National Medical Support Notice

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Child Support Enforcement

RIN 0970-AB97

45 CFR Part 303

National Medical Support Notice

AGENCY: Office of Child Support Enforcement (OCSE), Administration for

Children and Families, HHS.

ACTION: Notice of Proposed Rule Making.

-----------------------------------------------------------------------

SUMMARY: This proposed regulation implements provisions of the Child

Support Performance and Incentives Act of 1998 (CSPIA), Public Law 105-

200, that require State child support enforcement agencies, under title

IV-D of the Social Security Act (the Act), to enforce the health care

coverage provision in a child support order, and to use the National

Medical Support Notice (NMSN) to aid enforcement.

DATES: Consideration will be given to written comments received by

January 14, 2000.

ADDRESSES: Address comments to: Administration for Children and

Families, Department of Health and Human Services, 370 L'Enfant

Promenade, SW., Washington DC 20447. Attention: Division of Policy and

Planning, Office of Child Support Enforcement. Comments will be

available for public inspection Monday through Friday, 8:00 A.M. to

4:30 P.M. on the fourth floor of the Department's offices at the

address mentioned above.

FOR FURTHER INFORMATION CONTACT: John Seneta, Division of Policy &

Planning, OCSE, tel: (202) 401-5154, fax: (202) 401-3444, e-mail:

[email protected]

SUPPLEMENTARY INFORMATION

Statutory Authority

This notice of proposed rulemaking is published under the authority

of sections 452(f) and 466(a)(19) of the Social Security Act (the Act),

42 U.S.C. 652(f) and 666(a)(19), as amended by section 401 of the Child

Support Performance and Incentive Act of 1998 (CSPIA), Public Law 105-

200, and technical amendments in section 4(b) of the Noncitizen Benefit

Clarification and other Technical Amendments Act of 1998, Public Law

105-306.

Section 401(b)(4) of CSPIA requires the Secretaries of Health and

Human Services (HHS) and Labor to publish interim regulations providing

for the NMSN not later than 10 months after the date of enactment of

CSPIA. The date of enactment was July 16, 1998 and 10 months from that

date is May 16, 1999. The Medical Child Support Working Group asked to

be involved in the development of the notice prior to the original

publication due date. In the interest of developing a proposed Notice

that best addresses the needs and concerns of the affected parties, DOL

and HHS solicited comments and suggestions regarding the Notice from

the Working Group at its public meetings of April 13, and May 12 and

13, 1999, that proved very helpful in the development of the Notice

that is proposed herein. In order to encourage greater public

participation in this rulemaking and reduce the possibility of

confusion, the agencies have decided to publish the Notice as a

Proposed Rule, rather than as an interim regulation. We believe that

this more closely comports with congressional intent to permit the

affected parties, including the Working Group, to comment on the Notice

before it becomes effective.

Also being published in the Federal Register today is a parallel

proposed regulation developed by the Department of Labor (DOL) under

section 609(a) of the Employee Retirement Income Security Act of 1974

(ERISA) (29 U.S.C. 1169(a)), adopting the NMSN. Under ERISA section

609(a)(5)(C), if the NMSN is appropriately completed, and satisfies the

conditions of ERISA section 609(a)(3) and (4), the NMSN is deemed to be

a ``qualified medical child support order'' as defined in section

609(a) of ERISA.

In this regulation, OCSE is implementing the provisions of CSPIA

that require States to have in effect laws that require procedures to

enforce the health care coverage provisions in child support orders

through the use of the NMSN. The NMSN notifies the noncustodial

parent's employer of the provision for health care coverage of the

child in a IV-D case.

Background

The enactment of the Child Support Enforcement Amendments of 1984,

Public Law 98-378, added a new section 452(f) to the Act that required

the Secretary to issue regulations to require State IV-D agencies to

secure medical support information, and to secure and enforce medical

support obligations whenever health care coverage is available to the

noncustodial parent at a reasonable cost. Initially these regulations

were placed in Subpart B at 45 CFR 306.50 and 51. Subsequently they

were redesignated and placed where they appear now at 45 CFR 303.30 and

31. Since the enactment of this legislation and the implementing

regulations, States have been making efforts to establish and enforce

medical support for children with limited success.

