CHAPTER 3
Taking the First Step:
Establishing Health Care Coverage in Child Support Orders

State Child Support Guidelines

As discussed in the introduction to this Report, the current medical child support model is based on a number of outdated assumptions. They include: (1) mothers are not in the paid labor force, (2) fathers are employed at the same job for most of their working lives, and (3) employers provide free or nearly free dependent health care coverage to their employees. Because presumptive State child support guidelines may be based upon these erroneous assumptions, they fail to maximize private family health coverage enrollment for children in single-parent households.

The first assumption, that mothers are not in the paid labor force, is clearly incorrect, as is testified to both by most people's experience as well as by government and academic studies. In the majority of households, both parents participate in the workforce. Thus, either parent may have access to employment-based family health care coverage.

In families with a formal child support order, 16 percent of these agreements order the custodial family to provide coverage and 37 percent order the noncustodial parent to provide it.¹ Among all custodial mother families, with or without a court order for support, 35 percent of the custodial parent families actually provide health care coverage for the child support-eligible children. The noncustodial parent, or someone else outside the household, provides health care coverage for 24 percent of these families.²

Yet the Working Group found that only 27 States' child support guidelines direct the decision maker to consider both parents as potential sources of health care coverage.³ Within these States, recognizing the custodial parent's employer as a potential source of insurance has clearly paid off.

The remaining States' child support guidelines do not require consideration of coverage available to the custodial parent. In the worst case scenario in these States, children may not be enrolled in family health coverage at all. If no coverage is available through the noncustodial parent, and if the noncustodial parent has not been ordered to contribute to the cost of coverage under the custodial parent's plan, then the children may remain uncovered, as the cost of coverage is often prohibitive for the custodial parent alone. In other instances, the children in these States may indeed have family health coverage, but they may not be enrolled in the family health coverage plan that best meets their needs because the custodial parent's coverage has not been considered.

For these reasons, the Working Group recommends amendment of Federal regulations to require States to revise their child support guidelines so that decision makers are required to explore health care coverage available to both parents.⁴

The Working Group also found that even when the State's child support guidelines direct the decision maker to look at coverage available to both parents, IV-D programs focus almost exclusively on the noncustodial parent. This is because Federal child support statutes and regulations assume that the noncustodial parent is the only possible source of coverage mandated, as well as because the historical mission of the IV-D program was to establish and enforce obligations against noncustodial parents.⁵ Some States reported that they did not pursue custodial parent coverage because they believed it was not a proper IV-D program activity. This practice has to change in order to maximize the number of children who receive private coverage.

For this reason, the Working Group also recommends that Federal regulations at 45 CFR §303.31 be amended to make it clear that IV-D agencies can and should consider health care coverage available to either parent when they establish or modify a medical child support order.

Ensuring that IV-D agencies consider health care coverage available to either parent when they establish or modify a medical child support award is, however, just a first step. It is also necessary to set clear guidelines regarding allocation of the costs between the parents. When the custodial parent provides and pays for the children's health care coverage, the noncustodial parent should share the cost of any required premiums. The child support order should require the noncustodial parent to do so, and the amount of the child support payment should increase accordingly. On the other hand, when the noncustodial parent provides and pays for the children's health care coverage, the cash support obligation may need to be adjusted (and in many cases already is) to reflect the cost of the coverage.

Towards this end, the Working Group recommends that child support guidelines include formulas for determining how the amount of the cash support award should increase or decrease in order to account for health care premiums, and child support orders should clearly specify how such amounts are to be allocated between the parents. Specifically, HHS should amend 45 CFR §302.56 to require that State child support guidelines include clear methods of adjusting child support awards to reflect the manner in which the parents will share the cost of premiums associated with the children's health care coverage.⁶

At this time, States use different approaches to allocate health care costs between the parents. Nineteen States and the District of Columbia⁷ deduct the premium cost from the income of the parent who provides the coverage before calculating the amount of the child support obligation. Twenty- nine States⁸ calculate the basic child support obligation and then they add some or all of the children's family health coverage cost to the support award if the custodial parent is providing coverage, or they deduct the amount from the child support obligation if the noncustodial parent is providing coverage. Two States⁹ treat family health coverage costs as a reason to deviate from the presumptive amount determined under the child support guidelines.

Furthermore, the 29 States that allocate premium costs between the parents and add/subtract the amount from the basic cash award vary substantially in how costs are allocated. In four of these States, for example, the parent providing the coverage bears the entire cost.¹⁰ In other States, the cost is split fifty-fifty.¹¹ In still others, the cost is prorated.¹² Where an allocation takes place, most States include only the marginal cost of covering the children, while the rest allocate the entire cost of family coverage.¹³

Clearly, there is currently no agreement between States as to a "best practice" regarding adjusting child support obligations to include health care premiums, so at this time the Working Group is not recommending a national standard for allocating premium costs.

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Role of the Decision Maker —
Administrative Agency, Court, Other "Tribunal"

Coverage Options — Need for Information

The decision maker needs information about health care plans that are available to both parents in order to: (1) determine whether either has reasonable access to private health care coverage that is accessible to the child, (2) allocate costs, and (3) draft the medical support order. The parents themselves are the best source of this information.

Recognizing this, Alabama and New York enacted statutes that require both parents in all child support proceedings to provide information about any group health plans available to them.¹⁴

The Working Group recommends that HHS amend 45 CFR §303.31 to oblige all States to require each parent to disclose information about available private group health care coverage as a part of the State child support guidelines.

Furthermore, while IV-D agencies currently have the authority to request information about health care coverage available or potentially available to a parent from employers,¹⁵ many agencies are either not aware of this or they do not understand the potential value of gathering family health coverage information before a support order is established or modified.

Section 466(c) of the Social Security Act permits IV-D agencies to request information from employers and engage in individual case discovery. This will help States learn which employers offer dependent coverage to at least some of their employees and which do not. As State child support agencies obtain this information, they can begin (or continue) to build their own databases. They can supplement this information with data from other sources, such as Temporary Disability Insurance carriers or the Medicaid agency. States should be encouraged to do this so that they can begin to determine when they should request further information and when such a request would be futile. For example, if the State database shows that Corporation ABC does not provide dependent coverage to any of its employees, the IV-D agency would not request health care information from Corporation ABC.

For this reason, in addition to recommending that States require parents to disclose family health coverage information, the Working Group also recommends that the Federal Office of Child Support Enforcement (OCSE) inform State child support agencies that they need to request health coverage information from employers. This disclosure of coverage information by employers and plan administrators is particularly important since many employers offer more than one plan to their employees,¹⁶ and the decision maker must be familiar with all of the available options in order to determine the best health care choice for the children.

In addition, DOL should make it clear to plan administrators that they must provide information on ERISA-covered health care plans when it is requested for the purpose of drafting a QMCSO, including completing a NMSN.¹⁷ The Working Group suggests that DOL include this information in the booklet that is proposed in Recommendation 32.

Decisionmaking Principles

There are three basic principles that should be considered when making decisions about coverage options for children's health care:

• Coverage should be comprehensive.
• Coverage should be accessible and stable.
• Coverage should be affordable.

Because continuity of care is very important, existing family health coverage should be maintained-regardless of which parent provides it — if it is comprehensive, affordable, and reasonably accessible. In Massachusetts, the law provides that if the custodial parent is currently providing coverage at a lower cost, or if the custodial parent prefers to maintain the coverage, irrespective of cost, the decision maker should not move the child to the noncustodial parent's coverage.¹⁸

The decision maker, however, should have authority to order a change of coverage if that is in the best interest of the child. If, for example, the noncustodial parent has coverage that is accessible to the child and is available at no cost, while the custodial parent's coverage is very expensive, there is good reason to change. If the custodial parent's coverage is maintained, there will be less money available to meet the child's other basic needs. In such a case, then, the child would probably benefit from a change in coverage.

