PREFERENCING NONMARRIAGE IN LATER YEARS.

AuthorKaplan, Richard L.

TABLE OF CONTENTS I. HEALTH INSURANCE II. SOCIAL SECURITY BENEFITS III. INCOME TAXATION A. Taxation of Social Security Benefits B. Sale of a Principal Residence IV. EMPLOYMENT-BASED RETIREMENT PLANS V. TESTAMENTARY PROTECTIONS VI. SURROGATE HEALTH CARE DECISION-MAKING VII. LONG-TERM CARE AND MEDICAID A. Why Medicaid B. Medicaid Eligibility Criteria 1. Income Test 2. Asset Test C. Asset Transfers D. Estate Recovery VIII. GENERAL INDEBTEDNESS CONCLUSION INTRODUCTION

Consider the following scenario: Bill and Betty were married to other people for most of their adult lives but met two years ago at a social event organized in their community for persons of a certain vintage who share an interest in particular activities, such as international travel or local cultural performances. They have enjoyed spending time together and, without the imperatives attendant to starting a family, are pondering whether they should get married. Quite apart from their conditioned reflex to remarry, the U.S. legal system seemed to favor such arrangements, at least when Bill and Betty were much younger. But does the legal system still manifest this preference during their later years of life?

Many older couples have concluded that it does not. A report from the Pew Research Center in 2017 found that "the number of people over 50 who cohabit with an unmarried partner jumped 75 percent from 2007 to 2016 ... the highest increase in any age group." (1) An analyst for the U.S. Census Bureau observed in 2019 that there was "a significant jump in cohabitation among older adults, particularly in the last 10 years as divorce rates went up among this group." (2) The process of disentangling decades of accumulated financial and other arrangements undoubtedly encourages older people to choose cohabitation over marriage with their new companions. (3)

In fashioning our nation's laws relating to personal relationships, making marriage the default arrangement for committed adults reflected a pronounced heteronormativity bias. This strong presumption favoring marriage was historically limited to opposite-sex partners but has more recently been extended to same-sex partners as well. (4) Today, the legal preference for marriage manifests itself in both contexts. It does so most significantly in the tax treatment of employer-provided fringe benefits, especially health insurance; eligibility for Social Security retirement and disability benefits; distribution of retirement plan payments; protection against being disinherited; and authorization to make medical decisions. Couples who are not married can receive some, but not all, of these advantages through specific legal steps, though some serious effort is often required.

This pattern does not, however, apply across all legal domains when older partners arc involved. When such couples approach their later years and require assistance with activities of daily living, the law actually propagates an overwhelming preference for nonmarriage, an anomaly that was the original inspiration for this Article. But this Article examines the economic and legal rights of cohabitants in later life more generally. It begins by examining certain legal regimes affecting older Americans and analyzing the preferential treatment in those regimes for married persons. Among the areas examined are health insurance, Social Security benefits, retirement plan distributions, testamentary dispositions, and health care decision-making. It then addresses the disjointed "system" of financing long-term care that currently exists in the United States and how the joint federal and state government health care program known as Medicaid treats married and unmarried couples, as well as personal indebtedness more generally. Along the way, this Article considers a very practical problem that many unmarried couples face as they get older: should they get married at all?

  1. HEALTH INSURANCE

    In the United States, two principal models for financing health care expenditures predominate: employer-provided health insurance and government-financed health care programs. But these two models operate in largely distinct spheres. Employer-provided health insurance is the overwhelming platform for actively employed persons, largely attributable to changes made during World War II and then codified after that war through federal tax benefits that remain in force today. (5) Government-financed health care, meanwhile, is the near-exclusive platform for specific sub-groupings of Americans, including persons aged sixty-five and older, (6) persons with minimal financial resources, (7) persons who served in the United States military, (8) and children. (9)