The Omnibus Budget Reconciliation Act of 1993 (OBRA), Public Law

103-66, was a significant piece of legislation that contained

provisions intended to remove some of the impediments to State IV-D

agency attempts to secure and enforce medical coverage for children in

IV-D cases. OBRA contained many improvements that facilitated obtaining

and enforcing medical coverage, including: prohibiting discriminatory

health care coverage practices; creating ``qualified medical child

support orders'' (QMCSOs) to obtain coverage from group health plans

subject to ERISA; and allowing employers to deduct the costs of health

insurance premiums from the employee/obligor's income. Some of the

medical support provisions of OBRA were included as Medicaid State plan

requirements under section 1908 of the Act [42 U.S.C.1396g-1] and

required States to enact laws governing employer and insurer compliance

with health care provisions of support orders. The QMCSO provisions are

contained in section 609 of ERISA (29 U.S.C. 1169).

Section 382 of the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996 (PRWORA), Public Law 104-193, added a new

paragraph 19 to section 466(a) of the Act (466(a)(19)) that requires a

provision for health care coverage in all child support orders

established or enforced by IV-D agencies. Prior to enactment of PRWORA,

health care coverage was required for cases with an assignment of

medical support rights for public assistance cases under titles IV-A,

XIX, and IV-E, and, by regulation, individuals not receiving public

assistance could choose not to seek medical support. Despite improved

medical support requirements (such as procedures for including health

care coverage in all child support orders under title IV-D) and a focus

on enforcement of medical support by OCSE and the State IV-D programs,

the enforcement of medical support coverage for children under the IV-D

program has remained elusive.

Extensive consultations with State IV-D agencies, employers, HHS,

DOL, and advocates of medical support coverage, resulted in an array of

medical support provisions in CSPIA. These provisions were enacted in

order to further eliminate barriers that prevent meaningful

establishment and enforcement of medical child support coverage.

In addition to the requirements that are contained in this

regulation, CSPIA

[[Page 62075]]

provides for the establishment of a Medical Child Support Working

Group. The Working Group is charged with submitting a report to the

Secretaries of Health and Human Services and Labor containing

recommendations regarding appropriate measures to address impediments

to the effective enforcement of medical support by IV-D agencies. This

report is due not later than January 2000. The Secretaries in turn will

jointly submit a report to Congress not later than two months after

receiving the Working Group's report. The Working Group includes 30

members representing: HHS and DOL, State child support directors, State

Medicaid directors, employers (including payroll professionals),

sponsors and administrators of group health plans (as defined in

section 607(1) of ERISA), children potentially eligible for medical

support, such as child advocacy organizations, State medical child

support programs, and organizations representing State child support

programs.

Section 401 of CSPIA modified section 452(f) of the Act to make it

consistent with the requirement in section 466(a)(19) of the Act, as

amended by section 382 of PRWORA, that medical support be included as

part of any child support order under title IV-D of the Act. Section

401 of CSPIA further strengthens the enforcement of medical support

coverage for children by requiring HHS and DOL to jointly develop a

NMSN to be issued by States to enforce the medical support obligations

of a non-custodial parent. The NMSN must comply with requirements of

section 609(a)(3) and (4) of ERISA, which pertain to informational

requirements and restrictions against requiring new types or forms of

benefits. In addition to complying with ERISA requirements and all

title IV-D requirements, the NMSN must include a severable employer

withholding notice informing the employer of: (1) applicable provisions

of State law requiring the employer to withhold any employee

contributions due under any group health plan in connection with

coverage required to be provided; (2) the duration of the withholding

requirement; (3) the applicability of limitations on any such

withholding under title III of the Consumer Credit Protection Act; (4)

the applicability of any prioritization required under State law

between amounts to be withheld for purposes of cash support and amounts

to be withheld for purposes of medical support, in cases where

available funds are insufficient for full withholding for both

purposes; and (5) the name and telephone number of the appropriate unit

or division to contact at the State agency regarding the NMSN.