Central to this decisionmaking process regarding the appropriateness of coverage is a determination of comprehensive coverage. States need to establish a definition of comprehensive coverage that will be used to evaluate insurance options.

Some plans are so limited, for example, that they do not meet the child's basic needs. Ordering such limited coverage may make the child ineligible for the State's CHIP, since SCHIP is limited to children with no coverage.¹⁹ The Working Group determined that to be considered comprehensive, coverage must include at least medical and hospital coverage; provide for preventive, emergency, acute, and chronic care; and impose reasonable deductibles and co-payments. When comparing different plans to determine which is most comprehensive, the decision maker should consider basic dental coverage, orthodontics, eyeglasses, mental health services, and substance abuse treatment, and how such benefits meet each child's unique needs. When both parents have access to private coverage, an established definition of comprehensive coverage will provide States with a standard for determining which of the available plans is superior.

In addition to ensuring that the most comprehensive coverage is ordered, decision makers must also ensure that the selected health care will be geographically accessible to the child — if it is not accessible, it is useless. Fee-for-service coverage is usually portable and does not raise access issues, but HMO and Preferred Provider Organization (PPO) coverage is frequently available only in limited geographic areas. Alternatively, reimbursement for the utilization of out-of-network providers may result in a lesser reimbursement payment and/or higher deductible and copayments. When the child lives in a different community from the parent who is ordered to provide coverage, the child may only be able to utilize the coverage for emergency services. These problems are minimal if the HMO has agreements with providers outside its service area. Such agreements allow the child to use alternate providers if the child lives outside its service area but in an area covered by one of these agreements.

However, in the absence of such agreements, serious problems arise. Children have theoretical coverage, but that coverage is useless because it is geographically inaccessible. Moreover, children may be in an even worse position than uninsured children — the "uninsured" children may be eligible for SCHIP, while these theoretically "insured" children are not.

A standard for determining geographic accessibility should be established so that access to a provider is not an unreasonable distance. The decision maker should determine if the primary care is available within 30 minutes or 30 miles of the child's residence. In lieu of a 30 minute/30 mile standard, an alternative standard may be adopted, such as those used by States that contract with a Medicaid managed care plan or that regulate managed care provider networks.

HCFA has issued guidance for organizations that contract with Medicare and Medicaid.²⁰ As a general rule, the primary care services and commonly used specialty and referral services are to be available within 30 minutes driving time from any point in the service area. Longer travel times may be permissible when residents in part or all of the service area customarily travel greater distances to obtain that service (e.g., in rural areas, or when there is only one provider of a given type in a broad region). Other factors to be considered are the means of transportation. In areas where low-income residents rely heavily on public transportation, the organization is to ensure that providers are accessible through these means.

Child support-eligible children face unique barriers in terms of access to health care coverage. One such barrier, as highlighted in Chapter 2 of this report, is that much of the health care coverage available to parents through their employers is provided through managed care organizations that limit the choice of service providers by geographic location or by a limited network of providers. If a noncustodial parent provides medical support through a restricted insurance plan, such as an HMO, available services may be inadequate when the covered child does not reside within or near the applicable service area (usually only emergency care is covered outside of the service area). The Working Group found that coordination agreements between plans that permit covered children to receive benefits outside the insurer's ordinary service area are a useful tool in expanding the health care coverage options that a decision maker may consider when establishing the medical support provisions of a child support order. Therefore, the Working Group recommends that the National Association of Insurance Commissioners (NAIC) encourage insurance providers to enter into coordination agreements.

In addition to taking geographic accessibility factors into account, a determination of accessibility must also take into account the stability of coverage. Many parents have access to dependent health care coverage at the time an order is entered but lose coverage shortly thereafter. Similarly, parents with seasonal employment (such as summer camp staff), those whose hours of employment vary at different times of the year (such as construction workers and fishermen), and those who frequently change jobs can afford to help pay for family health coverage at some times of the year but not at others. The decision maker may thus order available coverage only to find that it is no longer available or affordable by the time the paperwork is completed. This is an exercise in futility and should be avoided when possible.

When determining accessible coverage, then, the decision maker should consider the likelihood that coverage will be stable for at least one year. In short, decision makers should not order private coverage when it will not be available for an extended period of time, or when it is geographically inaccessible to the child.²¹

Decision makers must also address whether coverage is affordable. The definition of affordability must be considered in terms of reasonable cost. IV-D agencies are required to pursue private family health coverage whenever it is available at reasonable cost. Federal regulations state that "health insurance is considered reasonable in cost if it is employment-related or other group health insurance."²² The definition deeming employment-related coverage to be per se reasonable in cost was first promulgated in 1985. It was justified by a 1983 study by the National Center for Health Services Research, which found that employers paid 72 percent of the premium cost for low-wage employees. OCSE thus concluded that "most employment-related or other group health insurance is inexpensive to the employee/absent parent."²³

States have questioned the validity of this premise, however, since at least 1988.²⁴ And now, years later, there is even more reason to question the factual premise upon which this definition was based. The number of employers who offer completely subsidized dependent's coverage to their employees has significantly decreased.

The GAO estimates that in 1980, 51 percent of employers who offered family coverage fully subsidized the cost, but by 1993, only 21 percent of employers fully subsidized the cost.²⁵ Recent research shows that low-wage workers, who are the primary constituency of the IV-D program, are concentrated in certain "low-wage" firms where employee contributions to the cost of the premium are higher than in other firms.²⁶ Furthermore, the required employee contribution for health care coverage represents a much larger share of family income for low-income workers.²⁷

The size of the typical premium is not small.²⁸ The average percentage of the premium paid by the employee for family coverage ranges from 32 to 36 percent based on the plan type.²⁹ Employees at larger companies pay a considerably lesser percentage of their family health coverage premium costs than employees in smaller companies.³⁰

The estimates shown in the "Annual Premiums & Employee Contributions for Active Employees for Family Coverage, 1996" table suggest that on average, employee contributions to family health care coverage premiums are equal to 45 to 52 percent of the typical cash child support payment.³¹ Since the cost of health insurance coverage can be such a large part of the child support order, requiring such coverage has implications for the amount of cash payments the child receives and the size of the noncustodial parent's obligation, depending on how a State takes the cost of health care coverage into account. A State may reduce the cash obligation by the amount of health insurance cost, adjust the calculation of the noncustodial parent's income based on health insurance costs, or simply add a health insurance requirement with no adjustment to cash award.

Clearly, employee contributions to insurance premiums impose a significant financial burden on the parent who is providing the dependent coverage. States have long recognized this in their State child support guidelines. Every State provides a mechanism to adjust the amount of the child support obligation when a parent provides health care coverage for his children.³² If the custodial parent provides the coverage, the cash support award will probably increase, to reflect some contribution from the noncustodial parent toward the cost. If the noncustodial parent provides the coverage, the cash support award will probably decrease, to reflect the fact that that parent is subsidizing the cost of coverage through a separate deduction from wages toward the premium.

