PIQ-02-03

DATE:           December 20, 2002

TO:                State IV-D Directors and Regional Program Managers

FROM:          Sherri Z. Heller, Ed.D., Commissioner
                       Office of Child Support Enforcement

SUBJECT:   Medical Support Enforcement Policy Clarifications

Since the publication of the National Medical Support Notice (NMSN), the Federal Office of Child Support Enforcement (OCSE) has received a number of inquiries regarding the implementation of the NMSN and other medical support enforcement issues.

Under regulations at 45 CFR 303.32(c)(2), the state IV-D agency must send the NMSN to the employer within 2 business days after the date of entry of the obligor’s name in the State Directory of New Hires if the obligor is ordered to provide health care coverage. Is it necessary to send the NMSN if we know the employer does not offer health insurance to its employees?

No. Regulations at 45 CFR 303.32(a) require use of the NMSN to enforce health care coverage where appropriate. If the employer does not provide health care coverage for employee dependents, there would be no need for the IV-D agency to send the NMSN for those employees. However, the IV-D agency should make appropriate notation in the individual case record of the unavailability of health care coverage through that employer.

Question 2:

Mailing the multi-page NMSN and instructions is expensive and bulky. May the state send the entire NMSN the first time it is sent to the employer, but then send an abbreviated NMSN, with just the case-specific pages included, and instructions that the employer can contact the IV-D agency if the employer needs the instructions, or access the instructions at a specified website? Alternatively, could the state print a brochure to accompany the NMSN that contains all the instructions but in a less bulky form?

Response:

Employers and plan administrators need the explicit instructions contained in the NMSN in order to complete correctly their respective responsibilities. The first two pages of Part A and the first two pages of Part B contain case identifying information and response forms for the employer and plan administrator and are necessary for their appropriate and timely reply.

States may provide the instructions in an alternate printed format, such as a brochure, as long as the language in the instructions appears verbatim. Should an employer request that the IV-D agency send Part A and Part B without the instructions, the agency may send that employer the NMSN without instructions. States may develop a web site or other format for posting the instructions. Again, the agency must continue to mail the hard copy of the instructions with each NMSN unless the employer has requested otherwise.

States should also consider the feasibility of electronic transmission of the NMSN or the NMSN data. This would enable the state, upon the request of the employer, to transmit the form to employers in a format other than hard copy. OCSE is working with the Department of Defense to develop such a format and electronic transmission mechanism. OCSE and Department of Defense (DoD) are exploring expansion of the KIDS 1^st web application to enter the data for active duty military personnel as well as using the OCSE network to transport NMSN data to DoD via batch file transmissions. States and OCSE may explore the use of other prearranged mechanisms to transmit the NMSN to employers.

Must we re-send the entire NMSN when no response is received from the employer or plan administrator within the 40-day time period?

Response:

No, the NMSN does not need to be re-sent automatically. However, the IV-D agency should contact the employer to ascertain whether the NMSN was received or whether there have been delays in processing by the employer and/or plan administrator, and follow up appropriately (e.g., by re-sending the NMSN as necessary).

The Order/Notice to Withhold Income for Child Support promulgated in March 2001 includes on item five a space to check if the obligor's employer is required to enroll the child(ren) in any health insurance coverage available to the employee/obligor through employment. Since the use of item five has been made redundant by implementation of the NMSN, when will the Order/Notice to Withhold Income for Child Support be revised to eliminate the redundant item five?

OCSE is working on revisions to the Order/Notice to Withhold Income for Child Support. Revisions will be made before the current OMB approval expires in March 2004.

We currently collect insurance company name, address and telephone number as well as policy and group number and pass it on to Medicaid so that they can go after third party liability, as part of the 45 CFR 303.30(a)(7) requirements. The NMSN does not collect this information. Is it possible to make any changes and/or add items to the NMSN?

Response:

No, the NMSN may not be changed. The NMSN was developed to provide employers and plan administrators with a document that is consistent across the country. However, states may include with the NMSN their own cover letter or a separate document to provide or request additional information.

