In today’s episode, I wanted to talk about how health-related expenses for your kids are handled in a divorce agreement. Specifically, I wanted to talk about the two most common categories of health-related expenses that you will see a divorce agreement address. Those are the cost of providing health insurance for your kids and then the cost of everything else that’s health-related. Essentially, that boils down to everything else that is not covered by insurance. We often call them unreimbursed medical expenses. The gist is, on the one hand, you have the cost of maintaining health insurance, and on the other hand, you have the cost of everything that health insurance doesn’t cover that’s medical. Let me take those each in turn.
With regard to the health insurance premium, what typically happens is that a parent is covering themselves and also their children through the health insurance plan that’s available to them. What we try to measure is what’s called the incremental cost of insuring the children on your health insurance plan. That is the difference between what it would cost you to insure yourself alone and what it actually costs you to insure yourself with your children. The difference there is the incremental cost of insuring your kids, and that is the cost that the insuring parent and the other parent generally are going to share in the context of a divorce process.
Now, as I mentioned in our previous episode about providing health insurance for kids, there may be opportunities for a parent to enroll the kids in a better quality health insurance plan, but perhaps the health insurance plan is more expensive and that impacts what each parent’s responsibility is toward the incremental cost of insurance. Or perhaps a parent has an opportunity to insure the kids under a less expensive plan but arguably lower quality health insurance plan. What you want to do or have done in your agreement is you want to have clarified how you will address health insurance options like that. It can simply be that you will only change the kids’ health insurance plan by mutual agreement at the time. Or it maybe if it’s very important to you, for instance, that if the children have access to a better quality health insurance plan, and by that, I mean essentially one that more reliably will cover more of their medical expenses, that so long as the cost of that plan is under X hundred, X thousand dollars per month or per year, you will enroll the kids in that plan. That is more an issue of which plan to select. Once a plan is selected, measuring the incremental cost of that plan is pretty straightforward. It’s just finding the difference between the total cost of insuring yourself with the kids and the total cost of insuring just yourself.
Now let’s talk about that second category of health-related expenses. As I mentioned, those are essentially all expenses that insurance does not cover, everything else that you have to pay for your kids, related to your kids’ health, that is not for their health insurance premiums. That would be expenses that you have to pay like copays or deductible in-network or out-of-network, or a particular share of co-insurance until you have met the in-network or out-of-network, out-of-pocket max for your particular health insurance plan. Or it could be for out-of-network providers, 100% of those costs because you have the health insurance plan that doesn’t have out-of-network benefits. Or it could be the full cost of medical treatments that your health insurance plan deems unnecessary and thus refuses to cover. There’s a really wide range of potential health-related expenses in this second category, everything essentially that’s not an insurance premium.
I also want to flag that I may refer to medical expenses, but generally speaking, these expenses cover not just medical but also dental, orthodontic expenses, prescription pharmacy expenses, and certainly within medical is included mental health and psychotherapeutic expenses. The overall metric for whether or not a particular medical or health-related expense is shared between parents, the most common descriptor for that the expense needs to be reasonable and it needs to be medically necessary. Something may be medically necessary, but it may not be reasonable for a given treatment to go to the absolute most expensive practitioner in your area who accepts no insurance and charges ten times what the same practitioner in-network for your insurance would have charged. If it is not common in your family’s history and in your family’s decision making around health-related expenses to go out of network for a particular expense, it may just not be reasonable to incur a very high cost for a particular medical expense.
Additionally, a medical expense, and there’s some subjectivity here, but it may not be medically necessary. That’s something that you really need to, number one, try to come to agreement with your ex-spouse on. Number two, you want to really look to your child’s medical providers to understand whether something is purely elective or whether it is more in the category of medically necessary or at least very strongly medically advised. What medically necessary does not mean is only emergency treatment necessary to save a child’s life. It is more that a doctor or other treating medical, dental, mental health professional is saying, “This is what is required for your child’s wellbeing,” and not simply in the context of it’s necessary because this is an emergency. Hopefully, that’s not a situation that presents itself for you at all. Medical expenses, to be shared, need to be reasonable and need to be medically necessary within reason.
