[Federal Register Volume 65, Number 249 (Wednesday, December 27, 2000)]
[Rules and Regulations]
[Pages 82154-82176]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31611]
[[Page 82154]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Child Support Enforcement
45 CFR Part 303
RIN 0970-AB97
National Medical Support Notice
AGENCY: Office of Child Support Enforcement, Administration for
Children and Families, HHS.
ACTION Final rule.
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SUMMARY: This rule 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 through the use of the
National Medical Support Notice (NMSN).
A proposed rule was published in the Federal Register on November
15, 1999 (64 FR 62074). After consideration of the written comments
received, changes have been made in this final regulation, including
changes to the NMSN found in the Appendix.
DATES: This regulation is effective January 26, 2001.
FOR FURTHER INFORMATION CONTACT: Elizabeth Matheson, Director, Division
of Policy, Office of Child Support Enforcement (OCSE), (202) 401-9386.
SUPPLEMENTARY INFORMATION:
Statutory Authority
This final rule 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.
Also being published in the Federal Register today is a parallel
final 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,
Pub. L. 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), Pub. L. 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), Pub. L. 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,
IV-D agencies were required to petition for inclusion of medical
support in all new and modified IV-D child support orders for cases
with an assignment of medical support rights for public assistance
cases under titles IV-A, XIX, and IV-E. 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 problematic.
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 provided for the establishment of a Medical Child
Support Working Group. The Working Group was 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. The Working Group held a series of meetings beginning in
March, 1999. At its final meeting in June, 2000, the MCSWG approved its
report to the Secretary of Health and Human Services and the Secretary
of Labor. The Working Group's report contains seventy-six
recommendations for expansion of health coverage for children eligible
for child support enforcement services. The Working Group also
submitted comments on the Notice of Proposed Rulemaking published in
the Federal Register on November 15, 1999 (64 FR 62074). The Working
Group included thirty 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), organizations
representing children potentially eligible for medical support, State
medical child support programs, and organizations representing State
child support programs.
Section 401 of CSPIA strengthens the enforcement of medical support
coverage for children by requiring HHS
[[Page 82155]]
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 to transfer the NMSN
within 20 business days after the date of the NMSN, without the
employer withholding notice, to the appropriate plan which provides
health care coverage for which the child is eligible. The plan
administrator then determines if the Notice is qualified under section
609(a) of ERISA in the case of an ERISA-covered plan, or, in the case
of a church plan, section 401(f) of CSPIA.
Upon notification by the plan administrator(s) that enrollment may
occur and the amount of employee contribution to withhold, 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 health insurance premiums
by the child support order, whichever is less. If the amount for the
premium cannot be withheld due to such limitations on withholding, the
child may not be enrolled. 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 two 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) of the Act, 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.
This section is effective October 1, 2001, or, if later, the
effective date of State laws requiring the use of the MSN. 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. This deadline provides
States ample opportunity to enact implementing State legislation after
publication of final regulations.
Description of Regulatory Provisions and Changes Made in Response to
Comments
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 and includes requirements in paragraphs (c)(5),
(7) and (8) in response to comments received on the proposed
regulations. These new paragraphs address employee contests to
withholding of health plan contributions based on a mistake of fact,
procedures for notifying employers to terminate such withholding and
procedures for the IV-D agency to select from available options for
health care coverage when notified by plan administrators of those
options.
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.
Section 303.32(c)(2) requires State IV-D agencies to send the NMSN
to the employer within two 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 twenty business days after
the date of the NMSN.
[[Page 82156]]
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. 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) was a part of proposed paragraph (c)(4) in the
NPRM. Based on comments received on the NPRM, under paragraph (c)(5),
employees may contest the withholding based on a mistake of fact.
However, the employer must initiate the withholding until such time as
the employer receives notice that the contest is resolved.
Section 303.32(c)(6) 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).
Section 303.32(c)(7) was added in response to comments to require
the State agency to promptly notify the employer when there is no
longer a current order for medical support in effect for which the IV-D
agency is responsible.
Section 303.32(c)(8) was added as a result of comments on a
provision pertaining to Part B, ``Plan Administrator Response'' portion
of the NMSN. Under section 303.32(c)(8), the IV-D agency must select
from available options when the plan administrator returns ``Part B''
of the NMSN and under item 3 informs the IV-D agency that there is more
than one option available under the plan. The IV-D agency must select
an option and notify the plan administrator of this selection. This
provision will ensure that children are enrolled when a decision must
be made if there is more than one option for health care coverage.
To comply with statutory requirements, section 303.32(d) requires
enactment of State laws requiring the use of the NMSN. The requirements
for using the NMSN 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 regular session of the State legislature that
begins after October 1, 2001. For States that have two year legislative
sessions, each year of such session would be regarded as a separate
regular session.
Description of the National Medical Support Notice and Changes Made in
Response to Comments
A State IV-D agency will issue a two-part NMSN, Parts A & B, to an
employer who maintains or contributes to a group health plan and who
employs a noncustodial parent who is obligated by a court or
administrative child support order to provide health coverage for a
child(ren). Part A of the NMSN, the Notice to Withhold for Health Care
Coverage, 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, Notice To Withhold for Health Care Coverage
Part A, the Notice to Withhold for Health Care Coverage, includes
information for, and responsibilities of the employer. In response to
comments received on page one of the Notice to Withhold for Health Care
Coverage, we clarified that the NMSN applies to State and local
government and church health plans. We added the Issuing Agency's fax
number. We also replaced ``alternate recipient(s)/child(ren)'' with
``child(ren)'', and ``employee/obligor'' with ``employee.'' We replaced
``Court Name'' with ``Court or Administrative Authority.'' With respect
to the various types of health coverage available, we deleted ``under
your plan'' and replaced ``Basic'' with ``Medical.''
On page one of the Notice to Withhold for Health Care Coverage, the
issuing agency provides information starting with the name and address
of the issuing agency, date of the notice, case number, telephone and
fax numbers of the issuing agency, name of court or administrative
authority, date of the support order, and the support order number. The
issuing agency provides pertinent information with respect to the
employer, the employee, the custodial parent, and the child or
children. The issuing agency provides the employer's Federal EIN number
(if known) and the employer's name and address. Information on the
employee is also provided including the employee's name, social
security number, and mailing address. Information is provided on the
custodial parent, and the child or children, including their names and
addresses. If there is a danger of domestic violence and abuse to the
custodial parent and/or the children, the IV-D agency may substitute
the name of an official as well as its address for the address of the
custodial parent and children. Finally, page one includes a provision
for the type of family group health care coverage that is required by
the order, i.e., any available or medical, dental, vision, prescription
drug, mental health, and other. If no option is specified, the employer
should send Part B to the administrator of each group health plan for
which the child may be eligible.
Throughout the remainder of this preamble, the first page of the
Notice to Withhold for Health Care Coverage, Part A, will be referred
to as the ``case identification data section.''