45 CFR 303.31 requires IV-D agencies to provide the custodial parent with information pertaining to the health insurance policy secured for the dependent children. Part B of the NMSN only requires the Plan Administrator to advise the IV-D agency when the children have been enrolled. The IV-D agency will not have any information that would help the custodial parent use the health care coverage. Also, the health plan administrator will be advising the custodial parent directly of the coverage. Do IV-D agencies still have to provide this information to the custodial parent?

Response:

Yes. Sections 303.31(b)(5) and 303.31(c) of our regulations require the IV-D agency to provide the custodial parent with information pertaining to the health insurance policy which has been secured for the dependent child(ren) pursuant to a medical support order.

The Plan Administrator Response in Part B of the NMSN requires the plan administrator to indicate the children are covered and the coverage effective date. To report Medical Support Ordered and Provided (lines 21-23) accurately on the OCSE-157 report, will the effective date provided on the NMSN be sufficient to reflect "provided"?

Response:

Yes, the coverage effective date as reported by the plan administrator to the IV-D agency may be used as the date for purposes of line 23 of the OCSE-157.

On Parts A and B of the NMSN, bottom of first page, the form lists the health insurance coverage required by the order. If the IV-D agency checks the box for "any health coverages available" and the plan administrator responds that there is coverage effective as of a certain date, how will the state know what specific type(s) of coverage are being provided (i.e. medical, dental, vision, prescription drug, mental health, other)?

Response:

The IV-D agency may need to contact the plan administrator for details of coverage.

In 45 CFR 303.32(c)(8), what was the intent of the word "consultation"? IV-D agencies do not want to be in the business of giving legal advice on which plan to choose, especially if at a later date problems arise with the selection.

Response:

The NMSN final rule at section 303.32(c)(8) requires that "The State agency, in consultation with the custodial parent, must promptly select from available plan options when the plan administrator reports that there is more than one option available under the plan."

The intent of the requirement is to ensure the IV-D agency discusses the available health care coverage options with the custodial parent. IV-D agencies are not expected to provide legal advice on which plan to choose. No legal advice should be provided to a parent unless given in accordance with legal practice requirements imposed by the state and any other applicable governing body.

Why doesn't the noncustodial parent provide input on choice of plan coverage when multiple options are available from the Plan Administrator?

Response:

Before the NMSN is transmitted to a noncustodial parent’s employer, the noncustodial parent may choose, from among available options, coverage that meets the support order requirements. However, if coverage consistent with the support order has not been selected prior to receipt of the NMSN, federal regulations require the IV-D agency to consult with the custodial parent when multiple options are available. While the regulations do not mandate similar consultation of the noncustodial parent by the IV-D agency, they also do not prohibit such consultation.

Our state plans to impose a fine on employers who fail to transfer the NMSN within the required 20-day timeframe. Is there any federal legislation that mandates states impose a penalty on employers who do not comply with the NMSN requirements?

Response:

No, federal IV-D law does not specifically require states to include a fine against employers in their state laws requiring employers to honor the notice. However, we strongly encourage states to address in state law the consequences for an employer who does not respond to a NMSN.

When does the 20-day timeframe begin for the IV-D agency to respond to the insurance plan administrator notification that there is more than one coverage option available?

Response:

DOL regulations, at 29 CFR 2590.609-2(c)(3), specify that "the NMSN satisfies Employee Retirement Income Security Act (ERISA) section 609(a)(3)(B) by instructing the plan administrator that if a group health plan has multiple options and the participant is not enrolled, the Issuing Agency will make a selection after the Notice is qualified, and if the Issuing Agency does not respond within 20 days, the child will be enrolled under the plan’s default option (if any)."

The 20-day timeframe begins on the date that the plan administrator sends the NMSN response to the issuing IV-D agency that there is more than one coverage option available.

