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Unreimbursed Medical Expenses - Who Is Responsible For Payment?

The payment responsibilities of a child's unreimbursed medical expenses is often an issue that does not receive a lot of attention during divorce litigation.  However, as the cost of uncovered medical procedures have increased throughout the years, establishing each party's financial responsibilities for these expenses is an extremely important element of reaching a final resolution of your case.

The New Jersey Child Support Guidelines mandate that the custodial parent cover the first $250 per year for each child's unreimbursed medical expenses.  With the price of co-pays and prescriptions these days, this $250 does not go very far.  All unreimbursed medical expenses above this amount are to be paid by agreement between the parties, or through a Court Order.

The most common resolution to the issue of what each party's responsibility is towards these medical expenses is to use an 'income shares' approach.  Under this method, each party's respected income is registered a percentage in direct connection to the total combined income of the litigant.  For example, if Wife earns $100,000 per year and Husband earns $80,000 per year, Wife would have an obligation to pay for 55% (her share of parties' total income) of the registered unreimbursed medical expense, after the first $250 credit is properly applied.  I have found that this model is the most efficient resolution to the issue.  However, it is important to note that the 'income shares' approach is not a mandated or Court ordered resolution to this issue.  It is merely a practical approach that many attorneys utilize.

When drafting a Marital Settlement Agreement or a Post-Judgment Order, parties also have the option of coming up with their own agreed upon payment method of these expenses.  I have seen many litigants agree to a 50/50 split, even when their income percentages are not truly equalized.

Being that a vast majority of litigants share the designation of joint legal custody (joint decision making rights) of their children, if you are the custodial parent and wish to receive reimbursement for the medical expenses that you covered 'out of pocket', I suggest that you develop a system to inform the other spouse of these anticipated cost.  Many litigations focus on whether or not the other party had a chance to approve a medical procedure that will incur some 'out of pocket' expenditure before the non-emergency procedure commenced.  Like many other areas of a successful post-divorce relationship with the other parent, effective communication is the key to avoiding a potentially costly litigation.

As always, if you predict that the payment of unreimbursed medical expenses may be an issue in your pending or existing divorce agreement, I suggest that you consult with an experienced family law attorney to fully explore your options.

Full post as published by New Jersey Law Blog on April 23, 2009 (boomark / email).