What’s the Deal with the Six Percent Rule?

What’s the Deal with the Six Percent Rule?

Have you heard your lawyer mention something called the “Six Percent Rule,” but you’re not sure what that is?  This term comes from the Indiana Child Support Guidelines and is used to refer to the children’s medical expenses, which are not covered by insurance that must be paid by the parent who receives child support.

The Indiana Child Support Guidelines provide that “ordinary uninsured health care expenses” of a child or children are paid by the parent who receives child support. The amount that the Child Support Guidelines have determined is the ordinary uninsured medical expenses of a child or children is 6% of the “basic child support obligation” as calculated under the Guidelines.  The weekly child support payment that the parent who receives child support includes the other parent’s contribution toward these ordinary uninsured medical expenses.  That means that the parent who receives child support must pay a certain amount of the child or children’s annual uninsured medical expenses, presumably using the funds received as child support.  The parent who pays child support essentially pre-pays their contribution to ordinary uninsured medical expenses each week in their weekly child support payment.

So, what does this mean? Let’s say Sally and Bob have nearly equal incomes. Sally receives child support for little Johnny from her co-parent, Bob. Sally and Bob’s child support calculation shows that the basic child support obligation before it is divided between the parties is $200.00 per week.  This $200.00 per week child support obligation is $10,400.00 per year.  Six percent of that total is $624.00, which the Indiana Child Support Guidelines have determined is Johnny’s ordinary uninsured medical expense.  Sally must pay the first $624.00 of Johnny’s copays from his doctor, his counseling expenses, and the prescription costs for his asthma medication plus any other medical expenses that insurance does not cover until she pays the total. Once Sally has paid $624.00, she lets Bob know and provides him with receipts showing that she has hit the threshold. Any expenses that Johnny has during the same calendar year which are not covered by insurance are considered “extraordinary uninsured medical expenses” and are divided between Sally and Bob based on their respective income percentages. As Sally has the more flexible job, she usually takes Johnny to the doctor, so she is the one who is usually paying the expenses to the medical providers. After reaching her 6% threshold, Sally sends Bob her receipts each month for him to reimburse her for his share of the expenses. Bob has time – usually 10-15 days – to review the receipts and ask Sally or the medical providers any questions he may have.

If Sally does not provide Bob with copies of the actual receipts – not the bills! – from Johnny’s medical providers, then Bob does not have to reimburse her. Usually, there are limits to how long Sally can wait before providing receipts to Bob, or her requests are considered “stale” and she cannot collect from Bob.

If your child is generally healthy, your child’s medical expenses may not reach the annual 6% threshold in a particular year. However, if your child has chronic medical conditions or has braces in her future, you should discuss with your co-parent how these larger expenses will be handled. Items like braces can either be paid all at once – usually at a discount – or on a payment plan, which can affect how the 6% threshold operates and the division of the expense over more than one year.

There are other alternatives to the 6% Rule, but they are best discussed with your attorney. If you have questions about how your child’s medical expenses will be handled, contact the attorneys of Wanzer Edwards.

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Elisabeth M. Edwards Attorney
Elisabeth M. Edwards is a founding attorney at Wanzer Edwards, PC where she practices in the areas of family law and divorce, including collaborative law, family mediation and arbitration, and Parenting Coordination. Ms. Edwards completed her undergraduate degree at Hanover College, majoring in English. She went on to earn her Juris Doctor at the Indiana University Robert H. McKinney School of Law.
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