If the plan has a default option, the NMSN instructions tell the plan administrator to enroll the child(ren) in the default option if the plan administrator has not received an election from the IV-D agency within 20 business days of the date the plan administrator informed the IV-D agency that multiple coverage options were available.

May a IV-D agency in one state send an NMSN directly to an employer in another state? Must an employer in a state that does not yet require responses to NMSNs honor a NMSN received directly from another state IV-D agency?

Yes, a IV-D agency in one state may send an NMSN directly to an employer in another state.

DOL published on December 27, 2000 a final rule for the NMSN in conjunction with the OCSE final rule for the NMSN. The DOL final rule was effective March 27, 2001. ERISA employers are subject to DOL requirements and are required to accept and process NMSN from any state IV-D agency as of that effective date, even if the ERISA employer's own state has not yet enacted legislation to implement the NMSN.

A non-ERISA employer subject to state law would not be required to honor the NMSN until the effective date of its own state.

Can a state revise its web version of the state medical support form in use before the NMSN was developed to meet the requirements for use of the NMSN? The state interactive web version uses drop-down boxes and click buttons and the state wants to revise it, rather than simply having a PDF version of the NMSN that mimics the NMSN template.

In addition, the state’s current web form collects such specific medical support information as availability of coverage, premium amount, and coverage information. This information is uploaded to the state mainframe system. The NMSN requires the plan administrator to provide some of this information in hard copy, but the web version collects it automatically, and the state hopes to continue to collect the medical support information using the web version, at least as an addendum to the NMSN.

The NMSN was developed for use by all states for all medical support orders and all employers. The state IV-D agency may use its existing web version to collect medical support information, but the existing web version cannot be a substitute for NMSN. However, at the request of an employer, the state may furnish the information captured in the NMSN electronically or through a web-based format or another prearranged mechanism for transmission of the NMSN electronically through a secure transport system.

Many orders state that health insurance is to be carried through the obligor’s union. In such cases, should the IV-D agency send the NMSN to the employer, who will then send part B to the union, as plan administrator? Or, should the IV-D agency instead treat the union as the employer and send the NMSN to the union, which will in turn route part B to the plan administrator? (The plan administrator may be part of the union organization or a separate entity under contract to the union to administer the health plan.)

Response:

The IV-D agency must send the NMSN to the employer. The employer must send the NMSN to the union or third-party entity serving as the union’s plan administrator.

Federal legislation allows the IV-D agency to determine presumptive eligibility for Medicaid. Is federal IV-D funding available for this?

Response:

Section 1920A(b)(3)(A)(i)(2) of the Act includes state and tribal child support enforcement agencies as qualified entities to determine eligibility of a child for Medicaid and SCHIP. The state Medicaid and SCHIP agencies have the authority to designate the eligible entities to perform presumptive eligibility determinations, and to provide the appropriate forms, materials, and training. For additional information, please review the information memorandum (OCSE-IM-01-07) and contact your state Medicaid and SCHIP agencies.

Presumptive eligibility determination for Medicaid and SCHIP by IV-D agencies is not an authorized or required IV-D activity. The Office of Management and Budget (OMB) Circular A-87 and the DHHS Office of Grants and Acquisition Management (OGAM) action transmittal (OGAM-AT-98-2) provide information on how the costs would be allocated to the benefiting Medicaid and SCHIP agencies. Contact your state or tribal financial officers for further guidance.

PRIORITY OF WITHHOLDING

What is the current OCSE policy regarding the priority which employers should use when there is not enough money to pay current support, medical and arrears?

Response:

The current OCSE policy regarding the priority which employers should use when there is not enough money to pay all support obligations was addressed in OCSE-PIQ-93-06:

"Federal regulations at 45 CFR 302.51(a)(1) require that amounts collected be treated first as current support. In the preamble to the final regulation, published in the federal register on February 26, 1991 (56 FR 7988), governing extension of child support enforcement services to Medicaid recipients and former AFDC recipients, we stated that ‘When less than the total amount of the obligation is collected, the IV-D agency should allocate the amount collected between the child support and the medical support specified in the order in proportionate shares. Current support must be given priority over past-due support.’

