A friend told me how pleased he was with MassHealth, our state’s version of Medicaid. “It is much better than Blue Cross. There are no deductibles and dental care is included and free,” said the father of two. His wife said “the only thing that would be better is if we got divorced and then I could get all of the single mom stuff.”
The potentially interesting part of this story is that my friend’s mailing address is a suburban house on 2.6 acres of land with a Zestimate of $3.2 million and a price/tax history indicating that he purchased it for $2.1 million back in 2006. The health insurance ministry probably wouldn’t have been aware of the family’s 50-acre 8-bedroom (including guest house) vacation estate.
“Obamacare removed the asset test for Medicaid,” he explained. So they look only at income? “No. I actually had a good year in 2015 with a lot of capital gains.” [“A lot” of capital gains for this guy would be hundreds of thousands or single-digit millions of dollars.] What was the method for determining whether or not the taxpayers would pick up the tab for this family of four’s health and dental care? “They look only at W-2 income.”
Note that this makes collecting alimony and child support relatively more lucrative compared to working. Child support revenue, regardless of the amount, doesn’t count as “income” to qualify for this taxpayer-funded benefit. Alimony profits can be banked without a W-2 being issued. Jessica Kosow, the plaintiff in a typical higher-income Massachusetts case (see this chapter on Massachusetts family law), would qualify for free MassHealth despite having obtained, via litigation, triple the spending power of her Ivy League classmates with W-2 jobs:
In a June 22, 2011 status conference for this case [wife sued husband after four years of marriage when their daughter was two years old], Judge Maureen Monks explained her philosophy in setting child support for high income defendants: “when I look at how the current guidelines play out against most parties’ income it comes around between 20 and 25 percent, sometimes it’s a little higher. If there’s a big disparity it’s closer to 28 percent. Does that mean it makes sense is that what to assess up to a certain amount on his income. Maybe there is no limit right now…”
How did she do compared to her University of Pennsylvania classmates? payscale.com reported that in 2014 the median “mid-career” salary for a graduate of this Ivy League college was $112,200. If that graduate stayed in Pennsylvania, his or her earnings would be approximately $77,240 per year after taxes (ADP Paycheck Calculator). Kosow’s after-tax earnings, on the other hand would be approximately $132,786 in cash plus the free $1 million house (assume a rental value of $6000 per month), health insurance, and nanny services. Her total after-tax earnings from the Massachusetts divorce and child support system therefore would be about $250,000 per year, 3.2X what a Penn graduate working full-time would earn.
[Of course, this particular plaintiff might not take the time to fill out the forms for MassHealth due to the fact that she obtained a court order that her former husband pay her health insurance bill.]