Article

Attention New York Divorce Lawyers: Learn Insurance Law

By a show of hands, how many matrimonial lawyers practicing in the state of New York have heard of the “Age 29 Law”? Anybody? We didn’t think so. Neither of these authors had ever heard of it either.

All of that changed, however, on July 27, 2023, when the Appellate Division, First Department, issued its decision in B.D. v. E.D., 2023 NY Slip Op. 03971.

Before exploring the facts of B.D. v. E.D., we must understand, as best we can, the contours of the Age 29 Law which was enacted almost 15 years ago.

As we are living in a time where, sadly, reading has become passé, rather than dig into the annals of insurance law texts, we elected to find out what the Age 29 Law is through—what else— a Google search.

In order to obtain health insurance coverage under a parent’s policy pursuant to the Age 29 Law (L 2009, ch 240) the “young adult” must satisfy certain criteria: (1) be unmarried; (2) be 29 years of age or under; (3) not be insured by or eligible for comprehensive health insurance through his/her employer; and, (4) live, work or reside in New York State or the geographic area of the health insurance company’s service. In addition, the parent must be covered under the applicable policy, or, pursuant to a right under COBRA or state continuation coverage law. We note that the “young adult” does not have to reside with either parent, be financially dependent on either parent, or be a student.

At issue in B.D. was the mother’s 2022 motion to direct the father to pay for continued medical insurance coverage under the Age 29 Law for the parties’ then 26-year-old daughter until she turned 29.  At the trial court level, the Honorable Ariel D. Chesler denied the mother’s motion, and the mother appealed.

The parties in B.D. had entered into an agreement in 2015 which provided, at Section 6.3, as follows:

The Children are currently covered under [father’s] medical insurance…[Father] shall keep and maintain for the benefit of the Child such health and medical insurance plans greater than or equal to the coverage presently provided by his employer until the latter of (i) each Child is emancipated pursuant to this Agreement; (ii) each Child is no longer allowed by law to be covered under a parent’s insurance (emphasis added).

At the trial court level, the mother—citing Section 6.3 of the agreement—argued that the father was obligated to maintain and pay for the daughter’s health insurance until she “is no longer allowed by law to be covered under a parent’s insurance,” while also noting that the Age 29 Law requires health insurers to provide coverage for an unmarried child of an insured through age 29.

The father responded that it was “customary” for a child’s health insurance to end at age 26 pursuant to the Affordable Care Act (ACA), enacted in 2010 and commonly known as “Obamacare.” The ACA generally requires health insurers to make coverage available to children of insureds until age 26.  The father also pointed to the “significant financial consequences” that would befall him if required to maintain and pay for coverage for his daughter until age 29.

Also of note, as described in the decision: “Counsel further averred that, although the Age 29 Law went into effect in 2009, approximately six years before the parties entered into the agreement, neither he nor [the father] was aware of that law, and that the reference to the ‘law’ in Section 6.3 was to the [ACA]” (emphasis added).

In denying the mother’s motion, Justice Chesler concluded that the language “‘each child is no longer allowed by law to be covered under a parent’s insurance’ in Section 6.3 is ambiguous, i.e., is susceptible of more than one meaning.”  In other words, the language could be read to mean that the father was obligated to maintain and pay for health insurance until his daughter turned 26, and separately, it could be read to mean that the obligation continued until age 29.  “Had the parties intended to place on [the father] the burden of maintaining health insurance for [the daughter] pursuant to the Age 29 Law, the trial court observed, they could have specified so.”

You’ve heard the phrase, “this makes perfect sense.”  Chesler’s conclusion makes perfect sense, particularly to matrimonial lawyers who by and large understand the following core principles about child support: (1) under New York law, a court is obligated to find that a child emancipates for support purposes at age 21, unless the parties mutually agree to a later date; (2) matrimonial lawyers and parties will often, as part of settlement agreements, agree to defer the age of emancipation to a child’s 22^nd or 23^rd birthday if certain criteria are met; (3) matrimonial lawyers understand that the obligation to pay health insurance for a child may extend until age 26, in view of the ACA; and, (4) pursuant to a relatively new law in New York, enacted in October 2021, the child support obligation may be extended for adult children with special needs until age 26 if certain criteria are met. Notice that the Age 29 Law is nowhere to be found in the foregoing list.

The Appellate Division, First Department, however, modified on the law to grant the mother’s motion to the extent of directing the father to pay for health insurance coverage for the parties’ daughter until no longer eligible under the Age 29 Law, and to reimburse the daughter for payments she made for such coverage (that raises a whole different issue, as he is not reimbursing the mother, but is actually reimbursing his adult daughter for “child support”). We presume the adult daughter is responsible for her out-of-pocket, non-reimbursed medical expenses.

To summarize, the First Department found that the word “law” in Section 6.3 of the parties’ agreement does not exclude the Age 29 Law, but rather, is all encompassing and therefore includes such Law:

If the parties, both of whom were represented by counsel at all relevant times, wanted plaintiff’s obligation under Section 6.3 to be tied to or controlled by any particular law or laws, they could have specified the normative authority that defined [the father’s] duties. They chose not to do so.

As best we can tell reading between the lines, the First Department presumed that the matrimonial attorneys who drafted the parties’ agreement were or should have been aware of the Age 29 Law in the first instance.

The court therefore concluded that the agreement is “clear and unambiguous”, and despite any increase in financial burden to the father, “we enforce the plain language of the agreement regardless of any economic hardship that plaintiff may encounter.”

Where does this leave us?  Divorcing parents with children may well have a visceral reaction to the B.D. decision.  On one end of the continuum, there are those who might say “the law is the law” and, therefore, the First Department’s decision is correct.

On the other end of the continuum, there are those who might ask this question: is it that unreasonable for parents to expect that one day, their children will have to grow up without the expectation that Mommy and Daddy will foot the bill?

This article is not meant to take sides, one way or the other, but rather to highlight the existential questions that are raised by the B.D. decision.  Stated differently, the B.D. decision is not “just another case.”

One thing is certain: when drafting settlement agreements in a matrimonial case, be sure to be very specific as to what is covered in terms of the payor’s obligation vis-à-vis health insurance.  Understand that referring to a specific law, or laws, may be the safer bet if your goal is to limit the obligation versus referring to the “law” generally.

The First Department’s decision reads the Agreement literally, and using that literal interpretation, it is quite difficult to quibble with the outcome.  But here is the problem: matrimonial courts are courts of equity.  The plain language in contracts should of course be enforced and not rewritten by courts.

There is a concern, however, that ought to be considered.  Perhaps there are a litany of divorce settlement agreements floating in the ether with children who are now between the ages of 26-29, where no one (not the lawyers, and not the parties) thought about or knew about the Age 29 Law.  Are those agreements now susceptible to being opened up if they refer to providing coverage under “law”, i.e., will lawyers seek to take advantage of everyone’s collective lack of knowledge?  We hope not.

The B.D. decision presents difficult questions of both law and fact.  Once again, we do not have all, or any, of the answers, except this: it might be time for matrimonial lawyers to study insurance law, in addition to tax law, property law, banking law, and everything else we need to know. And if that’s the case, then God save the Queen, man.  If you do not understand that reference, please start reading the newspaper. Or, as we did with the Age 29 Law, try Google.

"Attention New York Divorce Lawyers: Learn Insurance Law," by Alan R. Feigenbaum and *Marilyn T. Sugarman was published in the New York Law Journal on October 4, 2023.

Reprinted with permission from the October 4, 2023, edition of the New York Law Journal © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.

*Marilyn T. Sugarman serves as special counsel at The Mandel Law Firm.