While we believe that the allocation of payments between child support and medical support described above is the best method of distribution, the State is not required to allocate support payments between child support and medical support in situations where the individual noncustodial parent has been ordered to provide both child support and medical support to the same custodial family.

For enforcement through withholding of income of medical support provisions in IV-D orders where application of CCPA [Consumer Credit Reporting Act] limits would preclude collection of the total amount of combined child support and medical support amounts, there is, at present, no Federal policy regarding any mandatory priority between wage withholding for child support and medical support. State laws and procedures, including the method for calculating the child support and whether credit is given for health care premiums, would determine whether the amounts withheld under the CCPA limits would apply first to cash child support, to medical support, or some proportionate sharing, or whether CCPA limits should apply to health care premiums at all. Consideration in making such policy determinations may include such issues as the consequences of a lapse in health insurance coverage and the availability of alternative enforcement remedies to collect unpaid cash support."

Should a federal employer use the employment state’s priority scheme to determine whether there is adequate disposable income available under the CCPA to cover the child support and the cost of health care premiums?

Response:

No, for federal employees, health care premiums are a mandatory deduction before arriving at disposable income for computing CCPA limits. Therefore, a federal employer should only consider whether or not the cash child support, rather than the combined total cash child support and health insurance premium payments, fall within the CCPA limits for withholding.

May a state receive an exemption or waiver to redefine the definition of "reasonable cost" when ordering medical coverage? Our state is considering using a maximum of 5 percent of gross income in determining if medical coverage, available through an employer, is reasonable.

Response:

No, there is no authority to grant an exemption or waiver of the reasonable cost definition contained in federal regulations issued pursuant to section 452(f) of the Act. The regulations (45 CFR 303.31) define reasonable cost as employment-related or other group health insurance (See OCSE-AT-85-16).

If there is an existing court or administrative order for the noncustodial parent to provide health care coverage and the custodial parent has satisfactory health insurance for the child(ren) and wants to continue to provide the health care coverage, should the IV-D agency petition the court to have the existing court order modified to have the custodial parent ordered to provide health care coverage? Alternatively, should the IV-D agency enforce the existing court order on the noncustodial to provide health care coverage even if the custodial parent wants to provide the coverage?

The state IV-D agency may either petition for modification of the support order to have the custodial parent ordered to provide health care coverage or take steps to enforce the existing order on the noncustodial parent. Since the custodial parent is already providing health care coverage, it appears it may be preferable to petition for modification of the order that the custodial parent will provide health care coverage.

If the court orders the custodial parent to provide health care coverage, is the IV-D agency required to enforce the health care coverage order against the custodial parent? Must the IV-D agency seek an order for the noncustodial parent to provide health care coverage in this situation?

Enforcement of a child support order requiring the custodial parent to provide health care coverage is not required in IV-D statute or regulations. Some states do not consider it appropriate for the IV-D agency to take enforcement actions against the custodial parent. Other states do consider it appropriate to take enforcement actions against the custodial parent when the custodial parent is required to provide health care coverage in the child support order. Federal matching funds are available for such enforcement activities.

When the custodial parent is able and willing to provide satisfactory health care coverage, the state is not required to seek an order for the noncustodial parent to provide health care coverage.

If there is an existing child support order for the noncustodial parent that does not provide for health care coverage and the custodial parent has satisfactory health care coverage for the children, is the IV-D agency required to petition the court to order the custodial parent to provide the health care coverage or should an order be entered to order the noncustodial parent to provide the coverage?

The OCSE regulations, at 45 CFR 303.31(b)(1) require: "Unless the custodial parent and child(ren) have satisfactory health insurance other than Medicaid, [the IV-D agency shall] petition the court or administrative authority to include health insurance that is available to the noncustodial parent at reasonable cost in new and modified orders for support."

If the custodial parent has satisfactory health insurance coverage other than Medicaid, there is no requirement for the IV-D agency to petition for modification of the order to require either the custodial parent or the noncustodial parent to provide coverage.

