The responsibility of a child’s unreimbursed medical expenses is often a topic that does not receive much attention when negotiating divorce settlements. With the continuous increase in health care expenses, it is important to factor in how each party is going to satisfy the costs spanning from a routine check-up to a potential extended hospital stay.
The New Jersey Child Support Guidelines mandate that a custodial parent (i.e. parent that is receiving child support) cover the first $250 per year, per child in unreimbursed medical expenses. This obligation is established due to the fact that $250 per year, per child, is factored into the weekly child support in which the custodial parent receives. As one can anticipate, with the trend towards high deductible health insurance plans and increased provider costs, $250 per year does not go very far. All unreimbursed medical expenses above this amount for the children are to be satisfied via agreement by the parties or through a Court Order.
A common resolution to the division of a child’s unreimbursed medical expenses is to utilize an “income shares” approach. When establishing each party’s responsibility, their income is assigned a percentage of the total combined (net) income. For example, if Wife earns $100,000 of net income per year and Husband earns $80,000 net income per year, Wife’s income share would total 55%, which would directly correlate to her percentage contribution towards all unreimbursed medical expenses. Through our practice, I have found this approach the most practical and equitable when dividing medical costs.
As is the case with many other child-related credits, establishing a system with your former spouse will greatly assist with the reimbursement of out-of-pocket medical expenses. For example, many health insurance companies issue Explanation of Benefits (“EOBs”), while this is a helpful document, it is not of the final bill in which you are responsible from a medical provider. We advise clients to only submit finalized bills, with corresponding proof of payment to their former spouse when they are seeking reimbursement. By limiting potentially contradictory documentation, confusion is avoided and reimbursements can be processed on an expedited basis. With the overwhelming majority of divorced parents sharing joint legal custody (decision making authority) for the children, beginning a dialogue as soon as possible regarding future procedures will eliminate claims that one side was not included in the discussion and informed of the potential costs. Lastly, I recommend that during annual insurance open enrollment periods, both parties take the opportunity to review plans in which they are eligible and select the same for the children that balances out-of-pocket maximums with insurance coverage costs.
If you would like to discuss the interplay between child support and unreimbursed medical costs for your children, the attorneys at Ulrichsen Rosen & Freed will be more than happy to assist and address any questions you may have on this topic.