What is the 6% Rule? How Does it Impact Child Support and Payment of Uninsured Health Care Expenses?
Divorcing couples always want to know who should pay for their child’s medical expenses. Generally, the issue of insurance coverage and payment of insurance premiums is included in child support calculations because the party who provides insurance coverage is entitled to credit for the weekly amount paid. Therefore, the biggest remaining issue between parents is how to divide uninsured medical expenses for the children. When parties can agree, they have the ability to be flexible about how they want to divide these expenses, and there are many good reasons why parties would want to tailor the way they divide these expenses to their specific situation. In some cases, one party has supplemental coverage, a Health Savings Account, Flex Spending account, or other employer benefits that make sense to exhaust before dividing expenses between parties. Parents of children with specific medical issues may also need to specifically plan how uninsured expenses will be divided throughout the year.
When parents cannot agree or do not believe their case requires special accommodations, the Courts will follow the 6% Rule pursuant to the Indiana Child Support Guidelines. Under the Guideline 6% Rule, the parent who is receiving child support is required to pay an initial portion of ordinary uninsured health care expenses. The theory behind this is that the parent who is receiving child support should set aside a certain percentage, 6%, of that support toward ordinary uninsured health care expenses. In other words, a portion of child support is intended to cover expenses such as co-pays and a certain threshold amount of uninsured healthcare expenses. Beyond that 6% number, the parties divide any additional uninsured medical expenses pursuant to their pro rata shares of the parties’ total gross income. Your lawyer will have software to automatically calculate the recommended child support amount, as well as the 6% calculation and the pro rata share of expenses beyond the 6%.
What expenses count toward the custodial parent’s 6% obligation? Any uninsured healthcare expense, which may include office co-pays, contact lenses, glasses, prescription medications, crutches, orthodontia, and any portion of any healthcare provider’s bill (family care doctor, psychologist, counsellor, optometrist, dentist, etc.) that is not covered by health insurance. That portion that is not covered is usually reflected on the insurance company’s Explanation of Benefits (EOB) and may also be reflected on a separate billing from the provider showing any reductions or payments by the insurance company. It is important for both parents, however, to know what is being spent on these types of uninsured healthcare costs. As with any other co-parenting issue, parents should routinely exchange information, billing statements, and receipts in order to determine if one parent has met his/her 6% threshold and how bills should be divided. Without a proper exchange of information and accurate record keeping, it can be difficult for an attorney to help resolve a payment dispute under this rule.