Federal law requires the use of the NMSN when the noncustodial parent is ordered to provide health care coverage in the support order and the noncustodial parent’s employer is known. May the state use the NMSN when the custodial parent is ordered to provide health care coverage in the support order and the custodial parent’s employer is known?

Yes. While the statute and the final rule for NMSN do not address this issue at this time, it does not appear that such use would be excluded.

How are co-pay issues between custodial parent and the noncustodial parent to be addressed?

Such cost-sharing responsibilities for each parent should be addressed when the support order is established or modified.

SCHIP beneficiaries referred to IV-D agencies from separate SCHIP programs are not mandated to cooperate with the IV-D program. The IV-D program then has no ability to close the case or provide related services. This problem of non-cooperation also extends to certain Medicaid beneficiaries who are referred to CSE when there is no requirement for their cooperation as a condition of receipt of Medicaid. How should the IV-D agency respond in these instances?

Beneficiaries under a separate (non-Medicaid) SCHIP program are not entitled to IV-D services, but must apply for IV-D services and pay all appropriate fees. State IV-D agencies are not required to provide services if these cases are referred by SCHIP agencies but no application for services, or associated application fee is paid. However, some states have opted to expand the Medicaid program rather than operate a separate SCHIP program.

Medicaid beneficiaries are generally required as a condition of eligibility to cooperate in the establishment of paternity and pursuit of medical support (except when there is good cause not to cooperate). However, there are additional exceptions to the cooperation requirement. Examples include individuals receiving Medicaid services through the poverty level pregnant women provisions, individuals receiving transitional Medicaid services under section 1925 of the Social Security Act, and individuals receiving child-only Medicaid services.

The state IV-D agency should consult with the state SCHIP agency and state Medicaid agency to determine whether referred cases are (1) Medicaid cases entitled to IV-D services and subject to Medicaid cooperation requirements, or (2) separate SCHIP program cases that require an application for IV-D services and are not subject to cooperation requirements. A 1993 Dear Colleague Letter (OCSE-DCL-93-48), which disseminated the proposed regulations by the Health Care Financing Administration (HCFA), now known as the Centers for Medicare and Medicaid Services (CMS), on referral of Medicaid clients for IV-D services, suggested the state IV-D agency collaborate with the state Medicaid agency regarding appropriate referral criteria and procedures. Also, the IV-D agencies should review the Dear Colleague Letter (OCSE-DCL-00-122) which includes the HCFA letter to state Medicaid Directors regarding Medicaid and SCHIP eligibility, cooperation, and referral issues. Effective coordination among IV-D, Medicaid and SCHIP programs can help states ensure children’s health care needs are met.

Although there is no specific criterion for case closure when Medicaid beneficiaries referred for IV-D services are not required and refuse to cooperate in securing medical support, the IV-D agency may close appropriate cases that meet one of the case closure criteria at 45 CFR 303.11(b). In those states with separate SCHIP programs, the SCHIP beneficiaries would have to apply for IV-D services. To close SCHIP cases, the appropriate case closure criteria in 45 CFR 303.11 would have to be met. States may close such cases in accordance with section 303.11(b)(10) and (11), governing non-IV-A applicant cases in particular.

Previously, the custodial parent who applied for IV-D services could opt out of IV-D medical support services. What changed that option?

The Child Support Incentives and Performance Act (CSPIA) amended section 452(f), which requires the Secretary of HHS to issue medical support regulations. These regulations are under development.

In the interim final rule published in the Federal Register February 2, 1999 and disseminated in OCSE-AT-99-01, OCSE revised 45 CFR 303.31(c) by replacing medical support enforcement services "are available'' with medical support enforcement services "will be provided'' because all orders entered under the title IV-D program must address health care coverage. Therefore, non-IV-A applicants or recipients of services under 45 CFR 302.33 may no longer decline to have health insurance coverage issues addressed in new or modified child support orders.