For more than a decade, States have worried about the effect of these adjustments in cash support, especially when the noncustodial parent is ordered to provide health care coverage.³³ If the premium associated with the coverage is too high, cash support will be substantially reduced, leaving the custodial parent without enough money to supply the child's basic needs. If cash support is not adjusted downward, however, poorer noncustodial parents will pay an unreasonably high portion of their income as support. If these parents cannot meet their own basic needs, they have little incentive to work and support their children, which may actually reduce the amount of child support they pay.³⁴

Some States have addressed this problem by developing policies that look at the actual cost of providing insurance relative to the obligated parent's income. If cost exceeds a certain percentage of that parent's income, coverage is not ordered. For example, Washington State does not require the decision maker to order the noncustodial parent to pay coverage if the premiums are more than 25 percent of the noncustodial parent's basic child support obligation.³⁵ In other States, the decision maker exercises discretion when the cost is too high, even if the coverage is employment-related. For example, Colorado does not require the decision maker to order coverage if the premium exceeds 20 percent of the noncustodial parent's gross income.³⁶

Other States compare the cost of family health coverage to the amount of the cash support award. For example, Maine does not require the decision maker to order coverage if the cost exceeds 15 percent of the parent's cash support obligation³⁷ and Montana has a similar rule if the cost exceeds 25 percent of the cash support obligation.³⁸ The Working Group also noted that the SCHIP program directs that contribution by the parent toward the cost of this health care coverage should not exceed five percent of a family's gross income.

The Working Group looked at these State policies in developing a new definition of reasonable cost. The Working Group began with the Maine/Montana approach, which calculates reasonable cost relative to the cash support award. The Working Group rejected this as a national guideline, however, because a significant number of States (12) use a child support guideline that calculates a cash support obligation only for the noncustodial parent. These States have no ability to calculate a support obligation for the custodial parent. If the custodial parent were to be the one ordered to provide coverage, there would be no way to adjust that parent's obligation in those States.

The Working Group also considered the amount of cash support owed under various State guidelines and concluded that using the Percentage of Support Obligation model would exacerbate existing inequities. There is enormous variation in different States' treatment of similarly-situated families. For a low-income family with a combined income of $14,400 per year, for example, the noncustodial parent's typical child support payment ranges from nothing in Connecticut to $327 in Indiana.³⁹ If the Federal government adopted a 25 percent of cash support standard, the Connecticut father would have no obligation, while the Indiana father would owe an additional $82, for a total obligation of $409. It is clear that this approach would compound existing inequities.

For this reason, the Working Group concluded that affordability should be determined with reference to the gross income of the parent providing the coverage. Even in States that use the Percentage of Income model, the gross income of both parents can be determined. Moreover, this approach does not exacerbate the inequalities that would be created if affordability were determined based on the Percentage of Support Obligation model.

The Working Group also debated the relative merits of the higher standard used by Washington and a percentage similar to that embodied in the SCHIP formula. The Working Group was concerned about the effects of reducing the amount of cash support when the noncustodial parent provides coverage, given the importance of maintaining sufficient cash support, especially at lower income ranges where large numbers of families are affected by welfare reform. Time limits and work requirements combine to move many families from public assistance to low-wage jobs and encourage others to avoid using the public assistance system. These families need cash support to meet their children's other essential needs.

In addition, the Working Group was concerned that a combination of cash support and a health care premium equal to 25 percent of the child support obligation could be high enough to send the obligation over Federal wage withholding limits. When this happens, employers are left trying to figure out what to do, IV-D agencies have to go back and modify orders, and children lose coverage. The Working Group selected a nonvariable percentage of income that applied throughout the country and, in most cases, that would keep the largest number of orders within withholding limits.⁴⁰

Consequently, the Working Group concluded that the best approach was to use the five percent of gross income standard, which is based on the standard used in the SCHIP program. The Working Group was persuaded that the SCHIP standard struck a reasonable balance between cash and premium costs, was consistent with existing public policy, would minimize the number of cases where cash and medical support obligations exceed withholding limits, and would enable consistency in recommendations for cases where public, rather than private, coverage is used. For these reasons, the Working Group recommends that 45 CFR §303.31(a)(1) be amended to reflect this standard.

The five percent standard will be appropriate in most cases. At the lowest income levels, however, the additional cost of health care coverage may make the financial burden on the noncustodial parent too high. If that burden is adjusted downward, cash support may not significantly contribute toward the cost of providing basic necessities for the children. For this reason, States should not order noncustodial parents with incomes below 133 percent of the poverty level to provide private health care coverage to their dependents unless such coverage is available at no cost.

The Working Group also recommends that OCSE identify this as a best practice and disseminate information regarding the rationale for it to the States. The preamble to the Federal regulations defining reasonable cost should also include this information, so that it will be clear to States that they have the flexibility to adopt this approach.

Similarly, if a custodial parent's income is so low that her resident child qualifies for or is receiving Medicaid, that parent should not be required to provide private coverage unless such coverage is available at no cost. The Working Group also recommends that OCSE identify this as a best practice and disseminate supporting information to States. The preamble to the Federal regulations should also state that deviation is allowable in extremely low-income cases.

In sum, the Working Group recommends that there should be some minimum national standard for determining the appropriateness of coverage based on comprehensibility, accessibility, and affordability. HHS should include definitions/standards for these terms in a revised 45 CFR §303.31. Standard definitions will promote greater equity between similarly-situated families in both intra-state and interstate cases. The current lack of uniformity leads to situations where inappropriate coverage is ordered for one child but not for another, where some parents are paying for useless coverage while others are not, where some children receive less cash support because their parent is paying for inaccessible coverage but other children do not lose cash support for this reason, and/or where some children are denied SCHIP coverage because inaccessible coverage is theoretically available to them while other children enter the SCHIP program because the decision maker has recognized the futility of ordering inaccessible coverage. Overall, establishing standard definitions for affordable, comprehensive, and accessible coverage will maximize the number of children who are enrolled in stable, comprehensive, accessible, and affordable family health coverage.

Children with Special Needs

In determining the appropriate type of health care coverage for children with special health needs (CSHNs), it is of paramount importance to consider the medical, mental, and social service needs of these children and their guardians. CSHNs are at great risk of chronic illnesses and disabilities. Therefore, attention must be given to their routine preventive and acute care. Many of the services necessary to address these conditions may not be covered in certain health care plans, and it is essential that CSHNs have continuity of care.⁴¹ In determining appropriate health care coverage for CSHNs, it is important for the decision maker to consider which plans are adequate to meet those needs. A common definition of CSHNs would help facilitate the decision maker's determination of the appropriate plan enrollment and system(s) of care, whether private, Medicaid, or SCHIP coverage. For some families, for example, health care coverage would outweigh cash support as the primary need. Flexibility must be available to the decision maker to accommodate such individual situations.

The Decision "Matrix"

Once the decision maker has obtained all of the pertinent information concerning the child's needs, health care plans available to both parents, and the parents' ability to pay, they must determine which of the parents is best able to provide comprehensive, stable, affordable, and accessible coverage that serves the best interests of the child. The table on the following page, "Decision Matrix for Tribunal Use," illustrates the decision logic for the tribunal to use in determining whether to order private or public group health care coverage.

Steps 1-3 reflect the basic principle articulated in Recommendation 3 — that is, that the decision maker should first determine if either parent has accessible, affordable, comprehensive coverage. When it is clear that only one of the parents has access to comprehensive coverage, this coverage should be ordered.

Step 4 tells the decision maker what to do if only one parent has accessible, affordable, comprehensive coverage. If only the custodial parent has such coverage, then that coverage should be ordered. Likewise, if only the noncustodial parent has such coverage, then that coverage should be ordered. What the Working Group's decision matrix makes clear is that even if the custodial parent is the one with access to such coverage, that parent should be ordered to provide it.

Step 5 tells the decision maker what to do when both parents have access to comprehensive, accessible, and affordable coverage. In these situations, the Working Group recommends that the custodial parent's coverage should be ordered. We recommend this for a number of reasons.

