In addition to calculating each parent’s child support obligation the cost of providing health insurance for the parties’ children has to be calculated, and allocated between the parties. There are two ways to calculate the health care premium for the children. The first is to calculate the actual marginal cost of covering the children. The second is to calculate the per capita cost of covering the children.
Actual Marginal Cost of Health Care Coverage for Children
If the parent paying for the children’s health insurance knows how much they are paying weekly to cover the children then that amount is placed on the child support worksheet as a weekly amount and allocated between the parties in proportion to the combined parental income. However, usually, the cost of providing healthcare is broken down in the following choices: Employee, Employee and Spouse, Employee and Family. To sort out how much of the total health insurance premium is solely for the children’s coverage requires the employee to subtract the amount paid to cover themselves, or themselves and their spouse alone from the cost paid to cover them and their children. The difference is the actual cost to cover the children. For example, if the employee’s cost to cover themselves and their spouse and children is $800 per month, and the cost to cover the employee and their spouse is $500, then the cost to cover the children is $300 per month.
Per Capita Cost of Health Care Coverage for Children
In the usual case the employee parent cannot figure out the actual marginal cost to cover the children. In these situations the per capita cost calculation method has to be used. The per capita cost to provide the children with health coverage is calculated by dividing the cost of the health insurance premium by the number of people covered by the premium. This yields a per capita (per person) figure. To calculate the children’s portion of the premium the per capita/per person figure is multiplied by the number of covered children to arrive at the total amount to cover the children. For example, if a mother is covering health insurance payments for herself and her two children, and the weekly payroll deduction is $75.00 to cover her and the children to calculate the amount of the premium which is allocated to her children she should divide the weekly premium deduction ($75.00) by the number of people covered (3 people – her and her two daughters) to arrive at a per capita/per person figure of $25.00 per person. Since she’s covering 2 people other than herself (her two daughters) the amount of the weekly health care premium allocated to the children is $25.00 x 2 persons = $50.00 per week for the children’s health care.
Allocation of Health Care Coverage Costs Between Parents
To illustrate how health care costs are allocated between parents, suppose that the wife is paying $42 per week (x 4.3 weeks/per month = $180.60 per month) to provide health care coverage for her two children. Further suppose that wife earns $800 per week and husband earns $1200 per week. The parents combined weekly income is $2000 per week. Wife’s $800 per week is 40% of the parents combined weekly parental income of $2000 per week. Husband’s $1200 per week is 60% of the parents combined weekly income. Without factoring in any other adjustments to income (e.g., alimony, other dependent deduction, prior child support orders, etc.,) husband would be responsible for 60% of the children’s weekly health insurance cost which in this example is $25.20 per week. ($42 per week x .60 = $25.20 per week). Husband’s portion of the $180.60 per month health insurance bill would be $108.36. Wife’s portion would be $72.24.
Allocation of Unreimbursed Medical Expenses After Payment of $250 Per Child Per Year By Custodial Parent
Using the same figures from the example above, and assuming that the wife is the custodial parent, after she pays $250 per child per year of unreminbursed medical expenses, the parents would allocate the remaining unreimbursed annual health care expenses as follows: Wife earns 40% of the combined income so she is responsible for 40% of the unremibursed medical expenses. Husband earns 60% of the combined income, so his responsible for 60% of the unreimbursed medical expenses.
Double Coverage (Health Insurance Covered by Both Parents)
An interesting issue arises when both parents cover the children on their health insurance. Both parents insurance coverages will not be deemed primary. Generally, the insurance coverage adjustment is for the person who is paying for the primary coverage. However, if the parties agree they can extend the adjustment to cover both coverages.
What Health Insurance Covers and When Does It End
Health insurance typically covers the costs of medical and dental coverage. One can also make an argument that vision coverage, and other atypical health care costs should be included. Health insurance coverage usually ends when child support ends upon the child’s emancipation.
If you have questions about the division or allocation of health insurance costs during or after a divorce or separation, don’t hesitate to contact me to discuss your obligations. I have been practicing family law in Bergen, Hudson, Passaic and Essex counties for over 20 years. I can be reached at 201-731-3086 or via e-mail using the contact form. The consultation is free.