By Hon. Nancy L. Thane, Presiding Judge, Tuscola
County Family Division
When the Affordable Care Act’s (ACA) individual mandate to
maintain health insurance self-coverage became effective in 2014, there was
some question of whether or not the cost of coverage should be deducted from a
parent’s income when figuring a child support obligation. Some jurisdictions
decided that, as a mandatory condition of employment, the cost should be
deducted from income, while others decided not to deduct the cost because a
parent’s insurance costs were not previously allowed as a deduction when
calculating support.
During the 2015 review of the Michigan Child Support Formula
Manual (MCSF), the reviewing workgroup recommended a change because parents
have less funds available for child support after purchasing mandated coverage.
Based on that recommendation, the State Court Administrative Office (SCAO)
added a provision to clarify that a parent’s actual net cost of providing
mandatory self-coverage must be deducted from income.[1]
For nearly three years, parents who actually purchased self-coverage have
received a deduction for those costs.
In preparing for the Michigan Family Support Council Fall Conference,
I reviewed the following question: should friend of the court staff ever deduct
a parent’s net cost of self-coverage deduction because the ACA’s individual
mandate was repealed by the tax reform legislation enacted in late 2017? As I
thought about what occurred in late 2017, I remembered that there was no
shortage of widely varying claims made by the media and politicians around the
time that legislation was enacted.
In reviewing the ACA’s individual mandate to maintain coverage,
26USC 5000A(a) was not modified by the TaxCuts and Jobs Act of 2017 (TCJA). When I checked with my Fall
Conference co-presenter, Bill Bartels from SCAO, he confirmed, “Unless a person
is exempted from having to maintain coverage, federal law mandates that parents
maintain self-coverage.”[2]
Like any mandate, history has taught us that certain
individuals will choose to ignore it, and many others will do what is required.
The federal reduction of the penalty could result in fewer people following the
mandate to maintain self-coverage.
“The formula does not distinguish whether any particular law,
a contract, or court order created the mandate,” Bill explained. “If an
individual follows any mandate and actually maintains self-coverage, that
parent qualifies to receive the deduction required by 2017 MCSF 2.07(F).”
The most important step in determining child support is to calculate
accurate net income figures. Parents
cannot pay support with money that they have previously spent meeting the
federal self-coverage mandate. Therefore, any parent who purchases qualifying
coverage must continue to receive the self-coverage deduction.
Any additional questions on this topic can be directed to Bill Bartels at BartelsB@courts.mi.gov or Paul Gehm at GehmP@courts.mi.gov. You may also submityour question to the editor to be addressed in a future article.
Hon.
Nancy Thane received her undergraduate degree from Michigan State University and
her J.D. from the Thomas M. Cooley School of Law. In 1987, Thane became an
assistant prosecutor in Tuscola County. She was appointed the county's Friend
of the Court Family Court Referee in 1988, a position which she held until
2011. At that time, she was named staff attorney and deputy friend of the court
director, and later Tuscola County Friend of the Court Director. She is
currently serving as presiding judge of the Tuscola County Family Court
Division.
[2]
The relevant part that the TCJA changed was in Section 11081, which eliminated
the penalty for failing to maintain required coverage by changing the amount
and percentage to zero.