We believe that employers will welcome the use of a standard form

that will be used by all State IV-D agencies as required in these

regulations. This will simplify processing for all concerned and most

importantly enhance health care coverage for children who are excluded

from their noncustodial parent's group health plan.

Section 466(a)(19) of the Act, as amended by section 401(c)(3) of

CSPIA, requires States to have in effect laws requiring the use of

procedures providing for IV-D agencies to use the NMSN to enforce child

support orders which include a provision for the health care coverage

of the child. Section 466(a)(19)(B) of the Act requires the use of the

NMSN in all cases where the noncustodial parent is required to provide

health care coverage for the child pursuant to the order and the

noncustodial parent's employer is known to the State agency. The

statute provides an exception, under section 466(a)(19)(B), to using

the NMSN if a court or administrative order stipulates alternative

health care coverage to the noncustodial parent's employment-based

coverage.

Under section 466(a)(19)(B)(i), States must use the NMSN to

transfer notice of the provision for health care coverage of the child

to employers, including State or local governments and churches.

Section 466(a)(19)(B)(ii) requires the employer within 20 business days

after the date of the NMSN, to transfer the NMSN, without the employer

withholding notice, to the appropriate plan which provides health care

coverage for which the child is eligible.

Upon notification by the plan administrator(s) that enrollment of

the child(ren) has been completed and withholding is required for

employee contributions to one or more plans under this notice, the

employer implements the withholding from the employee's income. The

employer withholds employee contributions within the limitations on

withholding in accordance with the amounts allowed by the State of the

employee's principal place of employment (which may equal or be less

than that allowed by the Federal Consumer Credit Protection Act (15

U.S.C., section 1673(b)), or the amounts allowed for medical support by

the child support order whichever is less. The employer also observes

the State law of the employee's principal place of employment for

prioritization purposes if withholding is required for both cash and

medical support payments.

Section 466(a)(19)(B)(iii) of the Act requires, in cases where the

noncustodial parent is a newly hired employee, that the State agency

send the NMSN, together with the income withholding notice pursuant to

section 466(b) of the Act, within 2 business days after the date the

newly hired employee is entered into the State Directory of New Hires,

pursuant to section 453A of the Act.

Under section 466(a)(19)(B)(iv) when the employment of a

noncustodial parent with any employer who has received an NMSN is

terminated, the employer is required to notify the State IV-D agency of

this termination. Finally, under paragraph (C), any liability of a

noncustodial parent employee to a group health plan for contributions

necessary for enrollment of a child is subject to appropriate

enforcement, unless the employee contests such enforcement based on a

mistake of fact.

States must implement use of the NMSN no later than the first day

of the first quarter beginning after the close of the first regular

State legislative session that begins after October 1, 2001. This

deadline provides States ample opportunity to enact implementing State

legislation after publication of final regulations, issuance of the

Medical Child Support Working Group's recommendations, and the

Secretaries' report to Congress.

Description of Regulatory Provisions

We are implementing the statutory requirement for the development

and use of the NMSN by adding a new section, 45 CFR 303.32, ``National

Medical Support Notice,'' to existing rules governing the Child Support

Enforcement program under title IV-D of the Act. This section restates

statutory requirements.

Section 303.32(a) requires the State to have laws requiring

procedures for the mandatory use of the NMSN in accordance with section

466(a)(19) of the Act.

Section 303.32(b) provides for an exception to the use of the NMSN.

The exception applies to cases with court or administrative orders that

stipulate alternative health care coverage.

Section 303.32(c) includes the mandatory procedures for enforcement

of health care coverage for the child through the use of the NMSN.

Section 303.32(c)(1) requires State IV-D agencies to use the NMSN

to provide notice of the provision for health care coverage of the

child(ren) to employers.

[[Page 62076]]

Section 303.32(c)(2) requires State agencies to send the NMSN to

the employer within 2 business days after the date of entry into the

State Directory of New Hires of an employee who is an obligor in a IV-D

case.