Employer Response
The ``Employer Response'', attached to Part A, is to be completed
by the employer. Under the heading for ``Employer Response,'' we
clarified that the employer has twenty business days to forward Part B
to the plan administrator if none of the response situations described
in boxes 1, 2, and 3 apply. If any one of the three response situations
in boxes 1, 2, or 3 apply, the employer must return Part A to the IV-D
agency within twenty business days after the date of the notice. If the
plan administrator informs the employer that the child(ren) is/are
enrolled in an option under the plan for which the employer determines
that the employee contribution exceeds the amount that may be withheld
from the employee's income due to State or Federal withholding
limitations and/or prioritization, the employer must check box 4 and
return Part A to the IV-D agency.
The response situations on the ``Employer Response'' have been
clarified and revised. The previous response number 1 has been split
into two responses. Response number 1 now reads, ``Employer does not
maintain or contribute to plans providing dependent or family health
coverage.'' Response number 2 now reads, ``The employee is among a
class of employees (for example, part-time or non-union) that are not
eligible for family health coverage under any group health plan
maintained by the employer or to which the employer contributes.''
Responses 2 and 3 have been redesignated 3 and 4 respectively. In the
newly designated response number 3, ``Health care coverage is not
available because the employee is no longer employed by the employer,''
we added a new line for the ``date of termination'' of the employee.
[[Page 82157]]
Response number 4, previously designated number 3, was not changed and
says, ``State or Federal withholding limitations and/or prioritization
prevent the withholding from the employee's income of the amount
required to obtain coverage under the terms of the plan.'' On the
bottom of the ``Employer Response,'' we added a new line for the
employer to provide the ``employer identification number'' (EIN), if it
was not provided by the Issuing Agency in the case identification data
section.
Instructions to Employer
In response to comments on the ``Instructions to Employer,'' we
made the following changes. We deleted the word ``also'' from the first
sentence in the first paragraph under the heading, ``Instructions to
Employer''. Under the subheading of ``Employer Responsibilities,'' we
deleted the opening clause ``As the employer of the employee, you are
required to:'' since it is clear from the heading to this section,
``Instructions to Employer,'' that the instructions apply to the
employer. Under subparagraph 2.b.2, we deleted ``and the parties'' to
clarify that if enrollment cannot be completed because of
prioritization or limitations on withholding, the employer should
complete item 4 of the Employer Response to notify the Issuing Agency.
Also, under the subheading of ``Employer Responsibilities,'' we added a
new subparagraph 2.c. that instructs the employer, after the plan
administrator notifies the employer that the employee is subject to a
waiting period that expires more than ninety days from the date of
receipt of the Notice, or whose duration is determined by a measure
other than the passage of time (for example, the completion of a
certain number of hours worked), to notify the plan administrator when
the employee is eligible to enroll in the plan and that the Notice
requires the enrollment of the child(ren) named in the Notice in the
plan.
Under the subheading of ``Limitations on Withholding,'' we
clarified that the maximum Consumer Credit Protection Act limit applies
to the combined amount withheld for both cash support and for medical
support coverage. We clarified that under the National Medical Support
Notice, the employer may not withhold, for health insurance premiums,
more than the least of: (1) The amounts allowed by the Federal Consumer
Credit Protection Act (15 U.S.C. section 1673(b)); (2) the amounts
allowed by the State of the employee's principal place of employment;
or (3) the amounts allowed for health insurance premiums by the child
support order. In the NPRM, item three previously read, ``The amounts
allowed for medical support by the child support order.'' As noted
above, we revised item three. The purpose of this change is to
differentiate between employee contributions, or premiums, for health
coverage paid to the plan administrator, and cash medical support
collected by the IV-D agency under a separate income withholding order
which is paid to the custodial parent. (The income withholding form,
rather than the NMSN, is used to withhold cash medical support when
specifically designated in an order).
Under the subheading of ``Priority of Withholding'' in this
section, we added space for the IV-D agency to provide State specific
information regarding the prioritization of withholding payment.
Under the subheading of ``Notice of Termination of Employment,'' we
made minor changes by eliminating unnecessary words.
Under the subheading of ``Employee Liability for Contribution to
Plan,'' we clarified the language regarding contests. We added
clarifying language to the second, third and fourth sentences to
indicate that the employee may contest the withholding under this
Notice based on a mistake of fact. The second sentence reads, ``The
employee may contest the withholding under this Notice based on a
mistake of fact (such as the identity of the obligor).'' In the third
sentence, we added the language, ``by the Issuing Agency''. The third
sentence says, ``Should an employee contest the withholding under this
Notice, the employer must proceed to comply with the employer
responsibilities in this Notice until notified by the Issuing Agency to
discontinue withholding.'' In order to clarify who the employee should
contact in order to contest enforcement, we added the fourth sentence:
``To contest withholding under this Notice, the employee should contact
the Issuing Agency at the address and telephone number listed on the
Notice.'' Finally, we added a sentence to make clear that if an
employee wishes to contest a determination that the NMSN is a qualified
medical child support order with respect to an ERISA covered plan, DOL
has taken the position that the contest must be made in Federal court.
The last sentence under the subheading, ``Employee Liability for
Contribution to Plan,'' says, ``With respect to ERISA covered group
health plans, it is the view of the Department of Labor that Federal
courts have jurisdiction if the employee challenges a determination
that the Notice constitutes a Qualified Medical Child Support Order.''
We made no changes to the following subheadings in this section,
``Duration of Withholding,'' ``Possible Sanctions,'' and ``Contact for
Questions.''
Under the final DOL regulation published today in the Federal
Register, Part B of the NMSN, the ``Medical Support Notice to Plan
Administrator,'' 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 NMSN as a ``qualified medical child support order'' under
section 609(a) of ERISA, and to enroll the child(ren) as dependents of
the participant 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 that there are multiple options from which the Issuing
Agency must select coverage, that the employee is subject to certain
types of waiting periods, or that the order is not qualified. The
specific contents of Part B are explained in detail in the DOL
regulation published today.
We have attached the final NMSN (including instructions) as an
Appendix in the Federal Register. However, the NMSN will not be
codified in the Code of Federal Regulations.
Response to Comments
We received twenty-six comments in response to the notice of
proposed rulemaking published in the Federal Register on November 15,
1999. The commenters included State and local governments, national
organizations, law firms, private citizens, and the Medical Child
Support Working Group (MCSWG).
The MCSWG had a congressional mandate in accordance with CSPIA to
make recommendations based on an assessment of the form and content of
the NMSN. The MCSWG provided input into the development of the proposed
NMSN and submitted extensive comments in response to the NPRM. Many of
the MCSWG's comments on the NPRM were consistent with comments received
from State IV-D agencies and other commenters on the NMSN. We
[[Page 82158]]
were able to incorporate most of the comments provided by the MCSWG
with minor exceptions.
We took these comments into consideration in the development of the
final rule. Our responses are limited to comments made with respect to
the requirements and responsibilities imposed on the State IV-D
agencies and the employers of noncustodial parents of children with
child support judicial or administrative orders that include a
provision for health care coverage. These responses are also limited to
comments on Part A of the NMSN.
