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Changes to The Michigan Child Support Manual

Clarkston Legal Sept. 20, 2016

Beginning January 1, 2017, the formula used to calculate child support in Michigan will change. Approximately every four years, the State Court Administrator’s Office and the Friend of the Court Bureau work together to revise the formula. In doing so, they take into account changes in the law as well as the ever-increasing cost of living.

Child Support is explained in the Michigan Child Support Formula Manual; the latest edition comes out in January and details the following major changes.

Health Care Coverage

The most significant changes are in response to the Affordable Care Act and its nation-wide insurance mandate. Previously, the cost of a parent’s health insurance coverage was not considered in calculating their income available to pay child support. Under the new formula, the cost of mandatory health care coverage will be deducted from a parent’s income available for support. With basic policies costing hundreds of dollars per month, this change to the formula could result in a substantial reduction in support for many parents.

The growing popularity of high-deductible plans combined with a Health Savings Account (HSA) was also a consideration in the new formula. Employer contributions to a parent’s HSA are no longer considered income for the purpose of calculating child support.

Determining which parent should maintain health care coverage for the children is easier under the new formula. The supplement to the formula provides a decision tree for determining who should provide the insurance, based on the cost of coverage, quality of coverage, and likelihood that a parent will maintain the coverage for the child.

Child Support and Business Owners

The new formula clarifies the allowable deductions for parents who own a business. Beginning on January 1, 2017, a parent may deduct the straight-line depreciation of personal property from their income available for support. This provision excludes personal vehicles and home office expenses.

Parents who own a business will continue to be subject to heightened scrutiny from the Friend of the Court and attorneys performing child support calculations. Business tax returns, profit and loss statements, and balance sheets are often necessary in order to calculate an accurate child support obligation.

Imputation of Income

Often, one parent chooses not to work, despite being capable of doing so. In that case, the child support formula imputes them with the income that they could be earning. The imputed income calculation is a sophisticated one, the new formula calls for consideration of a number of factors including the geographic region and present condition of the non-working parent.

The formula also specifically prohibits the practice of imputing income based on non-specific calculations, including the concept that a non-working parent can always be imputed with full-time, minimum wage employment.

Changing an Existing Support Order

Support orders entered prior to January 1, 2017 will be calculated using the old formula, and there is no automatic review when a new formula is created. If the new formula would result in a substantial change in a parent’s support obligation, they can file a motion asking the court for that reduction. The threshold for modification by the Friend of the Court is $50 or 10% of the original amount, whichever is greater.

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If you have a child support issue, consider scheduling a free consultation to review your options.