• First, children will benefit. The custodial parent's coverage is more likely to be easily accessible to the child. As discussed earlier, if coverage is not accessible, it is not used.
• Second, using the custodial parent's coverage will most likely decrease the IV-D agencies' enforcement burden. Custodial parents have a strong incentive to enroll the child in available insurance: if they do not do so, they will be responsible for all of the bills. Accordingly, the custodial parent is likely to act more quickly and require less prodding by the IV-D agency. The custodial parent will know when a job change is imminent and when the children need to be moved to the new policy or, if the new job does not provide dependent benefits, when the medical support order needs to be modified. This will reduce the amount of time that elapses before the IV-D agency learns that the order needs modification.
• Third, using the custodial parent's own coverage is procedurally easier for parents, employers, insurers, and plan administrators. Employers and plan administrators routinely distribute information about coverage, provide claim forms to their employees, and acknowledge the employee's signature on claims. It is far more difficult for employers, insurers, and plan administrators to deal with the custodial parent when the noncustodial parent provides coverage. Thus, communication regarding the child's health insurance is eased considerably when the custodial parent is the policy holder. Moreover, the COBRA and HIPAA rules are very clear for dependents covered by the custodial parent, but less clear for dependents covered by the noncustodial parent.⁴²

While there are many reasons for using the custodial parent's coverage when both parents have access to comprehensive, accessible, and affordable coverage, the Working Group recognizes that either parent may prefer the noncustodial parent's coverage in some instances. For example, if a child needs mental health services and the noncustodial parent's policy provides for such services while the custodial parent's policy does not, the former is obviously preferable. Or if the noncustodial parent is already providing dependent benefits to others in his household, and can add the child in question at little or no cost, it makes sense to use the noncustodial parent's policy.

The decision maker should have authority to assess what is in the child's best interest and order coverage accordingly. Consistent with Recommendation 1, this recommendation requires the decision maker to consider all sources of private coverage that may be available. This policy is also consistent with the direction States are now taking in this area. Of the 27 States whose child support guidelines require the decision maker to examine coverage available to both parents, six States require the decision maker to order the best and most affordable coverage.⁴³ One State, Arizona, actually provides a similar preference for custodial parent coverage⁴⁴ and Massachusetts expresses a preference for custodial parent coverage if it is already in place.⁴⁵

Moreover, several IV-D program administrators expressed a desire to move in this direction but felt they did not have the authority to do so. This change should be embodied in a new Federal statute, so that IV-D agencies have clear authority to assess coverage available to both parents and order custodial parent coverage in appropriate situations.

Step-parents are another possible source of coverage. Census Bureau data indicates that approximately 17 percent of child support-eligible children live in step families.⁴⁶ Remarried custodial parents who do not have access to dependents health care coverage through their own employment may have access to such coverage through their new spouses. Decision makers should also be directed to explore coverage available through step-parents when it is appropriate to do so. Although it is not ideal to order a parent to secure health care coverage through a step-parent's plan, such plans should be taken into account when a medical support order is established or modified, when such coverage is available.

Step-parents traditionally have had no enforceable legal obligations to their step-children.⁴⁷ In States that continue this tradition, the step-parent's provision of health care coverage has always been purely voluntary because the IV-D agency or private attorney handling the case could not enforce the obligation. However, approximately 20 States have now created a statutory duty for step-parents to support their step-children, at least while they are married to the children's biological or adoptive parent.⁴⁸ In these States, step-parents may be compelled to provide private health care coverage to their step-children. If the new marriage does not last, however, the children will lose access to coverage. In such instances, the custodial parent will need to quickly seek a new order or learn about and exercise any COBRA rights that may exist.

In addition, not all employer-sponsored plans extend benefits to step-children. Employers who do not currently provide such coverage should not be forced to do so. Nevertheless, since some large employers, including the Federal government, do provide health care coverage to their employees' step-children, this option may be available and desirable. Every State should have some policy in this area. The policy should reflect the realities of the situation and consider step-parent coverage only when the parties themselves believe it is appropriate and employers ordinarily make such coverage available. Even then, the custodial parent should be warned to seek COBRA coverage or modification of the order if the marriage terminates.

Establishment of Orders for Publicly-Funded or Other Alternative Health Care Coverage

In many cases, private health care coverage is simply not available to either parent.⁴⁹ In such cases, public or other alternative coverage must be considered, as the children — especially those in the IVD caseload — may be eligible for Medicaid or SCHIP benefits. In addition, some IVD agencies have worked with insurers to establish alternative lower-cost child-only plans that parents can purchase to provide coverage for their children.⁵⁰ These plans can be especially useful for children who do not qualify for Medicaid or SCHIP.

In other cases, private coverage is available but the cost is prohibitive. Medicaid, SCHIP, and alternative programs can also be helpful in these instances.

A few States have already taken the lead in granting decision makers the power to consider both public and private coverage when drafting or modifying support orders. For example, Connecticut's child support guidelines require the decision maker to order the custodial parent to apply for HUSKY B (the State's non-Medicaid SCHIP program) or an available equivalent government-sponsored plan when private coverage is not available to either parent at reasonable cost.⁵¹ Similarly, Texas requires the decision maker to order custodial parents to enroll in a program offered by the Texas Healthy Kids Corporation if private coverage is not available or affordable.⁵²

All States should be encouraged to consider public or other alternative coverage when drafting or modifying support orders for children whose parents cannot provide private coverage. This approach could substantially increase the number of children with access to basic health care coverage.

Public Payment for Private Coverage

Children can also obtain private coverage with a public subsidy. State Medicaid agencies can use program funds to purchase group health coverage⁵³ if such coverage is available to a Medicaid-eligible individual. Alabama, for example, has been purchasing group health coverage for Medicaid beneficiaries since 1991. This is especially valuable to children living in areas with a limited number of Medicaid providers. Medicaid agencies also are permitted to pay for cost-effective group health premiums for certain individuals entitled to elect COBRA continuation coverage.⁵⁴

SCHIP programs can also use program funds to subsidize coverage under employer-sponsored group health plans. If the coverage would also include individuals not eligible for SCHIP, the State would need to obtain a "family coverage waiver" from the Health Care Financing Administration (HCFA) in order to purchase the coverage.⁵⁵ Massachusetts and Wisconsin have elected to purchase family coverage through their SCHIP programs.⁵⁶

Essentially, employers and plan administrators are concerned that this ability on States' parts to subsidize private insurance may result in "adverse selection" — that is, the selection of children with serious, and costly, medical problems as those for whom it is deemed more cost-effective to pay the employee contribution for private coverage rather than enroll them in Medicaid or SCHIP.

For many self-insured plans, employee contributions represent only a small percentage of the plan's expenses, including benefit claims. In these plans, the employer is responsible for the majority of the plan's expenses. In addition, the group premium for insured plans is generally based on the nature of the risk pool of insureds, and again, the employer may be paying most of the premium. If there is a significant shift of high-risk/high-cost Medicaid and SCHIP-eligible children from those programs to group health plans (in other words, adverse selection), the cost to employers of maintaining these plans, whether self-insured or insured, may rise substantially. Thus selection criteria must be neutral and uniformly applied. An additional concern is that many (if not most) group health plans that require employee contributions are only equipped to receive such contributions through payroll withholding by and transmittal from the employer. Preliminary inquiries indicate that such plans are not administratively equipped to receive contributions from other sources, whether it be the employee or the Medicaid or SCHIP agency. Further analysis is needed to determine if the cost of modifying systems to permit such receipt would be substantial. The pros and cons need to be weighed in developing future policy.