Section 303.32(c)(3) requires employers to transfer the NMSN to the

appropriate group health care plan providing any such health care

coverage for which the child(ren) is eligible (excluding the severable

employer withholding notice directing the employer to withhold any

mandatory contributions to the plan) within 20 business days after the

date of the NMSN.

Section 303.32(c)(4) requires employers to withhold any mandatory

employee contributions to the plan and send any employee contributions

withheld directly to the plan. If the employee contests such

withholding, we are proposing that employers initiate withholding until

such time as the employer receives notice that the contest is resolved.

Employers are specifically directed to transfer contributions to

the plan because employers may also be directed by a separate child

support withholding notice to forward support payments withheld from

the employee's wages to a State IV-D agency.

Section 303.32(c)(5) requires employers to notify the State agency

promptly whenever the employment of a noncustodial parent for whom the

employer received an NMSN is terminated. This is consistent with the

requirement for notification of termination in income withholding cases

pursuant to 45 CFR 303.100(e)(1)(x).

To comply with statutory requirements, section 303.32(d) requires

laws requiring the use of the NMSN to be enacted by States. The

requirements for NMSN use must be effective the later of October 1,

2001 or the effective date of implementing State law. Such State laws

must be effective no later than the first day of the first calendar

quarter beginning after the first session of the State legislature that

begins after October 1, 2001. For States that have 2-year legislative

sessions, each year of such session would be regarded as a separate

regular session.

Description of the National Medical Support Notice

In the development of this notice, we involved the Medical Child

Support Working Group. The Working Group provided substantive comments,

recommendations for changes, and a changed format that will be easy to

follow by all parties concerned.

A State IV-D agency will issue a two part NMSN to an employer who

maintains or contributes to a group health plan. Part A of the NMSN,

the Employer Withholding Notice, is modeled on the Federally-approved

standardized income withholding form that was issued to State IV-D

agencies by action transmittal (OCSE-AT-98-03) on January 27, 1998.

Employers have voiced approval of this form indicating that the

standardized uniform withholding form has greatly facilitated the

processing of child support income attachments.

Part A, the Employer Withholding Notice, includes information for,

and responsibilities of the employer. The ``Instructions to Employer''

segment of the form explains the responsibilities of the employer. The

issuing agency provides this information starting with the name and

address of the issuing agency, date of the notice, case number,

telephone number of the issuing agency, court name (if applicable),

date of the support order, and the support order number.

The issuing agency provides pertinent information with respect to

the employer, the employee/obligor, the custodial parent, and the child

or children also known as alternate recipients. The issuing agency

provides the employer's Federal EIN number (if known) and the

employer's name and address. Information on the employee/obligor is

also provided including the employee/obligor's name, social security

number, and mailing address. Information is provided on the custodial

parent, and the child or children (the children are also referred to as

alternate recipients). These include the names and address of the

custodial parent and children. If there is a danger of domestic

violence and abuse to the custodial parent and/or the children,

provision is made to substitute the address of the custodial parent and

children with name and address of an agency official. Finally, the

Notice includes a provision for the type of family group health care

coverage that is required by the order, e.g., basic, dental, vision,

prescription drug, mental health, and other.

The ``Employer Response'', attached to Part A, is to be completed

by the employer, as appropriate when either (1) the employer does not

offer or participate in plans providing family health care coverage or

the employee is among a class of employees that are not eligible for

family health coverage under any group health plan maintained by the

employer or to which the employer contributes, (2) coverage is

unavailable because the employee is no longer employed by the employer,

or (3) State or Federal withholding limitations and/or prioritization

preclude the withholding from the employee's income of the amount

necessary for coverage.

Under the proposed DOL regulation published today at FR Part B of

the NMSN, the Medical Support Notice, notifies the administrator of the

group health plan in which the named employee is enrolled or eligible

for enrollment, that the employee is obligated by a court or

administrative child support order to provide medical support coverage

for the named child(ren). Part B provides the information necessary for

the plan administrator to treat the notice as a ``qualified medical

child support order'' under section 609(a) of ERISA, and to enroll the

child(ren) as dependents in the group health plan. Part B of the NMSN

was also developed to comply with the requirements placed on group

health plans under State laws described in section 1908 of the Act, and

to accommodate the requirements on State agencies to use automated

processing of medical child support orders as well. Part B also

includes a ``Plan Administrator Response'' that is used by the plan

administrator to inform the Issuing Agency, that either the child has

been enrolled, or not enrolled with a reason, and other information

regarding coverage that is pertinent or lacking for enrollment. The

specific contents of Part B are explained in detail in the DOL

regulation published today.

