CHAPTER 4:
Implementing a New Tool:
The National Medical Support Notice and Related Issues

National Medical Support Notice

Background

Health care coverage for children living in a single-parent home can be enforced through a medical child support order in private domestic relations proceedings or as the result of State IV-D agency efforts to establish and/or enforce medical child support obligations. Congress amended ERISA in 1993,¹ requiring group health plans to provide benefits in accordance with the provisions of any QMCSO. This was not enough, as child support enforcement agencies have rapidly moved to automated, administrative processes to secure obligations. The QMCSO requirements may be interpreted to require the IV-D agency to obtain specific information to tailor an order in compliance with those requirements, a labor intensive ("by the each") process. Thus, the conflicts between the QMCSO requirements and the need of State agencies to automate their enforcement procedures have frustrated attempts to enroll children in noncustodial parents' group health plans. There are several reasons for continued frustration.

• Prior to CSPIA, there was no clearly defined "tool" to enforce medical support obligations, as there was to enforce child support (income withholding notice).
• The OBRA '93 amendments contained highly individualized and specific requirements that each order had to satisfy to be "qualified" by an ERISA plan administrator.
• The wide variety of notices and orders that various States use to enforce medical child support obligations, and the failure of many of these orders to comply with ERISA requirements, frequently confuses and frustrates employers, plan administrators, and State IV-D agencies. As a result, children face unnecessary delays or denials when attempting to enroll in their noncustodial parent's group health coverage.
• Plan administrators often do not agree on which notices and orders satisfy ERISA requirements and State IV-D agency personnel are often unfamiliar with those requirements.
• Because a degree of standardization is essential to optimal use of automated systems, the lack of uniformity or standardization among plan requirements and "qualified" medical support orders also precluded the effective use of automation to facilitate the implementation and enforcement of medical support obligation services by IV-D agencies.
• This lack of uniformity or standardization among plan requirements-and hence, the content of a "qualified" medical support order — required IV-D agency staff to invest significant time and effort in determining each plan's standard for qualifying a medical child support order and obtaining the information necessary to satisfy that particular standard.
• The methods States use for communicating with all the associated parties vary widely.
• Where a medical support provision of a child support order has been rejected by the plan administrator, there is presently no streamlined mechanism to appeal that decision. Hence, the Working Group's focus is on ensuring the document forwarded to the plan administrator is legally sufficient to avoid delay or denial.

The provisions of CSPIA that relate to the NMSN were intended to alleviate some of those problems.² Specifically, CSPIA directed the Secretaries of Labor and of HHS to jointly develop and promulgate by regulation a National Medical Support Notice.³ The same law amended ERISA⁴ to require the administrator of a noncustodial parent's employment-related group health plan to deem an appropriately completed Notice (that also satisfies the QMCSO requirements) to be a QMCSO for the child and to implement coverage in a timely manner.⁵ This "deeming" provision and time-limited responses are critical to the IV-D agency's implementation of medical support in an expeditious and automated fashion.

The Notice and ERISA

CSPIA requires the NMSN to conform to the requirements of §609(a) of ERISA⁶ and to Title IV-D of the Social Security Act;⁷ it also requires IV-D agencies to issue the Notice to the employer of a noncustodial parent when alternative coverage is not provided for in a child support order. In recognition of employer concerns that the form be made easily accessible to the various parties who may have to deal with it, Congress directed that the form be "easily severable" so that the sections could be handled by the employer and by the plan administrator, if different from the employer. Amendments to §466(a)(19)⁸ of the Social Security Act require States to enact laws that mandate State agencies' use the Notice as the prescribed method of enforcing the health care coverage provisions in child support orders. This will ensure that plan administrators receive uniform notices from child support agencies in every State.⁹

If the administrator of a noncustodial parent's ERISA-covered group health plan receives an appropriately completed Notice that has been issued by a IV-D agency and that satisfies the requirements of §609(a) of ERISA, that Notice must be deemed a QMCSO. Within 40 business days after the date of the Notice the plan administrator must notify the issuing agency whether coverage is available to the child named in the Notice. The child's custodial parent or a substituted State official must be provided with a description of coverage available under the plan and any forms or documents necessary to effectuate such coverage.¹⁰

