By Marie E. Matyjaszek
Well, the “Redcoats” aren’t coming, but the 2017 Michigan Child Support Formula is! Starting January 1, 2017, the new formula and its manual will take effect, along with some welcome and I’m sure, unwelcome, changes. I would like to highlight the two topic changes that I personally think will cause the most noise (cheers and jeers) among practitioners and clients alike – retirement and health care.
The biggest “BOO!” I see coming revolves around what a party contributes to his or her retirement. Under the current manual (2013 edition), the court can take into account voluntary retirement contributions made by a party as a deduction for purposes of the child support formula. This amount can be up to 5.5 percent of one’s gross income. The 2017 formula eliminates this option, and only provides for mandatory or nondiscretionary retirement contributions.
Realistically, we all want to save for retirement, and in my opinion, the voluntary retirement contribution deduction was a good thing. The court should consider that people need to support themselves in the future. The 2013 formula provided for a cap of 5.5 percent, so if an individual contributed a substantial amount over 5.5 percent, anything above the 5.5 percent would not be considered. Alas, the powers that be did not agree with (or ask) me.
Another retirement change is that employer contributions to a person’s pension or retirement have been removed from what is considered income. To be honest, I don’t know too many people that utilized that provision previously, so I doubt it will be missed.
Health insurance changes will likely generate the largest cheers from the crowd, with modifications to allow for credit for a party’s spouse who covers the children on his or her health insurance. This just makes sense. The manual states that “the court may permit a parent to provide required coverage through alternative means, such as a spouse’s or other household member’s coverage or coverage provided by a nonparent-custodian…provided that a parent is required to purchase coverage immediately should the alternative coverage stop. (MCSF Manual §3.05(B)(3)).
The manual goes on to say, “If the parent provides insurance for the children-in-common using a spouse’s or household member’s benefits, consider amounts paid by the parent’s household as the parent’s premiums paid to insure the children.” (MCSF Manual §3.05(C)(1)(c)).
One of the biggest complaints I hear is that it’s not fair to ignore the cost a spouse pays to cover their step-children on his or her insurance. And, that’s a legitimate complaint – the money is likely coming out of a marital pot, and there’s no reason to pretend that health insurance costs are cheap. Consideration of the cost to provide for that insurance has also changed – the 2013 formula provided that parents had to cover their children on their insurance as long as it did not exceed 5 percent of their gross income to do so. The 2017 formula, section 3.05(A), has increased that reasonable cost to not exceeding 6% of the providing parent’s income.
Also, a new deduction was added – the cost that a parent pays to provide him or herself with mandatory health care coverage.
The last health care change that I think is important to note is the annual ordinary medical cost. This cost represents the dollar amount the payee has to pay each year prior to the payer’s requirement to contribute a percentage to unreimbursed health care costs for the minor children. This also assumes that the payer is contributing an ordinary medical portion in his or her total child support cost each month. The current numbers are: $357 for one child; $715 for two children; $1,072 for three children; $1,430 for four children, and $1,787 for five or more children; with all of those amounts being per year.
For orders entered after the 2017 effective date, the new amounts are: $403 for one child; $807 for two children; $1,210 for three children; $1,614 for four children, and $2,017 for five or more children, all per year.
While the numbers have jumped a decent amount, so has health care. The average cost most parents spend out of pocket each year for their children’s health care is often much more than the amounts provided by the formula.
I will likely supplement this article down the road, once I’ve had the chance to fully utilize the new formula with actual cases. I’m not a huge fan of change, so my Spidey senses are tingling with a whole new formula manual after 4 years. Here’s to hoping it’s received and put into practice well!
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The author is an Attorney Referee at the Washtenaw County Friend of the Court; the views expressed here are her own. She can be reached at matyjasz@hotmail.com.