    These two models differ in many ways, but their treatment of marital status is actually quite similar. For example, employer-provided health insurance typically covers not only employees but also their current spouse. In most cases, an employer's financial contribution toward the cost of spousal coverage is materially less than the employer's contribution to the cost of its employees' coverage, but it is significant nonetheless. (10)

    Furthermore, the employer's financial contribution is coupled with ready access to such insurance, usually without any medical underwriting for the spouse. In other words, a married person can get health insurance through their spouse's employer with minimal hassle. The cost of such insurance is typically more favorable than health insurance policies available from the Marketplace Exchanges created under the Affordable Care Act (ACA). (11) Marital status, in other words, conveys substantial benefits in securing health insurance through employer-based plans that are generally unavailable to unmarried partners.

    Similarly, a person who qualifies for the federal government's Medicare program can enroll that person's current spouse (12) even if the current spouse has not satisfied the work requirement that Medicare generally imposes. (13) The dependent spouse in this situation must still meet the age requirement of age sixty-five (14) but need not have direct prior attachment to the compensated workforce. Indeed, Medicare allows enrollment of a Medicare beneficiary's former spouse if their marriage lasted at least ten years. (15) Marital status, once again, is critical to obtaining health insurance, this time via the Medicare program.

    In all of these circumstances, a spouse is not obligated to obtain health insurance on the basis of their marital relationship, but it is generally very beneficial to do so. Prior to enactment of the Affordable Care Act, a spouse might find that obtaining insurance on her own was difficult or even impossible if that person had preexisting medical conditions or illnesses that might result in high medical expenditures. After enactment of the ACA, health insurance is guaranteed regardless of prior health care status, but available policies often have high monthly premiums, sizeable annual deductibles, (16) and severe restrictions on possible health care providers. (17) In other words, even when health insurance is available without regard to marital status, the coverage options that such status conveys are often superior in terms of cost, provider choice, or both. Accordingly, marriage is not always required to obtain health insurance, but it usually enhances the choices that are available.

  2. SOCIAL SECURITY BENEFITS

    There is nothing simple or direct about any aspect of the federal government's retirement benefits program called Social Security, (18) and its treatment of marriage is no exception. On the one hand, this program provides a spousal benefit to a spouse who is at least sixty-two years old (19) and has been married to the retired spouse for at least one year. (20) This spousal benefit is one-half of the retired person's monthly Social Security retirement benefit, (21) as long as that amount exceeds what the spouse would be entitled to receive based on her own work record. (22) For example, assume that Bill's history of wages and salaries subject to Social Security's payroll taxes over his work life entitles him to a monthly retirement benefit of $6,000. Assume further that Bill and Betty decide to marry. If Betty's own work history entitles her to a retirement benefit of $2,600, Betty would receive $3,000 per month--namely, half of Bill's monthly benefit. But if Betty's work record entitles her to a retirement benefit of $3,500, she would receive that amount instead and would get nothing from Bill's Social Security account. In effect, she would be treated as if she and Bill were not married at all. Thus, marital status might provide a financial benefit under the Social Security's retirement benefit calculus but not necessarily, with the actual result depending upon a person's own work record. While not assured, marital status does provide the possibility of a higher benefit calculation.

    Marriage conveys additional considerations after a couple has been divorced at least two years (23) as long as their marriage lasted at least ten years. (24) In that circumstance, the former spouse is treated as if that person were still married for most Social Security purposes. So, if Bill and Betty divorced after being married at least ten years, Betty could receive a divorced spouse benefit equal to half of Bill's monthly retirement benefit, assuming--once again--that her own work-record benefit was not greater. On the other hand, a divorced spouse can claim retirement benefits before the worker spouse files for such benefits, (25) while a current spouse must wait until the worker spouse also files for retirement benefits under this program. (26) Thus, a former spouse is not always treated the same as a current spouse.

    A provision of particular importance to older divorced couples provides that a subsequent marriage does not eliminate a spouse's entitlement to a retirement benefit based on that person's former spouse's work record if the later...

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