In order to provide an opportunity for maximum review and public

comment on the National Medical Support Notice (NMSN), we have attached

the proposed NMSN (including instructions) as an Appendix. We will

revise this notice following the comment period on the NPRM and will

issue it to States through the ACF policy issuance system. We will not

re-publish this appendix as a part of the final rule. However, we will

make appropriate changes as a result of comments received.

Executive Order 12866

Executive Order 12866 requires that regulations be drafted to

ensure that they are consistent with the priorities and principles set

forth in the Executive Order. The Department has determined that this

proposed rule is consistent with these priorities and principles. The

changes in this proposed rule reiterate the language in the statute,

and do not add any nonstatutory requirements.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (Public Law 96-354) requires the

Federal

[[Page 62077]]

government to anticipate and reduce the impact of regulations and

paperwork requirements on small entities. The Secretary certifies that

this proposed rule will not have a significant economic impact on a

substantial number of small entities because the primary impact of

these regulations is on State governments.

Paperwork Reduction Act of 1995

Section 303.32(c)(1) contains an information collection

requirement. As required by the Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)), the Administration for Children and Families has

submitted a copy of this section to the Office of Management and Budget

(OMB) for its review.

Title: National Medical Support Notice.

Summary: The information collected by State title IV-D

agencies will be used to complete the National Medical Support Notice

(NMSN) which will be sent to employers of employee/obligors and used as

a means of enforcing the health care coverage provision in a child

support order. Primarily, the information State agencies will use to

complete the NMSN will be the information regarding appropriate persons

which is necessary for the enrollment of the child in employer related

health care coverage, such as the employee/obligor (name, SSN, mailing

address); employer's name/address; the name/address of the Alternate

Recipient who is the child; and the custodial parent's name and

address. The employer forwards the second part of the NMSN to the group

health plan administrator which contains the same individual

identifying information. The plan administrator requires this

information to determine whether to enroll the Alternate Recipient in

the group health plan. If necessary, the employer would also initiate

wage withholding from the employee's wages for the purpose of paying

premiums to the group health plan for enrollment of the child.

Description of the likely respondents: State and local

title IV-D agencies initiate the process of enforcing medical health

care coverage for the child by completing and sending the notice to

known employers of the noncustodial parents (employee/obligors).

Employers and plan administrators are on the receiving end of the NMSN.

Information collection........................................ (\1\)

Number of respondents......................................... 54

Responses per respondent...................................... 13,454

Average burden hours per response............................. .1666

---------

Total annual burden hours................................. 123,507

\1\ 45 CFR 303.32.

ACF will consider comments by the public on this proposed rule in:

Evaluating the accuracy of ACF's estimate of the burden of

the proposed collections of information, including the validity of the

methodology and assumption used;

Enhancing the quality, usefulness, and clarity of the

information to be collected; and

Minimizing the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technology, e.g.,

permitting electronic submission of responses.

OMB is required to make a decision concerning the collection of

information contained in this interim final regulation between 30 and

60 days after publication of this document in the Federal Register.

Therefore, a comment is best assured of having its full effect if OMB

receives it within 30 days of publication. This does not affect the

deadline for the public to comment to the Department on the proposed

regulation. Written comments to OMB for the information collection

should be sent directly to the following: Office of Management and

Budget, Paperwork Reduction Project, 725 17th Street, NW., Washington

DC 20503, Attn: Ms. Wendy Taylor.

Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 requires

that a covered agency prepare a budgetary impact statement before

promulgating a rule that includes any Federal mandate that may result

in the expenditure by State, local, and Tribal governments, in the

aggregate, or by the private sector, of $100 million or more in any one

year.