Role of the IV-D Agency

The five steps outlined earlier in Recommendation 13 for determining which plan is most appropriate for a child will not effectively ensure that children are enrolled in the best available coverage unless: (1) parents are aware of what public and private family health coverage programs are available, and (2) the child support agency helps them enroll their children.

Child support programs must conduct outreach activities to educate parents about government-sponsored family health coverage options. When SCHIP was enacted, OCSE's Deputy Director sent a letter to all State directors urging them to become involved in SCHIP implementation and outreach activities,⁵⁷ however only a few State child support programs have done so. This is partly because it was not clear whether such outreach activities were a IV-D function and therefore eligible for Federal Financial Participation (FFP). This funding issue needs to be addressed by including Medicaid/SCHIP outreach activities in Title IV-D. Unless this change in the program responsibility and funding can be resolved administratively, or by regulation, Congress should enact legislation that mandates this outreach role for State child support enforcement agencies.

Enrollment Authority

Encouraging and enabling outreach activities, however, is just a first step for the IV-D agency. While the SCHIP statute does not expressly prohibit IVD agencies from enrolling eligible children in the program, IVD agencies are not permitted to enroll children in Medicaid. This must be changed. IVD agencies should be authorized to enroll children in Medicaid.

Section 1920A(b)(3)(A)(i)(I) of the Social Security Act, as added by §4912(a) of the Balanced Budget Act of 1997 (Pub. L. 105-33) added a new §1920A to the Medicaid statute.⁵⁸ The new law allows a "qualified entity" to determine a child's eligibility for Medicaid for a "presumptive eligibility period" on the basis of preliminary information that the family income of the child does not exceed the State's Medicaid income eligibility level. The presumptive eligibility period is the month in which the presumptive eligibility determination is made plus the next month, a period of approximately 28 to 62 days; it terminates when the Medicaid agency determines "regular" eligibility. "Qualified entities" currently include Medicaid providers as well as agencies that determine eligibility for the Head Start, Child Care, Development Block Grant, and Women Infants and Children (WIC) programs.

The Working Group is therefore recommending that IVD agencies be added to the list of agencies authorized to determine presumptive eligibility and the Medicaid statute be amended accordingly. This would expedite enrollment of eligible children in the Medicaid program when private coverage is not an option.⁵⁹ The IV-D agency could use the income information obtained to calculate cash support under the guidelines to make a preliminary determination regarding a child's eligibility for Medicaid. The child could then be enrolled as presumptively eligible and coverage would begin immediately.

While States should not be required to use their IV-D programs to make presumptive Medicaid eligibility determinations, they should be strongly encouraged to do so. If they choose not to, States should adopt other methods for facilitating the enrollment of eligible children in the Medicaid and SCHIP programs.

Contribution by the Noncustodial Parent

When they are financially able to do so, both parents should contribute to the cost of their children's health care coverage. While the definition of reasonable cost proposed earlier precludes parents with access to employer-based coverage from being ordered to provide coverage if the cost is not reasonable, this does not preclude the parent from contributing something toward the cost of the child's coverage. In other words, while it may be unreasonable to expect the parent to pay the full premium for available private coverage in some cases, it is not unreasonable to expect the parent to contribute something towards public coverage.

If private coverage is not ordered, children are likely to enter the Medicaid or SCHIP program at substantial public cost. While Medicaid is an open-ended program, the SCHIP program has a specific appropriation. If all of the SCHIP funds are used up, otherwise eligible children have to be turned away. While this has not yet happened, the potential exists, particularly if current SCHIP outreach efforts are successful. Parents of SCHIP-eligible children who could help contribute toward the SCHIP costs should be asked to do so in order to preserve funds for other eligible children in the future. In addition, when children do enter Medicaid or SCHIP, the custodial parent may have to pay premiums, co-payments, and/or deductibles. It is unfair not to ask noncustodial parents to contribute as well toward their children's health care costs in appropriate situations.

In order to achieve equity between custodial and noncustodial parents whose children are enrolled in Medicaid or SCHIP, the Working Group used the basic Medicaid and SCHIP cost-sharing policies as the starting point for its recommendation.

The Medicaid program is available to children in low-income families. Because these families are, by definition, low income, States are not allowed to charge custodial parents enrollment fees, premiums, deductibles, coinsurance, co-payments, or similar charges for most Medicaid services to children. However, the Working Group recommends that the same standard should also apply to low-income noncustodial parents. No cost-sharing should be imposed upon noncustodial parents with incomes below 133 percent of poverty, which is the cut-off for Medicaid eligibility.

Using this approach has three advantages: (1) the amount of cash support available to the child will not be diminished by virtue of the noncustodial parent's contribution to medical support; (2) the noncustodial parent's contribution to the child's support will likely remain below Federal wage-withholding limits, reducing the number of situations in which employers and IV-D agencies have to wrestle with that difficult issue; and, (3) obligations imposed on low-income noncustodial parents will not leave them with too little income to meet their own basic needs.

The SCHIP program is generally available to children with family incomes above the Medicaid level but below roughly 200 percent of poverty.⁶⁰ (At least eight States provide eligibility for children whose family income is above this level.⁶¹ ) Whether or not there is any cost sharing for services to SCHIP children depends on how the State chooses to implement its SCHIP program.⁶² If a State implements SCHIP through Medicaid expansion, then the Medicaid rules apply and families cannot be charged for children's services. If a State creates a separate SCHIP program for some or all SCHIP-eligible individuals, then the State can require custodial parents to contribute toward the premium for those children covered by the separate program.⁶³ There are, however, limits on the amount that States can charge. For families with income below 150 percent of poverty, premiums can range from $1.00 per month to $19.00 per month, depending on family size and income.⁶⁴ For families with incomes above 150 percent of poverty, there are no specific restrictions on the amount that can be charged for premiums or deductibles/co-payments. The aggregate cost of all premiums, deductibles, co-payments, and co-insurance charges, however, cannot exceed five percent of the family's gross income. When charges exceed this amount, the State must suspend further charges.⁶⁵

In short, in a separate SCHIP program States can impose costs on custodial parents with incomes above 150 percent of poverty as long as they stay within the five percent of gross income ceiling. It is appropriate to establish a similar cost-sharing scheme for noncustodial parents who are able to pay the costs. Therefore, the Working Group's recommendation incorporates the five percent ceiling. This also harmonizes with the standard for determining the reasonable cost of private coverage. Coordinating the noncustodial parent contribution with that established for the custodial parent by Medicaid and SCHIP provides a coherent approach for decision makers to use to determine whether private or public coverage is appropriate.

As long as a parent is not required to contribute more than five percent of the family's gross income, States should be able to ask for premium contributions up to the actual premium cost. Or, if they wish, States may develop a sliding scale contribution schedule for noncustodial parents, similar to the ones many States use to impose premiums on custodial parents. In any case, both parents will then be contributing toward the cost of their child's coverage.

Birthing Costs

Additional costs to be considered include costs associated with pregnancy and childbirth. Most States permit a mother to recover costs associated with pregnancy and childbirth from the alleged father when paternity is established.⁶⁶ This allows mothers who have paid these costs themselves to receive some reimbursement from the father. These laws are reasonable and should be maintained.

Applying these laws in cases where pregnancy and childbirth costs have been covered by Medicaid, however, is highly problematic. This is because it runs counter to two other important public policy goals: (1) encouraging mothers to seek prenatal care, and (2) encouraging fathers to establish paternity.

In 1985, the National Academy of Science's Institute of Medicine issued a report entitled Preventing Low Birth Weight. The report found that significant numbers of low-income women who were at high risk of giving birth to physically impaired infants did not seek prenatal care. As a result, many children were born with severe health problems. This was tragic for the children, and also meant that the public incurred substantial costs to care for these children. Better prenatal care would reduce these costs and give children a better chance for a healthy life.⁶⁷ This is a benefit for the private insurance industry as well.