Also being published in the Federal Register today, the Department
of Labor (DOL), in a parallel final regulation, has responded to
comments focused on the responsibilities and requirements imposed on
group health plan administrators in accordance with section 609(a) of
ERISA.
Comments on Part 303.32 National Medical Support Notice
Comments to Section 303.32(a) and (b)
1. Comment: Three commenters noted that language was unclear in the
first sentence of paragraph (a).
Response: We agree and have clarified the first sentence to require
that, ``States must have laws * * * for the use, where appropriate, of
the National Medical Support Notice (NMSN), to enforce * * * .''
2. Comment: Seven commenters recommended that section 303.32 should
indicate throughout it that State IV-D agencies use the NMSN ``where
appropriate'' in accordance with section 466(a)(19)(A) of the Act.
Response: We agree in part. For consistency with section
466(a)(19)(A) of the Act, we added the words ``where appropriate'' in
paragraph (a) of this section. Paragraph (a) requires States to have
laws pertaining to the use of the NMSN. The sentence reads, ``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, where appropriate, of the National Medical Support Notice
(NMSN) * * *. '' Given this change to paragraph(a), we do not believe
it is necessary to add the language, ``where appropriate'' to other
subsections of section 303.32.
3. Comment: Two commenters asked for additional clarification on
what constitutes ``alternate'' coverage in section 303.32(b). Three
commenters requested that we provide a list of exceptions that can be
construed as alternative coverage and some indication of how much
flexibility States have on the use of alternative coverage.
Response: Section 466(a)(19)(B) provides an exception to the
requirement that the noncustodial parent provide coverage through his
or her employment-related health plan. Section 466(a)(19)(B) says,
``unless alternative coverage is allowed for in any order of the court
(or other entity issuing the child support order) * * *'' Because the
statute allows for alternative coverage if stipulated in the order, we
believe it is inappropriate to develop a Federal list of exceptions.
However, an example of alternative coverage that might be stipulated in
an order could be cash contributions for premiums for health insurance
coverage provided through the custodial parent's employment. Another
example of alternative coverage that might be stipulated in an order
could be private coverage, unrelated to the noncustodial parent's
employment, such as California's ``IV-D Kids Medical Program.'' States
have flexibility to define and allow alternative coverage that meets
the health care needs of the child.
4. Comment: One commenter suggested that it be made clear that
alternative coverage is an alternative to the noncustodial parent's
employer-based coverage.
Response: We believe the language is clear on this point. The
statute specifically references, in sections 466(a)(19)(B), (B)(iii),
and (C) of the Act, the noncustodial parent's obligation to provide
medical support and the use of the NMSN to enroll the child(ren) in the
noncustodial parent's employment-related health plan. This regulation
implements the statutory requirement. As previously noted, however,
section 466(a)(19)(B) allows alternative coverage if stipulated in the
order, which could be coverage other than the noncustodial parent's
employer-based coverage.
5. Comment: Two commenters asked whether the Medicaid program under
title XIX and the State Children's Health Insurance Program (SCHIP)
under title XXI should be excluded from consideration as alternative
coverage.
Response: Section 466(a)(19)(B) of the Act refers to alternative
coverage as coverage allowed for in a judicial or administrative order.
The statute does not preclude medical support under Medicaid or SCHIP
from being stipulated in the order as alternative coverage. However,
provisions at 45 CFR 303.31(b)(1) preclude IV-D agencies from
considering Medicaid as satisfactory health insurance. The Medical
Child Support Working Group addressed this issue during its
deliberations and recommendations published in June, 2000. We are
examining the Working Group's recommendations on this issue.
6. Comment: One commenter recommended an expansion of alternative
coverage to include any definition of reasonable coverage as defined by
State laws and which is not through an employer.
Response: We are bound by section 466(a)(19)(B) of the Act that
limits alternative coverage to coverage allowed for in a court or
administrative order.
Comments to Section 303.32(c)(1) and (2)
1. Comment: One commenter recommended using ``send'' rather than
``transfer'' the NMSN to the employer. The commenter indicated that by
using the word ``transfer'' an implication is made that this section
only applies to situations in which there is a new employer identified
in a case with a known previous employer.
Response: In order to be consistent with the statute at section
466(a)(19)(B)(i), we are retaining the word ``transfer'' whenever
conveyance of the Notice is required. Section 303.32(c)(1) applies in
all appropriate cases pursuant to section 303.32(a) regardless of
whether or not there is a known previous employer. We are also
replacing ``send'' with ``transfer'' in section 303.32(c)(2). This
provision requires the State agency to transfer the NMSN to the
employer within two 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.
2. Comment: One commenter recommended that when a noncustodial
parent provides medical coverage that is not employer-related, the NMSN
should not be required to be used as a result of information derived
from the State Directory of New Hires (SDNH).
Response: As noted at 45 CFR 303.32(a), the NMSN is used 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 in accordance with a child support
order. If the order specifies coverage that is not employer-related,
and the noncustodial parent is providing such coverage, the IV-D agency
would not be required to send an NMSN to the employer within two
business days as a result of information derived from the SDNH.
3. Comment: One commenter indicated that it is unclear whether the
obligor must have a child support order in effect at the time the IV-D
agency sends the NMSN to the employer.
[[Page 82159]]
Response: Yes, there must be an order in effect at the time the IV-
D agency sends the NMSN to the employer. The statute at sections
466(a)(19)(A) and (B) of the Act limits the use of the NMSN to
enforcement of child support orders.
4. Comment: One commenter inquired whether the two business day
requirement for sending the NMSN to the employer also applies to
employment information obtained from other sources.
Response: Section 466(a)(19)(B)(iii) of the Act specifies that in
any case in which the noncustodial parent is a newly hired employee
entered in the State Directory of New Hires pursuant to section 453A(e)
of the Act, the State agency provides, where appropriate, the NMSN,
together with the income withholding notice issued pursuant to section
466(b), within two days after the date of entry of such employee in
such Directory. The statute does not impose the two day requirement for
sending the NMSN when employment information is obtained from other
sources.
5. Comment: One commenter recommended that enhanced funding be made
available to State IV-D agencies to meet the two business day
requirement to send the NMSN to the employer after the date of entry in
the SDNH.
Response: Section 455(a)(3)(B) of the Act provides States with
enhanced (80 percent) Federal financial participation (FFP) to meet the
new developmental requirements of PRWORA and the Family Support Act of
1988. States may use funds from their allocation of enhanced FFP to pay
for developmental costs of enhancing the Statewide automated system to
generate the NMSN. However, the ongoing maintenance costs of the system
for actually transferring the NMSN to the employer is considered a
regular program administrative cost that is eligible for FFP at the 66
percent matching rate pursuant to 45 CFR 307.35. The use of enhanced
funds would require the submittal of an advance planning document (APD)
to the Federal Office of Child Support Enforcement in accordance with
45 CFR 307.15.
Comments to Section 303.32(c)(3)
1. Comment: Two States believe that the twenty business day time
frame for employers to send Part B of the NMSN to the plan
administrators is too long. Recommendations were made for a shorter
time frame of ten business days.
