|Help your clients with nonfinancial resources
Clients going through a divorce also need nonfinancial advisers, and you can help find them.
July 19, 2012
When your clients are facing divorce, you can help them in a number of ways. One way is to refer them to other professionals who can help them get through the divorce in ways that you are not qualified to help. In this column I will cover two kinds of professionals: health insurance specialists and therapists.
Health insurance specialists
When your clients are talking about divorce and one spouse is covered on the other spouse’s group health insurance, the nonemployee spouse needs to find alternative health insurance coverage. If access to health insurance coverage isn’t available through his or her employment, the choice will probably be either COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985) coverage or an individual policy.
COBRA amended the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code (IRC), and the Public Health Service Act to provide continuation of group health insurance coverage that could otherwise be terminated without COBRA.
COBRA coverage is usually more expensive than health coverage for employees, because the divorced spouse covered with COBRA pays the entire premium, without the benefit of an employer subsidy.
A former spouse can elect to continue COBRA coverage for as long as 36 months. The plan administrator for the health plan has about 14 days to notify the person of the right to get COBRA coverage. The person needing COBRA coverage must contact the plan administrator within 60 days of the divorce or legal separation.
When your clients tell you they are divorcing or legally separating, you can help them by asking about health insurance. Suggest that they immediately begin gathering data about their health insurance options. Generally those are COBRA coverage on an ex-spouse’s employment coverage, health insurance through a membership affiliation, individual policy, or finding a job with health insurance benefits. In today’s job market, the latter is sometimes quite difficult to do.
When my clients’ only options are COBRA or an individual policy, I send them to a trusted health insurance broker. The challenge is not in getting the health insurance quote from the broker. The challenge is convincing the client of the high priority of this homework assignment. All too often clients will procrastinate on this task. Recently a client applied for individual health insurance and was turned down because of height/weight ratio. Fortunately for the client, she could elect COBRA and then have 36 months to shed the extra weight before she has to find alternative health insurance coverage. The risk is that she develops a new health problem before the end of the 36 months.
Divorce is a hugely stressful experience. Most people going through a divorce can benefit from therapy. You may or may not personally believe in therapy, but referring your clients to a few therapists might bring them some relief.
Thirty-year veteran therapist Faith Wilson explains “Personal testimony is OK when you are handing your clients names of possible therapists, but keep in mind that finding the right therapist is like a personal discovery. We cannot find friends for other people, but we can introduce them.”
Everybody relates differently. “A lot of people come in for one visit and expect the problem will be solved,” Wilson said. Instead, your client should be looking for a sense of peace in the first meeting and needs to feel somewhat better when leaving the therapist. “Somewhat better” means having a feeling of progress and a sense of where he or she is going with the therapist, and not necessarily thinking that the problem has been solved.
If you don’t know any therapists to refer, check with your insurance company or health plan. They maintain lists of therapists. I recommend you provide at least three names so your client has choices.
A divorce can be a crazy experience. When you can offer your clients additional value by being sensitive to and creative with their nonfinancial needs, you have the opportunity to enhance your adviser/client relationship.
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Tracy B. Stewart, CPA/PFS, CFP, CDFA, specializes in family law litigation support in Houston. She helps clients protect their wealth during property settlement negotiations. She is a member of the AICPA Personal Financial Planning and the Forensic and Valuation Services sections. She is a board trustee for the Collaborative Law Institute of Texas as well as on the Executive Board of Texas Society of CPAs. You can contact her through www.texasdivorcecpa.com.
* The AICPA’s PFP Section provides information, tools, advocacy and guidance to CPAs who specialize in providing tax, retirement, estate, risk management, and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. For CPAs who want to demonstrate their expertise in this subject matter, apply to become a PFS Credential holder. PFP Section members can access more information on COBRA using Forefield Advisor.