Domestic Violence Issues

ERISA originally provided that a medical child support order would be deemed a QMCSO only if the order clearly specified, among other things, the name and mailing address of each child covered by the order. However, State and Federal law prohibit the disclosure of the child's and custodial parent's address in cases in which there is an identified possibility of domestic violence or abuse.¹¹ The child support enforcement agencies were thus unable to craft medical child support orders that would be qualified in cases in which they were prohibited from disclosing the child's address. Congress responded by amending ERISA to permit the court or administrative agency to substitute the name and mailing address of an official of a State or of a political subdivision of the State for the mailing address of the child.¹²

High-Volume Administrative Enforcement

The use of automation has been critical in the effort to streamline case processing and data accuracy and to improve program performance. Based on the experience of the States, the Working Group concluded that automated systems could facilitate medical support enforcement by expediting the transmission of required data and the submission of time-sensitive responses. Central and State systems staff indicated that these modifications would be relatively simple and require approximately six months to complete. The Working Group determined that State child support enforcement automated systems should be modified, at a minimum, so that they could:

• Produce the form to be used as the prescribed Notice
• Pre-file common case identification data
• Automatically create entries in case chronology files, which record when and to whom a Notice was sent
• Receive and record information about the availability of health care coverage from custodial and noncustodial parents as well as employers and plan administrators
• Communicate information to TANF and Medical Assistance agencies and to custodial parents

The Working Group considered the feasibility of establishing mainframe-to-mainframe computer or Internet linkages between State child support databases and other entities involved in the Notice implementation process, including those of employers/plan administrators, Medicaid, and SCHIP. The Working Group did not recommend establishment of such linkages. This is an important issue that needs further study.

States report that they continue to be preoccupied with ensuring that their child support enforcement automated systems meet PRWORA certification requirements. For this reason, most states will not be able to begin modifying their systems to address medical support requirements until after October 1, 2000. This timing correlates with the projected September 2000 publication date of Final Regulations promulgating the NMSN, and with the possible availability of enhanced Federal funding to assist in financing these modifications, as proposed in Recommendation 65.

The Working Group considered whether the NMSN and the Order/Notice to Withhold Income for Child Support should be combined into one form. Employer representatives stated that this would be administratively burdensome, especially for large multistate employers; they also observed that this would frequently cause unnecessary delays in enrolling children in required health care coverage. Representatives of employers and insurers explained that large, multistate employers frequently separate payroll and health plan administration. The component that would process the NMSN and the one that processes the Order/Notice to Withhold Income for Child Support are not only administratively separate, but are often located in different parts of the country. CSPIA allows, and the Working Group concluded, that these two forms remain separate.

Timetable: NPRM, Final Rule, State Legislation

CSPIA specifically directed the Working Group to make recommendations based on assessments of the form and content of the NMSN as issued under regulations.¹³ To enable its members to become familiar with the issues considered by the agencies responsible for developing the Notice, the Working Group invited staff of HHS and DOL to attend Working Group meetings. Federal staff attended several meetings, provided overviews of the proposed Notice, and shared their views regarding the relevant issues.¹⁴ As a result of this collaboration, the Working Group's recommendations are reflected in the proposed Notice promulgated by the agencies.

In an effort to ensure that the NMSN would facilitate rather than complicate State agency efforts to secure health care coverage for children — as is consistent with Congressional intent as well as the concerns of the Working Group — the Working Group recommended, and the agencies agreed, that the Notice should be promulgated in a proposed regulation rather than as interim regulations. Notices of Proposed Rule Making (NPRM), promulgating the NMSN, were published in the Federal Register on November 15, 1999. The recommendations contained in this chapter regarding the NMSN are based on the Working Group's review of the NPRM.

Overview of Notice

The proposed NMSN is comprised of two parts: Part A, the Employer Withholding Notice, and Part B, the Medical Support Notice to the Plan Administrator. Each part includes information to be provided by the State IV-D agency, including the names and mailing addresses of the employee/obligor, the child and the employer, and the type of coverage to be provided, such as basic, dental, vision, mental health and prescription. They also contain information related to the underlying child support order, such as the date of the order and the court or agency issuing the order.

