Opinion ID: 2587753
Heading Depth: 3
Heading Rank: 6

Heading: Mada's Post-Retirement Health Insurance Benefit Is Partly Marital Property.

Text: Mada had a PERS defined benefit retirement account, which she both earned and cashed out before the marriage. Mada bought back her PERS account with marital funds and agreed to its characterization as marital property valued at $48,358. The superior court found that she also acquired, as part of the PERS benefit package, lifetime health insurance benefits that Karl cannot share. It found that this benefit was the result of Mada's premarital efforts, but that there was insufficient evidence to determine the amount of marital assets used to repurchase this asset. The court also found that even if the health benefits had been acquired with marital funds, there was no evidence that Karl could have used the benefits had the parties remained married. Karl, citing AS 25.24.160(a)(4) and Kinnard v. Kinnard, [43] argues that because the health insurance benefits were reacquired using marital funds, they should have been treated as a marital asset. He asserts that their value is $85,762 and that it was error not to credit him with at least half the benefits' value. Mada disagreed with Karl's expert's valuation of the health benefits, and asserts that they are not alienable. She also contends that no evidence was presented as to the amount of funds required to buy back the retirement and health benefits, or what the proportionate cost of each would have been. Mada argues that the coverage has no cash value and that the trial court correctly ruled that it was not subject to allocation. Health insurance benefits earned during the marriage are a marital asset of the insured spouse. [44] That the benefits cannot be transferred is irrelevant, because market transferability is not a prerequisite to determining value for property division purposes. [45] In Martin v. Martin we dealt with a similar issue involving frequent flyer miles. [46] The miles were non-transferrable, but an asset need not be marketable if the court can objectively determine that it has value to its owner. [47] We therefore held that the superior court correctly characterized the frequent flyer miles as a marital asset. [48] By using marital funds during the marriage, Mada reacquired the post-retirement health insurance benefits she earned before the marriage; the benefit is, therefore, at least in part a marital asset. As Karl argues, the benefit has value to Mada, and the court should have determined this value. We therefore vacate the ruling as to this asset and remand. On remand Mada's retirement health insurance benefit should be divided into marital and nonmarital portions. [49] Courts in other jurisdictions have approved the division of particular property into marital and nonmarital portions. [50] Only the marital portion of the retirement health insurance benefit is divisible between Mada and Karl; benefits Mada has earned since the marriage ended are not marital. This is because post-divorce, pre-retirement health insurance benefits are compensation for contemporaneously performed work and are therefore separate property, whereas post-retirement health insurance benefits are compensation for work previously performed. [51] In this case, when Mada eventually retires, some of that work will have been performed during the marriage and some of it will have been performed after the marriage. For purposes of valuing Mada's retirement health insurance benefit, work she performed before the marriage must be treated as having been performed during the marriage because Mada used marital funds to buy back this part of the benefit. The court should determine the percentage of the benefit that is marital by calculating the coverture fraction. [52] This fraction is calculated by dividing the number of years worked during the period of coverture by the total number of years worked. [53] To the extent Mada used marital funds to buy back health benefits for work performed before the parties began living together, that period of work must be treated as part of the period of coverture. Our holding should not be read to suggest that the proceeds from health insurance are marital property. [54] When valuing the retirement health insurance benefit, the superior court should look to the amount of the premium subsidy provided by the employer, rather than to either the proceeds or the cost of procuring comparable insurance. [55] There are inherent difficulties in attempting to calculate the value of this benefit. Because Mada had not yet retired at the time of trial, the evidence in the record makes it impossible to know with certainty how many years Mada will ultimately work. It is therefore impossible to calculate with certainty the percentages of marital and nonmarital interests for the post-retirement health insurance benefit. Likewise, because we cannot know how long Mada will live, the total value of the employer's premium subsidy cannot be calculated with certainty. Despite these uncertainties, sufficient evidence was presented in this case to place in issue the value of the retirement health care benefit; accordingly, the court on remand must exercise its discretion in fashioning an equitable division of this benefit. [56] It may, in its discretion, receive additional evidence relevant to the value of the benefit.