That same year, the Southern Governor's Regional Task Force on Infant Mortality published a report that reached similar conclusions.⁶⁸ Both this report and the Preventing Low Birth Weight report identified the cost of care faced by uninsured mothers as a barrier to obtaining prenatal care and advised the government to expand Medicaid eligibility to deal with this problem. At the same time, these reports identified the child support cooperation requirement as a barrier within the Medicaid program itself. Some women who were eligible for Medicaid did not apply because they did not wish to establish paternity or seek medical support.

Congress responded by expanding and simplifying Medicaid coverage for pregnant women in what is called the Poverty Level Pregnant Women Program (PLPW Program). In 1990, Congress eliminated the child support cooperation requirement for participants in the PLPW Program.⁶⁹ In doing so, Congress observed that applying the cooperation requirement to pregnant women had discouraged many of the women from seeking benefits that would give them access to early prenatal care. Indeed, the support cooperation requirements were deemed "a potential barrier to prenatal care for high-risk, low income women that would most benefit from it."⁷⁰

Congress recognized that eliminating the cooperation requirement would have fiscal consequences. States would no longer be able to seek reimbursement for prenatal, birthing, and post-natal Medicaid costs from the fathers of these children. Congress believed that the potential savings in human and fiscal terms, however, far outweighed the potential revenue loss. Thus Congress essentially adopted, a decade ago, a clear public policy that recognized that the value of encouraging mothers to seek and receive prenatal care far outweighed the potential cost recoupment from non-marital fathers.

Despite this clear public policy, some State child support enforcement agencies continue to pursue prenatal, birthing, and post-natal costs after the child is born. For example, if a mother receives TANF benefits, the State may bring a legal action seeking to establish paternity and a child support order seeking to recoup the birth-related costs. Courts have found this practice acceptable as long as the action is brought after the child's birth.⁷¹

While this practice may be technically legal, it clearly runs counter to the intent of Congress in removing the child support cooperation requirement from the PLPW program. Furthermore, there is some evidence that this practice is once again causing mothers to forgo prenatal care. From the mother's point of view, it is irrelevant when the State pursues support. If there is a concern about cooperation, that concern will be just as real after the birth as before it.

For this reason alone, the Working Group believes that State IV-D agencies should not pursue pregnancy and birth-related costs in Medicaid cases.

Another reason to end this practice is that it discourages voluntary paternity establishment. Often the mother and father have an ongoing relationship and want to establish their child's paternity. Since the early 1990s, Congress has placed great emphasis on the value of encouraging voluntary acknowledgement. Federal law requires every State to establish laws facilitating the voluntary establishment of paternity through the use of a simple acknowledgment process available to the parents at the time of their child's birth.⁷² Congress has provided incentive payments to States to encourage improvement in paternity establishment rates⁷³ and penalties for States that do not show improvement in this area.⁷⁴ The results are encouraging, but there is still more to be done, especially in working with low-income fathers.

If fathers acquire unrealistically high child support debt when they acknowledge paternity, they will neither admit paternity nor join these programs. Even an uncomplicated birth is expensive and a C-section can easily double the cost. Nevada reports that it seeks $3,100 for a normal delivery and $6,700 for a C-section in its Medicaid recoupment efforts. Projects that work with low-income fathers report that imposing responsibility for birthing costs of this magnitude makes fathers very reluctant to establish paternity and join the programs.

It is more important to establish paternity and future child support and to encourage fathers to establish a relationship with their children-perhaps through joining a fatherhood program-than to recoup pregnancy-related Medicaid costs. This is another reason why the Working Group believes that State child support enforcement agencies should not seek reimbursement of Medicaid-covered birthing costs.

Furthermore, since the fathers of children receiving Medicaid are likely to be low income,⁷⁵ the State usually cannot collect the assessed amounts anyway. Birthing costs thus artificially inflate the amount of arrears carried on the State's books and thereby make program performance appear worse than it is. Moreover, to the extent that the State does collect the medical expenses as arrears owed to the State, this money reimburses the State at the expense of additional support that might go to the child. When both parents have limited income, as is almost always the case when Medicaid is involved, the IV-D program should maximize the amount of support going to the child rather than collect State debt.

Apportioning Responsibility for Unreimbursed Health Care Expenses

Rarely are all health-related costs covered by family health coverage. Frequently, major expenses such as orthodontia, mental health services, and alcohol/drug rehabilitation are not covered at all. Unless these costs are addressed in the support order, the custodial parent has to absorb all of these costs. This inequity needs to be addressed.

Ordinary expenses (band-aids, aspirin, etc.) are relatively trivial and allowance for them is built into most State's basic cash support guidelines amount.⁷⁶ Extraordinary expenses are usually treated as an add-on to the basic support obligation or as a factor to be considered in deviating from the guidelines. The big issue here is distinguishing "ordinary" from "extraordinary" expenses. Most States do not define the difference in their guidelines. This leaves it to the courts/administrative agencies to decide on a case-by-case basis what to do. Not surprisingly, there is a huge amount of litigation in this area.

Those States that do define the difference in their guidelines do so by looking at costs either by year or by illness. If unreimbursed expenses exceed a certain amount per year (e.g., they are greater than $250 per year per child) or they exceed a certain amount (e.g., $100) per illness, they can be considered "extraordinary." Seven States use the former approach (three with lower dollar limits) and five States use the latter.⁷⁷

The Working Group believes that HHS should require every State to have a well-defined written policy defining extraordinary expenses. In addition, HHS should clarify that every State's child support guideline should give the decision maker the authority to order parents to share in the cost of co-payments, deductibles, and extraordinary expenses and should include such provisions in the support order.

Once it has been determined that a child has incurred an "extraordinary" expense, the cost must be apportioned between the parties. The Working Group learned that 23 States have a formula for allocating the costs, 24 States treat the existence of such costs as reason for deviating from the guidelines, one State issues separate orders for such costs, and three States do not address the issue. Of those with a formula, the majority prorate the costs between the parents.⁷⁸

The Working Group believes that it would be useful to have a standard national methodology for dealing with these costs. This would create more equity between similarly situated parents. It would also make it easier for State IV-D agencies to handle the issue in interstate cases as the standard for these cases would then be the same as the standard for in-State cases. Since a majority of States now use the pro-ration method, the Working Group recommends that HHS require all states to adopt the add-on approach and pro-rate the expenses between the parents.

Once "extraordinary expenses" are defined and the proration formula is established, it should be relatively easy for the parents to resolve payment of these expenses themselves. However, there may be disputes that have to be settled. One parent may question whether a particular expense was necessary. Another parent might question whether it was appropriate to use a particular provider whose fees are high. It is also possible that the services were provided by an entity that does not participate in the insurance plan and the other parent questions whether he should have to pay in those circumstances.

Settling these types of case-by-case problems is very labor intensive for private attorneys and can be very costly for the parents. Involvement in these individual case problems is usually not a good use of scarce IV-D resources. Several State IV-D programs reported that while they do get involved in such disputes, they consider them outside the basic mission of the IV-D program and a real drain in terms of time and personnel.

The Working Group felt that States would be wise to develop simple pro-se processes for parents to deal with these issues on their own. California, for example, has devised rules that require parents to share any bills they want to claim as extraordinary expenses within 30 days of receipt. If the provider is an entity that does not participate in the child's health care coverage program (for example, if the child is treated outside of his HMO network), the use of that provider must be justified.