Part A includes an Employer Response form. If the employer does not offer group health coverage, or if the employee is among a class of employees that is not eligible for family coverage under the employer's plans, or if the employee is not employed by the employer, the employer checks the appropriate box and returns the Response Form to the State agency. Otherwise, the employer forwards Part B to the appropriate plan administrator.

If, after receiving enrollment information from the plan administrator, the employer determines that State or Federal withholding limitations prevent withholding the required employee contribution to obtain coverage, the employer checks the appropriate box to indicate that withholding limits apply and returns Part A to the State agency.

The instructions to Part A inform the employer of the following:

• The employer's responsibilities with respect to the Notice, including its obligation to forward Part B to the administrator of each group health plan in which the child may be eligible to enroll
• The limitations on and priority of withholding
• The duration of the withholding obligation
• Possible sanctions to which the employer may be subject
• The employer's obligation to notify the State agency if the employee's employment terminates
• The employee's liability for making any necessary employee contributions to the plan
• A means to contact the State agency with any questions

The Plan Administrator Response form in Part B notifies the State agency of the following:

• Any defects in the Notice
• When it was determined to be a QMCSO
• Either that the child has been enrolled in the plan, or of the options available
• The effective date of coverage and the option selected in which the child will be enrolled, including a description of the plan

The instructions to the Plan Administrator inform the plan administrator of her responsibilities with respect to the Notice, including the following:

• Informing the parties when coverage is effective
• Providing a description of the coverage
• Providing the custodial parent with forms, documents and information necessary to effectuate coverage
• Notifying the participant that his coverage may be changed by the IV-D agency, based on an election made for the child.

The instructions also inform the administrator that the child may not be denied coverage on the ground that the child was born out of wedlock, is not claimed as a dependent on the participant's Federal income tax return, or does not reside with the participant, and that enrollments must be made without regard to open season restrictions. In addition, the instructions inform the administrator that the child is to be treated as a dependent under the terms of the plan and that the child may be entitled to COBRA continuation coverage under certain circumstances. Finally, the instructions set forth the conditions under which the child may be dis-enrolled from the plan.

Working Group's Discussion of the Notice

After review and assessment of the form and content of the Notice as issued under proposed regulations published in the Federal Register on November 15, 1999, it is the consensus of the Working Group that this proposed Notice conforms with applicable Title IV-D and ERISA requirements and other mandatory standards, as required by CSPIA. Further, the Working Group believes that, when implemented and properly completed, the proposed Notice will be an effective and valuable asset to States in enforcing the medical support obligations of noncustodial parents. It is essential that the proposed Notice be simple, easy to understand and, as far as possible, similar in format to the Order/Notice to Withhold Income for Child Support. The Working Group made several significant recommendations on the Notice, as discussed below. Based on the above, the Working Group recommends that the final rule for the NMSN should be published by September 2000 to allow States sufficient time to implement automated processes by October 1, 2001.

The Working Group determined that user familiarity, timely transmission of required data, and good coordination between involved parties are important keys to the effective use of the proposed Notice. The Working Group recommends that DOL/HHS implement strategies to reach out to and educate representatives of all of the groups that have a need for, or interest in, use of the Notice. An easy-to-understand booklet similar to HHS' The Employer's Desk Guide to Child Support and DOL's booklet on Qualified Domestic Relations Orders (QDROs) was discussed as a possible component of this strategy. The booklet could provide guidance with respect to the use of the NMSN, as well as the general ERISA provisions governing QMCSOs.

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Recommendations of the Working Group on
Making the Notice Work Better

The Working Group made a number of recommendations, which it believes will further enhance the effectiveness of the Notice. The recommendations are divided into two categories. The first category — identified as Notice Process Recommendations — are intended to improve the effectiveness of the Notice. The second category — identified as Technical Notice Comments — suggest technical changes to the Notice that the Working Group believes will help to improve the effectiveness, simplicity and/or the readability of the proposed Notice itself. These latter recommendations are contained in APPENDIX E: National Medical Support Notice (page A-37) together with the Working Group's Recommended Notice.