Response: We are bound by the statute at section 466(a)(19)(B)(ii)
that prescribes the twenty business day timeframe as the limit that
employers have to send the NMSN to plan administrators. It reads,
``within twenty business days after the date of the National Medical
Support Notice, the employer is required to transfer the Notice * * *''
Employers may send the notice sooner since the statute indicates
``within 20 business days * * *''
2. Comment: One commenter inquired what penalties would be imposed
on an employer for failing to transfer the NMSN to the plan
administrator within the twenty business day timeframe.
Response: The employer is subject to applicable State laws since
these requirements will be incorporated into State law in accordance
with sections 466(a)(19) and 454(20) of the Act. State laws should
address penalties or consequences to employers for failing to meet the
prescribed statutory time frame.
3. Comment: One State noted that this paragraph addresses the
twenty business day time frame for the employer to transfer the NMSN to
the plan administrator, but is silent on the forty business day time
frame that plan administrators have to respond to the Notice.
Response: Requirements related to the forty business day time frame
are included in the Department of Labor regulation published today.
Comments to Section 303.32(c)(4)
1. Comment: One State asked whether the NMSN could be used for
income withholding of cash medical support as specified in an order.
Response: No. The NMSN is used to enforce the provision of health
care coverage in an order and to enroll children in the noncustodial
parent's employer-related health plan. Section 452(f) of the Act
requires the Secretary of HHS to issue regulations that require IV-D
agencies to include medical support as part of any child support order.
The income withholding form, rather than the NMSN, is used to withhold
cash medical support if specifically designated in an order.
Instructions on the income withholding form (see OCSE Action
Transmittal-98-03, number 17a) indicate, ``Dollar amount to be withheld
for payment of medical support, as appropriate, based on the underlying
order.''
2. Comment: One commenter suggested that the Medicaid program be
given the option to pay for health insurance premiums when the Federal
or State withholding limitations have been reached.
Response: A State may be able to do this if it elects the option
under section 1906 of the Act to enroll individuals under title XIX in
cost effective group health plans.
3. Comment: One commenter recommended that the IV-D agency not be
held liable for IV-D actions taken on medical support in instances
where the noncustodial parent makes changes to the medical support
provisions of an order without notifying the IV-D agency of such
actions.
Response: We are unaware of any circumstances in a IV-D case where
an order can be modified without notice to the IV-D agency or to the
custodial parent. However, an employee has the opportunity to contest
the withholding of employee contributions based on a mistake of fact
which would bring errors to the IV-D agency's attention and ensure that
withholding is appropriate.
4. Comment: Three commenters questioned the provision that requires
immediate withholding even though an employee contests such
withholding. One State indicated that this is inconsistent with income
withholding for child support. The noncustodial parent has a right to
contest adverse actions as well as the right to be heard prior to
action being taken.
Response: The notice provision in this regulation is consistent
with the statutory language regarding income withholding under which
income withholding for cash support commences pending resolution of any
contest in favor of the employee. Section 466(b)(4)(A) of the Act
states, ``Such withholding must be carried out in full compliance with
all procedural due process requirements of the State, and the State
must send notice to each noncustodial parent * * *. (i) that the
withholding has commenced; and (ii) of the procedures to follow if the
noncustodial parent desires to contest such withholding on the grounds
that the withholding or the amount withheld is improper due to a
mistake of fact.''
5. Comment: Two commenters suggested that the regulations should
provide that the only basis for contesting the withholding should be
mistake of fact or identity of the employee.
Response: We agree and added a new paragraph (c)(5) indicating that
employees may contest the withholding based on a mistake of fact. We
removed the last sentence in proposed (c)(4) regarding the initiation
of withholding until such time that the contest is resolved, and
inserted it into the new paragraph (c)(5) pertaining to contests. We
also added similar language to the ``Instructions to Employer,''
subheading ``Employee Liability for Contribution to Plan,'' to clarify
that an employee may contest the withholding under this Notice based on
a mistake of fact.
[[Page 82160]]
6. Comment: One commenter asked for the contest rules for medical
support and income withholding.
Response: Provisions at 45 CFR 303.32(c)(5) limit the circumstance
for an employee to contest the withholding to a mistake of fact, such
as the identity of the obligor. The procedural rules for hearing
contests are determined under State law.
7. Comment: Three commenters requested Federal procedures for a
contest when an employee's contribution to a medical plan has been
inappropriately withheld.
Response: We believe it is more appropriate for States to develop
their own specific administrative and operational procedures for
contests. Procedures for addressing contests should include procedures
for return of inappropriately held funds.
Comments to Former Section 303.32(c)(5)--Now Section 303.32(c)(6)
1. Comment: One commenter recommended changing the timeframe for an
employer to notify the IV-D agency whenever the noncustodial parent's
employment is terminated from ``promptly'' to a twenty day timeframe.
Response: We are using ``promptly'' in order to be consistent with
the procedures in place for income withholding cases (see 45 CFR
303.100(e)(1)(x)).
Additional Comments on Mandatory Procedures
1. Comment: One commenter recommended that the regulation indicate
that States must have laws to require employers to follow all of the
procedures outlined at 45 CFR 302.32.
Response: We have already done so at 45 CFR 303.32(a) under which
States must have laws in accordance with section 466(a)(19) of the Act
requiring procedures that are specified under section 303.32(c) for the
use of the NMSN. These State laws and procedures are applicable to all
paragraphs of this subsection.
2. Comment: A commenter recommended that an additional mandatory
procedure be added to ensure that the NMSN is binding on the employer
and, if applicable, on the plan administrator without regard to the
date when the underlying support order was issued.
Response: Under the heading of ``Instructions to Employer'' in the
NMSN, we noted that the NMSN replaces any previous notice that the IV-D
agency has sent with respect to the employee and the children listed on
the NMSN. We also noted earlier in the preamble that if the NMSN is
appropriately completed and satisfies the conditions of ERISA under
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 and binding
on all parties concerned. The date the underlying support order was
issued, therefore, does not affect the binding nature of the NMSN.
3. Comment: One commenter suggested adding additional subsections
under paragraph (c), ``Mandatory procedures'', that would allow the
State to amend or terminate the NMSN for the following reasons: as a
result of a successful contest by the employee; upon emancipation of
any of the children named in the NMSN; upon modification or termination
of the medical support order; to add other children to the required
coverage; upon determining that the children have other satisfactory
health insurance; to correct any mistakes of fact contained in the
NMSN; and, upon case closure.
Response: State IV-D agencies have the authority to reissue the
NMSN or to terminate the NMSN when appropriate. We do not think it is
appropriate to list in the regulatory language every circumstance that
may result in amending or terminating the NMSN. However, with respect
to notifying the employer when there is no longer a current order for
medical support in effect, we have added subparagraph (c)(7) in this
regulation. This provision requires the State to have procedures for
promptly notifying the employer when there is no longer a current order
for medical support in effect.