Drafting the Medical Support Provisions of a Child Support Order

Medical support provisions in child support orders should be specific enough to identify exactly what health care coverage has been ordered, but general enough that health care coverage can be changed without modifying the underlying order. Although not necessary to make a medical support order qualified under §609(a) of ERISA, it would be helpful if the support order specifies how premium costs, deductibles, co-payments, and uninsured medical expenses will be shared between the parents. Not including sufficient detail in medical support provisions may preclude employers and parents from: (1) identifying exactly what health care coverage has been ordered, (2) obtaining contribution toward uncovered expenses; and (3) obtaining reimbursement from any health care provider because of confusion over which coverage is primary and which is secondary.

Crafting a medical support provision in a child support order thus involves balancing all of these concerns. Every State should try to determine the proper balance, given its particular laws. The order should be as clear and concise as possible.

The Working Group expects HHS and DOL to undertake substantial education and training efforts for IV-D, Medicaid, and SCHIP staffs. However, courts also play an important role in establishing and enforcing medical support. They should receive special attention from HHS and DOL, which should consult with judicial leaders, and the organizations that represent them, and collaborate with these organizations to train judges, court administrators, and clerks.

[ Go to Contents ]

Endnotes

[1] Wheaton, Laura.  “Noncustodial Fathers: To What Extent do They Have Access to Health Insurance?” The Urban Institute (2000), Table 2.

[2] Wheaton (2000), Table 3.

[3] This includes Alaska, Arizona, Colorado, Connecticut, California, Idaho, Indiana, Iowa Kentucky, Louisiana, Massachusetts, Michigan, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, South Carolina, Tennessee, Texas, and Wyoming.

[4] See 45 CFR §302.56.

[5] 42 U.S.C. §652(f) (1999); 45 C.F.R. §303.31 (1999).

[6] It is worth noting that this recommendation echoes one made several years ago by the U.S. Commission on Interstate Child Support in its Report to Congress.  The Commission recommended Federal regulations be changed to reflect “the payment of premiums for insurance plans carried by the custodial parent when such plans include the children at a cost less than that available to the obligor.  This recognizes the realities of the health insurance marketplace, where the custodial parent may be able to obtain more comprehensive or less expensive coverage that that obtainable by the noncustodial parent.”  U.S. Commission on Interstate Child Support,  “Supporting Our Children:  A Blueprint for Reform,” 138.

[7]Arkansas, California, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, Rhode Island,  Vermont, West Virginia, and Wyoming.  Laura Morgan, Child Support Guidelines: Interpretation and Application Table 3-1, §3.01a (1999).

[8] Alabama, Alaska, Arizona, Colorado, Connecticut, Florida, Idaho, Indiana, Kansas, Louisiana, Massachusetts, Mississippi, Missouri, Montana, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin, Id.

[9] Georgia and Nevada, Id.

[10] Mississippi, Tennessee, Texas and Wisconsin.

[11] For example, Alaska, and Massachusetts.

[12] For example, Idaho.

[13] For example, Alaska, like the overwhelming majority of states, allocates costs based on the premium associated with covering the children in question, A.R.C.P. 90.3 (1999) (Morgan, Child Support Guidelines, §301(a) (1999)), while Massachusetts allocates based on the cost of family coverage (Mass. Gen. Laws Ann. Child Support Guidelines, II-G (1999)).

[14] New York Family Court Act §424-a(a) reads in part: In addition, both parties shall provide information relating to any and all group health plans available to them for the provision of care or other medical benefits by insurance or otherwise for the benefit of the child or children for whom support is sought, including all information as may be required to be included in a qualified medical child support order.”

[15] 42 USC §666(c) (1999).

[16] In 1998, of those employers offering health care coverage, 44 percent offered one plan, 24 percent offer two plans, and 32 percent provide three or more options (KPMG, Health Benefits in 1988, 30).

[17] Congress conditioned an alternate recipient’s right to the receipt of benefits from a participant’s group health plan on the condition that the alternate recipient obtain a medical child support order that satisfies specific information and other requirements.  The DOL has expressed the view, in a similar circumstance regarding qualified domestic relations orders under §206(d)(3) of ERISA, that administrators of pension plans should provide to prospective alternate payees plan and participant benefit information sufficient to prepare a QDRO.  Such information might include the summary plan description and relevant plan documents.  See, QDROs: The Division of Pensions Through Qualified Domestic Relations Orders, Question and Answer 2-1, U.S. Department of Labor (1997), 12.  It is reasonable to assume that similar standards would apply in the case of qualified medical child support orders.

[18] Mass. Ann. Laws, Child Support Guidelines, II-G (1999).

[19] 42 U.S.C. §§1397aa(a), 1397bb(b)(3)(C) (1999).

[20] HCFA issued interim standards on September 28, 1998, “Quality Improvement System for Managed Care,” 61.

[21] As discussed in detail below, we anticipate that in such situations, the child would be enrolled in Medicaid or CHIP or another subsidized option if one is available (e.g., the Sacramento IV-D KIDS program) with financial contribution from the noncustodial parent commensurate with ability to pay.

[22] See, 45 C.F.R. §303.31(1999).  The definition deeming employment-related coverage to be per se reasonable in cost was first promulgated in 1985.  As early as 1988, States were questioning whether this was a viable definition.  In response, Child Support Enforcement reiterated its assumption that “most employment-related or other group health insurance is inexpensive to the employee/absent parent” citing a 1983 study by the National Center for Health Services Research which indicated that for low-wage employees with access to employment-related health insurance, 72 percent of the premium costs were paid for by employers.  53 Fed. Reg. 36016-17 (Sept. 16, 1988).

[23] See discussion at 53 Fed. Reg. 36016-17 (Sept. 16, 1988).

[24] Id.

[25] United States General Accounting Office.  Private Health Insurance: Continued Erosion of Coverage Linked to Cost Pressures.  GAO/HEHS-97-122 (July 1997), 35.

[26] Workers in low-wage firms are also less likely than workers in other firms to be offered health benefits and to be eligible for coverage when it is offered (Stephen H. Long and M. Susan Marquis, Employment-Based Insurance: Recent Trends and Coverage for Low-Wage Workers (Preliminary Results).  Rand (October 5, 1999), 20.

[27] For example, health insurance coverage accounts for nearly 10 percent of expenditures for households with incomes below $10,000, while for households with incomes at or above $30,000, health insurance accounts for 2 percent of expenditures.  Unpublished estimates by the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, using the 1997 Consumer Expenditure Survey.

[28] The average group premium ranged from $1,883 to $2,090 depending on plan type.  Employee Benefits Institute.  EBRI Databook on Employee Benefits (1997).  See http://www.ebri.org/facts/0997fact.htm

[29] Employee Benefits Institute.  EBRI Databook on Employee Benefits (1997).  See http://www.ebri.org/facts/0997fact.htm

[30] Gabel, Jon R., Paul B. Ginsberg, and Kelly A. Hunt.  “Small Employers and Their Health Benefits, 1988-1996: An Awkward Adolescence.”  Health Affairs (September/October 1997), 107.  It is not surprising that nearly 40 percent of uninsured children live in families whose parent(s) worked in firms employing less than 25 employees, while just under 20 percent of uninsured children were in families where their parent(s) were employed in a company with 1,000 or more workers.  Children were categorized by the size of the largest firm employing either parent.  Based on 1998 Current Population Survey estimates in Committee on Ways and Means, U.S. House of Representatives.  Medicare and Health Care Chart Book (May 17, 1999), 56.

[31] In 1995, the average child support received was $3,373 (Lydia Scoon-Rogers, “Child Support for Custodial Mothers and Fathers: 1995,” Census Bureau Current Populations Reports (March 1999), 60-196.)

