WHAT IS THE 6% RULE?
Many court orders and most agreements between the parties reference that the custodial parent (usually the person receiving child support payments) pay the six percent rule (6%). Many just follow the number set forth in the child support worksheet without truly understanding the rationale and calculations behind the “six percent (6%) Rule.” It is best the judicial officers and lawyers understand how that number is derived.
Guideline 7 of the current Indiana Child Support Guidelines (hereinafter CSG), sets forth the following explanation.
Explanation of 6% rule/uninsured health care expenses. The data upon which the Guideline schedules are based include a component for ordinary health care expenses. Ordinary uninsured health care expenses are paid by the parent who is assigned to pay the controlled expenses (the parent for whom the parenting time credit is not calculated) up to six percent (6%) of the basic child support obligation (Line 4 of the Child Support Obligation Worksheet). Extraordinary health care expenses are those uninsured expenses which are in excess of six percent (6%) of the basic obligation, and would include uninsured expenses for chronic or long term conditions of a child. Calculation of the apportionment of the health care expense obligation is a matter separate from the determination of the weekly child support obligation. These calculations shall be inserted in the space provided on the Worksheet.
Many incorrectly think the 6% rule applies to line 8 of the child support worksheet, which is typically the amount the non-custodial parent pays. However, this is not the correct application. As stated above it is 6% of line 4 which is the basic support amount owed by both parents before factoring in child care, health insurance, and parenting time credit. There is a basic support amount in all cases. If you only consider the support paid by the person who is not responsible for the controlled expenses, then in a negative support situation you would not have a 6% amount. This is not the case. Even with a negative support order the person is being attributed with support payments as the negative amount would be greater if that person had no responsibility for the health expenses of the child. Each party has a duty to pay a portion of the uninsured expenses, as is explained in the commentary of the CSG below.
Apportionment of Uninsured Health Care Expenses. Six percent (6%) of the support amount is for health care. The noncustodial parent is, in effect, prepaying health care expenses every time a support payment is made. Consequently, the Guidelines require that custodial parent bear the cost of uninsured health care expenses up to six percent (6%) of the Basic Child Support Obligation found on Line 4 of the Child Support Obligation Worksheet and, if applicable, the child support obligation attributable to a student living away from home (Section Two Line I of the Post-Secondary Education Worksheet).
That computation is made by multiplying the total of Line 4 and Line I by 52 (weeks) and multiplying the product of that multiplication by .06 to arrive at the amount the custodial parent must spend on the uninsured health care costs of the parties’ child(ren) in any calendar year before the noncustodial parent is required to contribute toward payment of those uninsured costs. For example, if Line 4 is $150.00 per week and Line I is $25.00 per week, the calculation would be as follows: $150.00 + $25.00 = $175.00 x 52 = $9,100.00 x .06 = $546.00.
Thus, on an annual basis, the custodial parent is required to spend $546.00 for health care of the child(ren) before the noncustodial parent is required to contribute. The custodial parent must document the $546.00 spent on health care and provide the documentation to the noncustodial parent.
After the custodial parent’s obligation for ordinary uninsured health care expenses is computed, provision should be made for the uninsured health care expenses that may exceed that amount. The excess costs should be apportioned between the parties according to the Percentage Share of Income computed on Line 2 of the Worksheet. Where imposing such percentage share of the uninsured costs may work an injustice, the court may resort to the time‑honored practice of splitting uninsured health care costs equally, or by using other methods. The court may prorate the custodial parent’s uninsured health care expense contribution when appropriate.
The following example demonstrates the importance of calculating the 6% rule amount correctly using line 4 of the child support worksheet rather than line 8. If the basic support amount is as set forth above, if the 6% rule applied as 6% of the support paid by the non-custodial parent at $50 a week, the 6% amount would be $3 per week x 52 weeks or $156 per year. When in fact the amount if figured properly as 6% of line 4 (i.e. 6% x $150 x 52 weeks) would be $468 a year. An even more glaring explanation of the problem if calculated improperly using line 8 is if the non-custodial parent has a negative support amount of say -$10 a week, then there would be no 6% rule amount.
When preparing an agreement or order it is best to spell out the dollar amount in the agreement or decree and make sure it is calculated properly. One must remember that the custodial parent also has a duty to pay a portion of the uninsured medical expenses if they have an income. If you reference the 6% amount without spelling it out then it requires you to locate the child support worksheet, which unfortunately does not always make it to the court file, to later determine what amount is the custodial parent’s duty to pay. In fact the support attributable to both parents accounts for the presumption that the custodial parent incurs 15% more. See Guideline 6 Commentary:
Analysis of Parenting Time Costs. An examination of the costs associated with the sharing of parenting time reveals two types of expenses are incurred by both parents, transferred and duplicated expenses. A third category of expenses is controlled expenses, such as the 6% uninsured health care expense that remains the sole obligation of the parent for whom the parenting time credit is not calculated. This latter category is assumed to be equal to 15% of the Basic Child Support Obligation.
Prepared by Richard A. Mann of Mann Law, P.C. Attorneys at Law, www.rmannlawoffice.com
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