In response to the commenter's concerns with amending or
terminating the NMSN, the IV-D agency could take the following actions:
(a) Result of a successful contest by the employee-Inform the
employer that the NMSN is no longer in effect;
(b) Emancipation of child(ren) named in the NMSN-Coverage of the
child(ren) named in the NMSN would terminate pursuant to State law;
(c) Modification or termination of the medical support order-
Reissue the NMSN if appropriate;
(d) Need to add other children to the required coverage-Reissue the
NMSN to add the child(ren);
(e) Upon determining that the children have comparable coverage--
the NMSN (Part A) provides notification that the employer must continue
to withhold employee contributions and may not disenroll (or eliminate
coverage for) the child(ren) unless the employer is provided
satisfactory written evidence that the child(ren) is or will be
enrolled in comparable coverage which will take effect no later than
the effective date of disenrollment from the plan; and
(f) To correct any mistakes of fact contained in the NMSN-Reissue
the NMSN in order to make the correction(s).
4. Comment: One commenter suggested that a separate section be
added to this regulation to provide for a Federal prescription on
allocation of withholding in instances where the combined income and
medical support withholding would exceed the maximum Consumer Credit
Protection Act (CCPA) limits. This should include allocating in
accordance with specified priorities between the income withholding for
cash child support and for employee contribution premium payments for
enrolling the child(ren) through the use of the NMSN.
Response: The Medical Child Support Working Group (MCSWG) made
recommendations in its June, 2000 Report on priorities of allocation
when there are cases where the combined income withholding for cash
child support and employee contributions for premium payments to health
administrators for health coverage exceeds the maximum CCPA limits. In
response to this comment, we plan to consider the recommendations from
the MCSWG before determining whether a Federal allocation standard
should be established. In the meantime, the employer must follow the
required prioritization on withholding in accordance with the State law
of the employee's principal place of employment. We have added
additional blank lines to the NMSN (see ``Instructions to Employer''
under the subheading, ``Priority of Withholding'') where States may
include State specific information regarding prioritization between
cash and medical support.
5. Comment: One commenter recommended changing the effective date
of this regulation to read, ``If a change in State law is not required,
this section is effective October 1, 2001; if a change in State law is
required, this section is effective on the effective date of State laws
described in paragraph (a) of this section. Such State laws must * * *
separate regular session.''
Response: Section 303.32(d) is consistent with section 401(c)(3) of
CSPIA, as amended by section 4(b) of Public Law 105-306. The statute
requires the effective date to be the later of ``(A)October 1, 2001; or
(B) the effective date of laws enacted by the legislature of such State
implementing such amendments, but in no event later than the first day
of the first calendar quarter beginning after the close of the
[[Page 82161]]
first regular session of the State legislature that begins after the
date specified in subparagraph (A). For purposes of the preceding
sentence, in the case of a State that has a 2-year legislative session,
each year of such session shall be deemed to be a separate regular
session of the State legislature.''
Comments on Part A of the NMSN
Case Identification Data Section
1. Comment: Eight commenters recommended changing the title from
``Employer Withholding Notice'' to ``Notice to Enroll.''
Response: The statute at section 466(a)(19)(B)(ii) of the Act
specifies a ``withholding notice'' that is severable and retained by
the employer. The employer sends the ``Part B'' portion of the notice
to the plan administrator. In response to the comment and for clarity,
we have revised the title to read, ``Notice to Withhold for Health Care
Coverage''.
2. Comment: One commenter suggested adding a statement that the
employer is required by law to enroll the children.
Response: Unless the employer is also his/her plan administrator,
the employer does not enroll children into the plan. The plan
administrator enrolls children into the plan.
3. Comment: Several commenters suggested that the Notice, pursuant
to section 401(e) and (f) of CSPIA, should contain language clarifying
that the Notice applies to State and local government and church plans.
These commenters expressed concern that because the Notice refers
specifically to ERISA, it may be misinterpreted as applicable to only
ERISA-covered plans.
Response: We agree. We added clarifying language to the case
identification data section regarding the use of the NMSN with respect
to State and local government and church plans.
4. Comment: One commenter recommended adding ``administrative
authority'' to the line in the case identification data section where
only ``court name'' appeared in the NPRM. The commenter made this
suggestion to recognize cases in which the order has been issued by an
administrative authority other than by a court.
Response: We agree. We added ``administrative authority'' to this
line so that it now says, ``Court or Administrative Authority.''.
5. Comment: Six commenters suggested deleting the term ``alternate
recipient(s)'' from ``alternate recipient(s)/child(ren)'' and
``obligor'' from ``employee/obligor.''
Response: We agree, and for clarity and simplicity, we deleted
``alternate recipient(s)'' and ``obligor'' throughout the NMSN so that
only ``child(ren)'' and ``employee'' will remain.
6. Comment: Three commenters expressed concern regarding the
confidentiality of the custodial parent's address appearing in the case
identification data sections of the NMSN. They recommended that the
employer be informed to keep the custodial parent's address
confidential and not to disclose that information to the employee.
Response: Information on the children's address is required under
section 609(a) of the Employee Retirement Income Security Act of 1974
(ERISA). If a State makes a determination that the custodial parent's
or child's address must be safeguarded, the State may substitute the
address of the IV-D agency for that of the custodial parent and
children.
7. Comment: Four commenters recommended adding a line for the IV-D
agency fax number to the case identification data section of the NMSN.
Response: We agree. We added a line for the IV-D agency's fax
number accordingly.
8. Comment: One commenter indicated a problem with understanding
the term ``basic'' type of family group health care coverage listed on
the bottom of the NMSN, Part A, and suggested replacing ``basic'' with
``basic/medical'' or ``major medical.''
Response: We replaced ``basic'' coverage with ``medical'' coverage.
The language on types of coverage noted on the bottom of the case
identification data section now reads: ``Any health coverages
available'' or ``medical''; ``dental''; ``vision''; ``prescription
drug''; ``mental health''; and ``other.
Employer Response
9. Comment: Two commenters indicated that the instructions under
the ``Employer Response'' do not address under what circumstances the
employer should complete item 3. Item 3 in the notice of proposed
rulemaking said that, ``State or Federal withholding limitations and/or
prioritization prevent the withholding from the employee's income of
the amount required to obtain coverage under the terms of the plan.''
Response: We agree that this section needs clarification. In the
revised NMSN, we changed number 3 to number 4. We revised the
introductory language under ``Employer Response'' to read, ``Check
number 4 and return this Part A to the Issuing Agency if the Plan
Administrator informs you that the child(ren) is/are enrolled in an
option under the plan for which the employee contribution exceeds the
amount that may be withheld from the employee's income due to State or
Federal withholding limitations and/or prioritization.''