[32] See, Laura Morgan, Child Support Guidelines, §3.01, and discussion under Recommendation 1 supra for more detail on this.

[33] States raised this issue as early as 1988 when they were required to aggressively pursue private coverage for children receiving Medicaid even when this caused a drop in cash support.  Prior to this time, States had to pursue private coverage only when the cost of family health coverage did not affect the noncustodial parent’s ability to pay cash support.  53 Fed. Reg.36015 (Sept. 16, 1988).

[34] See, for example, Frank Furstenberg, Kay Sherwood, and Mercer Sullivan, Caring And Paying: What Fathers And Mothers Say About Child Support, Manpower Demonstration Research Corporation (1992).

[35] Wash. Rev. Code §26.09.105(1) (1999).  Also, the decision maker can order the parent to provide insurance that exceeds 25 percent of the basic child support obligation if it is in the best interest of the child.  Wash. Rev. Code §26.09.105(2).

[36] Colo. Rev. Stat. Ann. §14-10-115(g) (1999).

[37] Me. Rev. Stat. Ann. tit.19A §2007(1998).

[38] Montana Code Annotated (MCA) 40-5-806(a)(8).

[39] Pirog, Maureen A., Marilyn E. Klotz, and Katharine V. Byers.  “Interstate Comparisons of Child Support Orders Using State Guidelines.”  Family Relations 27(8): 291.

[40] We also considered recommending a variable percentage based on the parent’s income.  However, we concluded that this approach was complex to administer and would not necessarily achieve better results than a flat percentage.

[41] The Colorado Department of Health Care Policy and Financing had designed and implemented the “Safety Net Project” to improve service delivery and care coordination for children with special needs in HMOs.

[42] 29 U.S.C. §1161 (1999).  See also Recommendations regarding COBRA/HIPAA in Chapter 6.

[43] Arizona Ariz. C.S.G. (S. Ct. Admin Order 96-29) (1998), Idaho, Idaho R. Civ. Pro. 6(c)(6) §8(c)(1)(1999); Massachusetts, Mass. Ann. Laws, Child Support Guidelines, II-G (1999); South Carolina, S.C. Code Regs. 114-4720 (1999); and Wyoming, Wyo. Stat. Ann. 20-6-302(b)(viii)(1999).  Tex. Fam. Code §154.182, requires the court to consider insurance available to the obligee, only if the obligor does not have access to coverage for the child through his/her employer, union, trade association or other organization.

[44] The Arizona guideline States: “An order for child support shall assign responsibility for providing medical insurance for the children who are the subject of the support order. If medical insurance of comparable benefits and cost is available to both parents, the court should assign the responsibility to the parent having primary physical custody.” Ariz. C.S.G. (S. Ct. Admin. Order 96-29 (1998).

[45] Massachusetts provides that, if the custodial parent is already covering the children at the time the order is entered, then he/she can opt to continue that coverage even if the noncustodial parent has access to coverage, Mass. Ann. Laws, Child Support Guidelines, II-G (1999).

[46] Unpublished calculation from HHS/Office of the Assistant Secretary for Planning and Evaluation based on the 1995 CPS Child Support Supplement.  See APPENDIX D: Health Care Coverage for Child Support-Eligible Children, page A-32.

[47] For a summary of the law in this area see Laura Morgan, “The Duty of Step-Parents to Support Their Step-Children,” in Divorce Litigation (September 1996).  An updated version is available on the web at http://www.supportguidelines.com/articles/art199908.html.

[48] These States are Delaware, Hawaii, Iowa, Kentucky, Maine, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Vermont and Washington.

[49] See, for example, Jocelyn Guyer and Cindy Mann, “Employed But Not Insured,” Center on Budget and Policy Priorities (1999).

[50] The Working group was provided extensive information about one of these programs, the Sacramento (California) IV-D KIDS program. We also received information about a similar program in Montana.  Chapter 8 sets out the Working Group’s recommendations for encouraging similar efforts elsewhere.

[51] Conn. Agencies Regs. §46b-215a-2a(g)(1)(B)(1999).

[52] Tex. Fam. Code §154.182(b)(4) (1999).

[53] 42 U.S.C. §1396e.

[54] 42 U.S.C. §1396a(a)(10)(F).

[55] Current HCFA policy is that this can be done for employer-sponsored insurance if: 1) the children have been insured for at least 6 months; 2) at least 60 percent of family premium costs are paid for by the employer; and 3) the costs to the State do not exceed the cost of SCHIP coverage.  (Policy under development pending final SCHIP rule.)

[56] See http://www.hcfa.gov/

[57] DCL 97-91 from Commissioner David Gray Ross to all IV-D Directors, dated December 6, 1997.

[58] 42 U.S.C. §1396a (1999).

[59] The law allows a child to have private coverage and be enrolled in Medicaid.  In a limited number of cases, the IV-D agency might also find that there is limited private coverage available to the child.  It could order this coverage and enroll the child in Medicaid, assuring more comprehensive services to the child.

[60] 42 U.S.C. 1397bb(b) (1999).

[61] As of June 1999, Connecticut, Georgia, Minnesota, Missouri, New Hampshire, New Mexico, Rhode Island and Vermont extended eligibility above the 200 percent of poverty level.

[62] 42 U.S.C. §1397cc(e) (1999).  Twenty- three States have a simple Medicaid expansion, while 33 have created a separate CHIP program. (Of the 33 with separate programs, 15 States have all of their CHIP-eligibles in a separate program, and 18 have a hybrid model with some CHIP eligibles in Medicaid and some in a separate program.)

[63] As of June 1999, 23 States had developed policies under which the parents of CHIP-eligible children are asked to contribute toward the CHIP premium.  These States are Alabama, California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Iowa, Kansas, Kentucky, Maine, Massachusetts, Michigan, Missouri, Montana, Nevada, Nebraska, New York, North Carolina, Rhode island, Vermont and Wisconsin.

[64] 42 U.S.C. §1397cc(e)(3)(A) (1999).

[65] 42 U.S.C. §1397cc(e)(3)(B) (1999).

[66] At least 30 States have such laws on their books.  These States are Alabama, Arizona, California, Colorado, Delaware, Hawaii, Iowa, Kentucky, Maine, Maryland, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah , Washington, Wisconsin, and Wyoming.

[67] Indeed, the Institute calculated that there would be $3.38 in savings for every $1.00 of public funds spent on prenatal care.  The Institute’s report is discussed extensively in Lewis v. Grinker, 965 F.2d 4904 (2d Cir. 1992).

[68] The title of the report is For the Children of Tomorrow.

[69] 42 USC §1396k(a)(1)(B).  See also 45 CFR §433.145(a)(2) and §433.147(a).

[70] See, H. Rpt. No. 101-881, 101^st Cong. 2d Sess. 106-107 (1990), reprinted in 1990 U.S. Code Cong. & Admin. News 2017, 2118-2119.

[71] See, for example, Matter of Steuben County v. Deats, 76 N.Y.2d 451, 560 N.Y. Supp. 2d 404 (1990); Perry v. Dowling, 963 F. Supp. 231 (W.D. N.Y. 1997).

[72] 42 USC §666(a)(5)(C).

[73] Id. §658a(b)(6)(A).

[74] Id. §609(a)(5).

[75] Wheaton (2000),15.

[76] Laura Morgan, Child Support Guidelines, Chapter 3, §301(b)(3).

[77] Morgan, Child Support Guidelines.

[78] Jane Venohr and Robert Williams, The Implementation and Periodic review of State Child Support Guidelines, 33 Family Law Quarterly 7 (Spring 1999), Table 4, 19.

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Last updated: 11/21/00