How Can Mediation Help?
The financial distress many individuals and families are currently experiencing is very real. In many cases, parties will want to attempt modifications to their divorce settlement sooner rather than later. With Court delays rampant (and a backlog of cases already existing prior to COVID-19), it may make sense for you to seek out a consultation with a Mediator in the near future.
Even in the best of times, the Mediation process is generally faster, less stressful, and more satisfying than going through the Court for a divorce agreement. I am able to be very flexible and help you customize a plan that suits everyone’s needs. If you would like to book an appointment with me to look into modifying your existing agreement due to extenuating circumstances, please call (781) 944-0156.