If a covered agency must prepare a budgetary impact statement,

section 205 further requires that it select the most cost effective and

least burdensome alternative that achieves the objectives of the rule

and is consistent with the statutory requirements. In addition, section

203 requires a plan for informing and advising any small governments

that may be significantly or uniquely impacted by the rule.

We have determined that the rule will not result in the expenditure

by State, local, and Tribal governments, in the aggregate, or by the

private sector, of more than $100 million in any one year. Accordingly,

we have not prepared a budgetary impact statement, specifically

addressed the regulatory alternatives considered, or prepared a plan

for informing and advising any significantly or uniquely impacted small

governments.

Congressional Review

This rule is not a major rule as defined in 5 U.S.C., Chapter 8.

List of Subjects in 45 CFR Part 303

Child support, Grant programs/social programs, Reporting and

recordkeeping requirements.

(Catalog of Federal Domestic Assistance Program No 93.563, Child

Support Enforcement Program)

Dated: July 14, 1999.

Olivia A. Golden,

Assistant Secretary for Children and Families.

Approved: August 3, 1999.

Donna E. Shalala,

Secretary, Department of Health and Human Services.

For the reasons discussed above, we are proposing to amend 45 CFR

chapter III as follows:

PART 303--STANDARDS FOR PROGRAM OPERATIONS

1. The authority citation of part 303 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667,

1302, 1396a(a)(25), 1396(d)(2), 1396b(o), 1396b(p) and 1396(k).

2. A new 303.32 is added to read as follows:

Sec. 303.32 National Medical Support Notice.

(a) Mandatory State laws. States must have laws, in accordance with

section 466(a)(19) of the Act, requiring procedures specified under

paragraph (c) of this section for the use of the National Medical

Support Notice (NMSN) to this section, to enforce the provision of

health care coverage for children of noncustodial parents who are

required to provide health care coverage through an employment-related

group health plan pursuant to a child support order and for whom the

employer is known to the State agency.

(b) Exception. States are not required to use the NMSN in cases

with court or administrative orders that stipulate alternative health

care coverage to employer-based coverage.

(c) Mandatory procedures. The State must have in effect and use

procedures that require:

(1) The State agency to use the NMSN to transfer notice of the

provision for health care coverage of the child(ren) to the employer.

(2) The State agency to send the NMSN to the employer within 2

business days after the date of entry of an employee who is an obligor

in a IV-D case in the State Directory of New Hires.

[[Page 62078]]

(3) Employers to transfer the NMSN to the appropriate group health

plan providing any such health care coverage for which the child(ren)

is eligible (excluding the severable employer withholding notice

directing the employer to withhold any mandatory employee contributions

to the plan) within 20 business days after the date of the NMSN.

(4) Employers to withhold any obligation of the employee for

employee contributions necessary for coverage of the child(ren) and

send any amount withheld directly to the plan. If the employee contests

such withholding, the employer initiates withholding until such time as

the employer receives notice that the contest is resolved.

(5) Employers to notify the State agency promptly whenever the

noncustodial parent's employment is terminated in the same manner as

required for income withholding cases in accordance with

Sec. 303.100(e)(1)(x) of this part.

(d) Effective date. This section is effective October 1, 2001, or,

if later, the effective date of State laws described in paragraph (a)

of this section. Such State laws must be effective no later than the

close of the first day of the first calendar quarter that begins after

the close of the first regular session of the State legislature that

begins after October 1, 2001. For States with 2-year legislative

sessions, each year of such session would be regarded as a separate

regular session.

Note: The following appendix will not appear in the Code of

Federal Regulations.

BILLING CODE 4184-01-U

[[Page 62079]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.033

[[Page 62080]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.034

[[Page 62081]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.035

[[Page 62082]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.036

[[Page 62083]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.037

[[Page 62084]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.038

[[Page 62085]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.039

[[Page 62086]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.040

[[Page 62087]]

[GRAPHIC] [TIFF OMITTED] TP15NO99.041

[FR Doc. 99-29401 Filed 11-12-99; 8:45 am]

BILLING CODE 4184-01-C