With respect to medical necessity, I want to raise a couple of points that sometimes couples will disagree on and may get a little tripped up over so that you can have them in mind if you think this might be a problem area for you and your spouse. First would be the area of more holistic or integrative medical treatments. Sometimes spouses have very, very different opinions on the value and on the medical necessity of treatments from a more holistic or integrative approach, from a functional medicine approach, naturopathic approach. If that’s the case, you want to do your best to talk through that issue as part of your negotiation. Alternatively, if you understand that you and your spouse really are just diametrically opposed to one another on that subject and let’s say you’re in support of more holistic treatment approaches, you may be completely comfortable covering the full cost of those, provided that your agreement clarifies that you are permitted to obtain treatments like that for your child. If more holistic or integrative medical approaches are something that you and your spouse disagree over strongly and it’s been a hot button issue for you, you really want to try to discuss that as part of your negotiation. If not to discuss it to share the cost, then at least to discuss it to clarify what treatments are permissible and to what degree do you need your spouse’s mutual agreement before engaging in a particular integrative or holistic or alternative treatment?
Another point of disagreement between people can be the use of out-of-network practitioners. In particular, if your health insurance does not have out-of-network benefits, it can be quite expensive to elect to use out-of-network practitioners. That said, if let’s say from birth, your child’s pediatrician has been out-of-network, has never accepted insurance, it’s important for you to clarify in your agreement that it is your expectation that you’ll continue using the same providers that you have been using historically, whether or not they’re in or out-of-network. It’s common to say that both parents will make best efforts or reasonable efforts to use in-network providers when available, but it’s also common to say that children will continue to see the providers whom they have been seeing. If it’s important to you to be able to select out-of-network providers for your kid, that’s important in the future. Your child, maybe they don’t have an out-of-network medical provider or dental or mental health provider right now, but you wouldn’t want to be constrained to only use in-network professionals in the future. You want to talk about that with your spouse and try to negotiate it as part of the agreement.
Alternatively, if you can’t come to agreement on that, you could always negotiate that if you elect to use an out-of-network provider, you will be allowed to do so for your child, provided that the excess cost over using an in-network provider would be covered by you. Number one, you may be okay with that even if you don’t have health insurance coverage for out-of-network professionals. Number two, if you do have health insurance coverage for out-of-network professionals, the excess cost to you may be substantially lowered by the insurance reimbursements that you receive for that out-of-network practitioner. So you may be very comfortable saying that, “Yes, fine. I understand we really differ on the value and importance of being able to go to the best practitioner in or out of network. And I’m fine to cover the excess cost if we end up going to somebody out of network.”
A final area where I see couples often have just different philosophies and different opinions would be in the importance of getting mental health treatment for a child. That could be even a couple of sessions with a therapist, or it could be ongoing treatment. If you anticipate that this is something that you and your spouse, or you know that this is something that you and your spouse see very differently, one spouse is very pro-therapy and would like to get the kids into treatment even if short term and the other spouse is very anti-therapy and thinks it’s only a good idea in the most extreme circumstances, you will really want to try to negotiate some kind of compromise with your spouse on that subject in the context of your divorce so that you’re not down the road fighting about that issue without your agreement providing any guidance for it.
One thing that I’ve seen is that if the parents, let’s say they have a couple’s therapist whom they’ve worked with and trust, or they really love their child’s school and really trust the advice of the principal, teacher, guidance counselor there, you can agree in your agreement, you can state in your agreement that if you don’t see eye to eye on engaging any kind of mental health treatment for a child at some time in the future, you will meet in good faith with and discuss the issue with a neutral professional at the child’s school or a mutually agreed upon mental health professional or the child’s pediatrician, somebody who can help you bridge the gap between your different opinion of what’s best for your child medically and help you come up with a compromised plan for treatment for your child.
The final thing I want to specify about health-related costs is that, generally speaking, if they are reasonable and medically necessary, you don’t have to mutually agree to them, although many people will say, “We will share medical or health-related costs that are mutually agreed to with the consent for treatment not to be unreasonably withheld.” You can’t simply just say, “No, I don’t agree to that, and thus, you have to pay for that expense.” There has to be a good faith reason why you aren’t agreeing to a particular expense. In general, it’s also very common not to see mutual agreement as a prerequisite for sharing health-related expenses if they are required to be reasonable and to be medically necessary. If you know that you and your spouse see health-related treatment and engaging different professionals very differently, it is probably a good idea for you to require some kind of mutual agreement before incurring certain health-related expenses just so you can ensure that you are on the same page.
Finally, bear in mind that in the context of an emergency, mutual agreement is never needed. Obviously, either parent who is present or learned of the emergency, they just take the steps needed to ensure that the child is receiving the best care that they can receive and there’s absolutely no requirement that the other parent be consulted with or mutually agree in a true emergency context where the child’s wellbeing depends on an immediate decision and it’s just not feasible to consult with the other parent prior to making that decision. I just want to clarify that that would be a category of health-related expenses related to a health emergency that absolutely would not require mutual agreement in advance.
That was our episode on how to address health-related expenses for children in the context of a divorce. I hope it was helpful for you.