10. Comment: One commenter suggested removing the parenthetical
just below the ``Employer Response'' heading that in the proposed rule
read,'' (To be completed by Employer, as appropriate)''. The commenter
suggested that we replace the parenthetical with language regarding the
twenty business day timeframe for employers to send the Notice to the
plan administrator if none of the situations reflected in responses
listed in this section apply. If any one of the situations reflected in
the responses listed apply, the commenter recommended that the same
twenty business day timeframe be used by the employer to inform the IV-
D agency which situation exists as reflected in the list of responses
that precludes enrollment of the child(ren) in the health plan.
Response: We agree. We revised the paragraph under the ``Employer
Response'' section to return this part to the IV-D agency within twenty
business days after the date of the Notice, or sooner, when any one of
the following responses apply: (1) ``Employer does not maintain or
contribute to plans providing dependent or family health care
coverage'', or (2) ``The employee is among a class of employees (for
example, part-time or non-union) that are not eligible for family
health care coverage under any group health plan maintained by the
employer or to which the employer contributes'', or (3) ``Health care
coverage is not available because the employee is no longer employed by
the employer.''
11. Comment: One commenter recommended adding space for the
employer's EIN or employer identification number at the bottom of the
``Employer Response'' section. This is needed if the EIN is not
provided by the Issuing Agency on the Employer Withholding Notice.
Response: We agree. We added space for the EIN in the ``Employer
Response'' section.
12. Comment: One commenter asked that the employer be required to
provide the cost of the employee's contribution on the ``Employer
Response'' form when the employer returns the response indicating that
the withholding limitations have been exceeded.
Response: We are not requiring employers to do so because of the
inherent differences involved in each case. We encourage States to
contact employers when it may be necessary to have this information.
[[Page 82162]]
13. Comment: One commenter noted that when coverage is not
available, a copy of Part A, that is sent back to the IV-D agency,
should not be sent to the custodial parent as instructed in the
introductory paragraph under ``Employer Response.''
Response: We agree. The IV-D agency is responsible for dealing with
the custodial parent in a IV-D case, and is therefore responsible for
notifying the custodial parent when the IV-D agency is notified that
coverage is not available. Requiring employers to also send a copy of
Part A to the custodial parent would place an additional burden on
employers. We have revised the introductory paragraph of the ``Employer
Response'' to clarify that Part A should not be sent to the custodial
parent when coverage is not available. The first sentence in the
introductory paragraph now reads, ``If either 1, 2, or 3 below applies,
check the appropriate box and return this Part A to the Issuing Agency
within 20 business days after the date of the Notice, or sooner as
reasonable.'' Similarly, in the new explanatory language regarding box
4 in the introductory paragraph of the ``Employer Response,'' the
employer is required to return Part A to the Issuing Agency only. Under
``Instructions to Employer,'' we made a conforming change to
subparagraph 2.b.2 under the subheading, ``Employer Responsibilities.''
We deleted ``and the parties.'' Subparagraph 2.b.2. now reads: ``Upon
notification from the plan administrator(s) that the child(ren) is/are
enrolled, either (1) * * * or (2) complete item 4 of the Employer
Response to notify the Issuing Agency that enrollment cannot be
completed because of prioritization or limitations on withholding.''
14. Comment: A commenter requested that we add a line for ``date of
termination'' under response 2 on the ``Employer Response.'' A
commenter also suggested that, when an employee terminates employment,
the form should instruct employers to use box 2 under the ``Employer
Response'' section of Part A of the NMSN that indicates, ``Health care
coverage is not available because the employee is no longer employed by
the employer * * *.''
Response: Under ``Employer'' Response we renumbered Response 2 in
the proposed rule to response 3 in the revised form that pertains to
the fact that the employee is no longer employed by the employer. We
also added a line for ``date of termination'' under the new response 3.
The new response 3 under the ``Employer Response'' section of the
NMSN is intended to inform the IV-D agency that the employee is no
longer employed by the employer at the time that the employer receives
the NMSN. The requirement for employers to promptly notify the IV-D
agency when an employee terminates employment is consistent with the
current procedure for income withholding cases.
Instructions to the Employer
15. Comment: One commenter suggested having the ``Instructions to
the Employer'' precede the ``Employer Response'' section because the
instructions should be read first before attempting to complete the
form. Another commenter requested that Part A and Part B should be
placed together at the beginning, followed by the instructions for both
Parts.
Response: We decided to maintain the format used in the NPRM. We
believe that the current sequence and format of the Notice provides
specific clarifying instructions for employers and plan administrators.
Part A includes the Notice to Withhold for Health Care Coverage, the
Employer Response and the Instructions to Employer. Part B includes the
Medical Support Notice to Plan Administrator, the Plan Administrator
Response, and the Instructions to Plan Administrator.
16. Comment: Three commenters recommended an indication of what
actions should be taken when it is known that there is an enrollment
waiting period in instances of recent employment. One commenter
recommended adding an explanation on the form regarding the employer's
role when the plan calls for a waiting period. A waiting period may
exist before enrollment can take place because the employee is a new
employee or until some other criterion is fulfilled, such as a
requirement to complete a certain number of hours worked. The commenter
recommended that the employer notify the plan administrator when
enrollment can take place upon receipt of notification from the plan
administrator that the waiting period will be in effect for a period of
more than 90 days from the date of receipt of the Notice or the waiting
period's duration is determined by another criterion.
Response: We agree that clarification is needed. We added
subparagraph 2.c. under the heading of ``Employer Responsibilities'' in
the ``Instructions to Employer'' to read: ``If the plan administrator
notifies you that the employee is subject to a waiting period that
expires more than 90 days from the date of its receipt of this Notice,
or whose duration is determined by a measure other than the passage of
time (for example, the completion of a certain number of hours worked),
notify the plan administrator when the employee is eligible to enroll
in the plan and that this Notice requires the enrollment of child(ren)
named in the Notice in the plan.''
17. Comment: One commenter suggested deleting the word ``also''
referring to children that appeared in the proposed notice in the first
sentence under the section ``Instructions to Employer''. The sentence
said, ``This document serves as notice that the employee identified
above is obligated by a court or administrative child support order to
provide health care coverage for the child(ren) also identified
above.''
Response: We agree, and deleted ``also'' from the sentence. The
sentence now reads, ``This document serves as notice that the employee
identified on this Notice is obligated by a court or administrative
child support order to provide health care coverage for the child(ren)
identified on this Notice.''
18. Comment: One commenter recommended deleting the clause, ``As
the employer of the employee, you are required to:'' that appeared in
the proposed Notice in the first sentence under the subheading
``Employer Responsibilities'' in the ``Instructions to Employer''
section of Part A. The commenter indicated that it is evident that the
employer is the employee's employer since this is under the subheading
of ``Employer Responsibilities'' and therefore unnecessary to use this
clause.
Response: We agree, and deleted the clause ``As the employer of the
employee, you are required to:'' We listed the employer's
responsibilities directly without the previous opening clause.
19. Comment: Two commenters recommended adding ``medical support''
to identify the ``Notice'' in the second sentence under the section
``Instructions to Employer'' so that the sentence would read, ``This
National Medical Support Notice replaces any Medical Support Notice
that the Issuing Agency has previously served on you with respect to
the employee and the children listed on this Notice.''
Response: We agree and added ``Medical Support'' before ``Notice.''
20. Comment: Three commenters recommended that additional language
be added under the subheading of ``Limitations of Withholding'' in the
``Instructions to Employer'' section of Part A to indicate that the
Consumer Credit Protection Act (CCPA) limit
[[Page 82163]]
applies to the combined amounts withheld for cash and medical support.
Response: We agree and have added language so that it now reads,
``The total amount withheld for both cash and medical support cannot
exceed ______% of the employee's aggregate disposable weekly
earnings.'' We also clarified that under the National Medical Support
Notice, the employer may not withhold more than the least of: (1) The
amounts allowed by the Federal Consumer Credit Protection Act (15
U.S.C. section 1673(b)); (2) the amounts allowed by the State of the
employee's principal place of employment; or (3) the amounts allowed
for health insurance premiums by the child support order.
21. Comment: One commenter suggested changing the subsection title
from ``Limitations on Withholding'' to ``Limitations on Premiums'' in
the ``Instructions to Employer'' section in order to avoid confusion
for employers who are more accustomed to receiving income withholding
notices for cash support.
Response: The limitations on withholding apply to both the amount
of cash child support or medical support, whether in the form of cash
amounts for medical support or employee contributions to health
insurance coverage. Therefore, we have not changed the subheading
``Limitations on Withholding'' to ``Limitations on Premiums.''
22. Comment: In the ``Instructions to Employer'', two commenters
suggested adding a line under the ``Limitations of Withholding''
subheading so that the IV-D agency could indicate the amount of cash
medical support that may be included in the order.
Response: If cash medical support is included in the order, it is
unlikely that the same order would include a provision for health
insurance coverage. If required by an income withholding order, an
employer sends cash medical support to the IV-D agency. Cash medical
support payments, specified in an order, are used for example, to
reimburse the custodial parent for medical costs incurred by the
custodial parent. The NMSN is used for a different purpose, that is, to
enroll children in their noncustodial parent's employment-related
health plan. The employer withholds the employee's contribution, or
payment of the premium, and sends it to the plan administrator and not
to the IV-D agency.
Limitations on withholding are set as a percentage of aggregate
earnings. If support is being withheld under a separate income
withholding notice, the amount of support being withheld would be
specified on that notice and available to the employer. For clarity, we
are changing the reference to line 3 under the heading of ``Limitations
on Withholding'', that is in the ``Instructions to Employer'' section
of the NMSN, to read, ``The amounts allowed for health insurance
premiums by the child support order, as indicated here: ____.'' This
will clarify that the withholding is for employee contributions rather
than for cash medical support.
23. Comment: Two commenters recommended that additional space be
provided under the subheading of ``Priority of Withholding'' in the
``Instructions to Employer'' section of the NMSN that appeared in Part
A, for the IV-D agency to provide a description of priorities between
cash and medical support under State law.
Response: We agree and added additional space under this subheading
for that purpose.
24. Comment: One commenter asked for a definition of ``comparable''
coverage under the subheading of ``Duration of Withholding at
subparagraph 1.b. that allows for disenrollment of a child because the
child will be enrolled in comparable coverage.
Response: Comparable coverage means coverage that is similar in
scope to the current coverage and that would provide approximately the
same type and extent of coverage to the child or children. Although the
term ``comparable'' coverage appears in section 1908(a)(3)(C)(i)(II) of
the Act, the term is not explicitly defined. The Health Care Financing
Administration is responsible for interpretations of title XIX and
intends to promulgate regulations which will include discussion of the
term ``comparable.''
25. Comment: One commenter suggested that a State have the option
of tailoring the provisions under the subheadings of ``Limitations on
Withholding'' and ``Priority of Withholding'' portions in the
``Instructions to Employer'' section of Part A in the NMSN in
accordance with its State law.
Response: The Consumer Credit Protection Act (CCPA) allows States
to specify limits for amounts withheld which may be less than the
maximum amounts allowed for by the CCPA. With respect to
prioritization, we added space under the subheading ``Priority of
Withholding'' in the ``Instructions to Employer'' section of Part A in
the NMSN. The additional space is intended for States to provide
information on how they prioritize between cash and medical support.
26. Comment: One commenter suggested changing the subtitle
``Duration of Withholding'' in the ``Instruction to Employer'' section
of Part A to that of ``Duration of Enrollment.''
Response: We believe that the subtitle ``Duration of Withholding''
should not be changed. The section ``Duration of Withholding,'' in the
``Instruction to Employer'' addresses withholding in the context of
withholding employee contributions, rather than coverage or enrollment.
Since the employer is responsible for withholding employee
contributions for health plan premium payments, we believe it is
important to list the circumstances that would allow the employer to
discontinue withholding. They are as follows: the court or
administrative child support order noted in the NMSN is no longer in
effect, or the child(ren) is or will be enrolled in comparable coverage
effective upon disenrollment, or the employer eliminates family health
coverage for all of its employees.
27. Comment: One commenter suggested revising the language under
the subsection of ``Notice of Termination of Employment,'' in the
``Instructions to Employer'' section of Part A to eliminate unnecessary
words. The language in the proposed rule read as follows: ``In any case
in which the above employee's employment with the above employer
terminates, the employer must promptly notify the Issuing Agency listed
above of such termination. This requirement may be satisfied by sending
to the Issuing Agency named above a copy of any notice the employer is
required to provide under the continuation coverage provisions of ERISA
or the Health Insurance Portability and Accountability Act.''
The commenter suggested the following revised language, ``In any
case in which the employee's employment terminates, the employer must
promptly notify the Issuing Agency listed above of such termination.
This requirement may be satisfied by sending the Issuing Agency a copy
of any notice the employer is required to provide under the
continuation coverage provisions of ERISA or the Health Insurance
Portability and Accountability Act.''
Response: We agree and incorporated the revised language
accordingly.
28. Comment: One commenter recommended changing the heading of
``Notice of Termination of Employment'' to ``Notice of Termination of
Employment or Disenrollment of Children.'' The commenter further
recommended that the employer be required to notify the State if the
[[Page 82164]]
children are disenrolled for any reason other than termination or
amendment of the NMSN by the IV-D agency.
Response: This recommendation would impose an additional reporting
requirement on the employer. The plan administrator is responsible for
notifying all parties concerned, including the IV-D agency, whether the
NMSN is a qualified medical child support order and whether enrollment
of the child(ren) occurs, or if the NMSN does not meet the criteria and
enrollment does not occur.
29. Comment: Three commenters recommended that a sentence be added
under the subheading of ``Employee Liability for Contribution to Plan''
in the ``Instruction to Employer'' section of Part A of the NMSN
indicating that in an event the employee contests withholding of the
employee's contribution required by the health plan, the employee
should contact the IV-D agency at the address listed on the NMSN.
Response: We agree. We added the following sentence under this
heading, ``To contest the withholding under this Notice, the employee
should contact the Issuing Agency at the address and telephone number
listed on the Notice.''
30. Comment: A commenter requested clarification regarding how an
employee could challenge certain aspects of the Notice qualification
process.
Response: Although the issue of the Notice qualification process is
more appropriately addressed in DOL's regulation, we concur with the
commenter that clarification is needed in Part A. We added the
following language under the ``Instructions to Employer'', subheading
``Employee Liability for Contribution to Plan': ``With respect to ERISA
covered group health plans, it is the view of the Department of Labor
that Federal courts have jurisdiction if the employee challenges a
determination that the Notice constitutes a Qualified Medical Child
Support Order.''
31. Comment: One commenter recommended that the NMSN be made
available for universal use in all child support cases and not limited
to cases under the title IV-D program. Another commenter recommended
that the NMSN should only be used by State IV-D agencies.
Response: The statute at section 466(a)(19)(A) requires the use of
the NMSN where appropriate in title IV-D cases.
32. Comment: One commenter inquired whether the Case Number and
Support Order Number requested in both Parts A and B of the NMSN are
the same.
Response: They are not the same. The case number identifies the
number of the case in the IV-D agency's caseload. The support order
number pertains to the judicial or administrative support order that
exists with respect to the individuals associated with the IV-D case.
33. Comment: Several commenters objected to the provision in Part B
of the NMSN in the ``Plan Administrator Response,'' section, (item
2.b.) that requires the IV-D agency to make a selection from an array
of multiple options available under the health plan or plans. These
commenters expressed concerns that there may be inadequate staff to
make the selection, that such interaction may cause delays in
enrollment, and that such interaction may hinder automation of the
child support enforcement system. Another commenter supported the
provision that the plan administrator should notify the IV-D agency
that a choice among more than one option is required. The commenter
also suggested that if the IV-D agency does not respond within twenty
business days after the plan administrator has returned the Plan
Administrator Response informing the IV-D agency that a choice is
required, and the plan has default option, the plan administrator
should enroll the child(ren), and the participant if necessary, in the
plan's default option.
Response: We believe that decisions regarding selection of coverage
are very important. If the plan administrator notifies the IV-D Agency
that the participant is not enrolled in the plan and that more than one
coverage option is available, the decision as to which option should be
selected rests with the IV-D agency, in consultation with the custodial
parent. The IV-D agency has this responsibility on the basis that the
IV-D agency initiated the enrollment process, is providing services to
the custodial parent and child, and is in the best position to make
such a selection, in consultation with the custodial parent. If the IV-
D agency does not make this selection and reply to the plan
administrator within twenty business days, and the plan has a default
option, the plan administrator should enroll the child(ren) in the
default option. If the plan does not have a default option, the plan
administrator may wish to contact the IV-D agency to ensure that each
child is placed in appropriate coverage as soon as reasonably possible.
We have added paragraph (c)(8) to this final regulation at 45 CFR
303.32 to clarify the IV-D agency's responsibility if it receives a
plan administrator response form indicating a choice of options is
necessary before enrollment may proceed.
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
final rule is consistent with these priorities and principles. This
regulation has been determined to be significant and has been reviewed
by the Office of Management and Budget.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (Public Law 96-354) requires the
Federal 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. These regulations place
requirements on IV-D agencies for the use of the NMSN. The NMSN itself
will help small employers and small plan administrators who are
required under State laws to comply with orders to enroll children in
health care plans available to their employees.
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 (name, SSN, mailing
address); employer's name/address; the name/address of the child(ren);
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
[[Page 82165]]
administrator requires this information to determine whether to enroll
the child(ren)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 NMSN 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
The Office of Management and Budget (OMB) filed comments on this
request for approval due to comments from one State. The State's first
comment pertained to changing the timeframes that the employer and plan
administrator have for processing the NMSN. The State wanted to change
the timeframe that the employer has to forward the NMSN to the plan
administrator from twenty business days from the date of the NMSN, to
ten business days. The State also wanted to change the timeframe that
the plan administrator has to enroll or deny enrollment from forty
business days from the date of the NMSN, to twenty business days.
With respect to the twenty business days timeframe for employers,
we are bound by the statute at section 466(a)(19)(B)(ii) of the Social
Security Act that specifies this timeframe for employers. With respect
to the forty business days timeframe for plan administrators, we are
bound by the statute at section 609(a)(5)(C)(ii) of the Employment
Retirement Income Security Act of 1974 (ERISA) that specifies this
timeframe for plan administrators. We have no authority to change
statutorily required timeframes.
As part of its second comment, the State indicated that it believes
the NMSN is fine for ERISA employers but may be rejected by non-ERISA
employers. Therefore the State recommended that the instructions and
response sections in the NMSN should be modified and changed.
Historically, the IV-D program experienced difficulties in
enforcing medical support coverage of children in ERISA covered health
plans. ERISA preempts State law, under whose authority child support
orders are established, and provides a basis for denying enrollment of
children under the IV-D program in ERISA covered health plans. A
primary objective of the NMSN is to meet the ERISA requirements for a
qualified medical child support order to effect enrollment. The
impediments to enrollment were in the ERISA covered health plans and
not with the non-ERISA plans. The NMSN has been developed to apply to
employer-related health plans. We have no reason to make any
modifications to the NMSN as we are in agreement with the State that
the NMSN will facilitate enrollment in ERISA covered health plans. We
do not agree that there will be problems with non-ERISA plans.
The information collection requirements were approved by OMB under
OMB number 0970-0222.
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.
Executive Order 13132
Executive Order 13132 on Federalism applies to policies that have
federalism implications, defined as ``regulations, legislative comments
or proposed legislation, and other policy statements or actions that
have substantial direct effects on the States, or on the distributions
of power and responsibilities among the various levels of government.''
While this rule does not have federalism implications for State or
local governments as defined in the Executive Order, there were
extensive consultations with State members of the Medical Child Support
Work Group, as well as other State and local child support
practitioners, on the content of the Notice and its requirements.
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: August 18, 2000.
Olivia A. Golden,
Assistant Secretary, Administration for Children and Families.
Approved: August 29, 2000.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
For the reasons discussed above, we are amending 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, where appropriate, of the
National Medical Support Notice (NMSN), 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.
[[Page 82166]]
(c) Mandatory procedures. The State must have in effect and use
procedures under which:
(1) The State agency must use the NMSN to transfer notice of the
provision for health care coverage of the child(ren) to employers.
(2) The State agency must transfer the NMSN to the employer within
two 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.
(3) Employers must 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 Notice to Withhold for
Health Care Coverage directing the employer to withhold any mandatory
employee contributions to the plan) within twenty business days after
the date of the NMSN.
(4) Employers must 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.
(5) Employees may contest the withholding based on a mistake of
fact. If the employee contests such withholding, the employer must
initiate withholding until such time as the employer receives notice
that the contest is resolved.
(6) Employers must 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.
(7) The State agency must promptly notify the employer when there
is no longer a current order for medical support in effect for which
the IV-D agency is responsible.
(8) 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.
(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.
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[FR Doc. 00-31611 Filed 12-26-00; 8:45 am]
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