Program Implementation Issues

The Working Group also discussed the importance of State IV-D agencies issuing release notices to employers when noncustodial parents' medical support obligations under a child support order terminate (such as the notice used by Washington State). Standard forms make it easier for employers and plan administrators to cooperate with child support agencies in medical child support cases. However, the Working Group rejected the idea of including a release notice as an integral part of the NMSN, because this would unnecessarily complicate a notice that was intended primarily for enrollment purposes.

The Working Group also approved requiring employers to send copies of any COBRA notices related to a child's loss of health coverage to any child support agency that has issued a medical child support order to the plan. The Working Group recognizes that it is important for children to have continuous health care coverage. Plans are currently required to send COBRA notices when a child loses coverage for specified COBRA events. A child support enforcement agency that has issued a NMSN to a plan also needs to receive copies of any COBRA notices related to the child's loss of health care coverage so that it can decide whether to enroll the child in COBRA or other alternative coverage. Unless child support agencies are notified of the impending loss of insurance, the coverage may lapse, and the child will probably be uninsured. At the same time, the burden of sending an identical COBRA notice to the IV-D agency is not significant since the plan is already required to prepare and send the notice to the child (in reality, the custodial parent).

As discussed above, Congress amended §609(a) of ERISA to permit the court or administrative agency issuing the order to substitute the name and mailing address of an official of a State (or of a political subdivision of the State) for the mailing address of the child in the order. The proposed NMSN promulgated by DOL and HHS has made provision for such substitution.

However, in cases where a State official's name and address have been substituted for the child's address on an NMSN, the administrator of a plan that provides benefits only in a geographically limited area (or which has one or more options that provide benefits only in a geographically limited area) may be unable to determine whether the child is in or close to the service area of the plan (or any of the geographically limited options). Disclosing the child's approximate location might increase the risk of domestic violence to the custodial parent or child. Accordingly, the Working Group recommends that the plan administrator provide information to the child support enforcement agency, so that the agency can determine whether the coverage (or any options) is accessible, as defined in Recommendation 8.

The Working Group also considered whether the employer — prior to forwarding Part B to the plan administrator — should determine whether the State or Federal CCPA limits would prevent withholding of sufficient amounts from the employee's wages to pay any employee contributions necessary to obtain coverage for the child under the plan. However, employer representatives indicated that payroll offices, where such determinations are made, often do not have information related to the employee contributions required by the group health plan.

This lack of information is more significant in cases in which there are different employee contributions required for different options available under the plan, and in the case of collectively bargained multiemployer plans. Accordingly, the Working Group determined that it would not be reasonable to require the employer to make determinations regarding withholding limitations prior to the plan administrator's determination of whether the Notice is qualified.

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Coverage for Children of Federal Employees and Military Personnel

Since the passage of the OBRA' 93, States have been required to enact laws under which employers and insurers must enroll a child in health coverage upon application by the custodial parent or IV-D agency in instances when a court or administrative agency orders an obligor to provide health coverage for a child and the obligor is eligible for such coverage but fails to enroll the child.¹⁵

Ironically, Federal law specifically bars the Federal government and the armed forces from enrolling dependents unless requested to do so by the employee from whom they derive coverage.¹⁶ This means that a substantial number of children who could obtain private coverage through a parent who is employed by the Federal government or the armed forces are unable to obtain this coverage unless the employee makes the request. It also appears to be inequitable for the Federal government to subject all employers except itself and the armed forces from this involuntary enrollment policy.

There have been efforts over the last few years to address this issue, including introduction of legislation in the current Congress.¹⁷ The Working Group believes Congress should enact such legislation as quickly as possible.

In conjunction with this, Congress should also clarify that the provisions of §1908 that prohibit employers from discriminating against dependents who are non-marital children, do not live with the employee, and/or who are applying out of season also apply to the Federal government.

The Working Group believes that implementing the NMSN, together with these recommendations, will make it possible for child support agencies to enroll more children in private medical insurance, help avoid lapses in children's health care coverage, and increase the efficiency and effectiveness of IV-D agencies' medical support enforcement activities.

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Endnotes

[1] Pub. L. 103-66 §4301(a), 107 Stat. 371 (1998), codified at 29 U.S.C. § 1169 (1999).

[2] 42 U.S.C. §466(a)(19)was amended in the following way – By Oct. 1, 2001 (or the next time the State legislature meets), all IV-D child support orders with a medical support component must be enforced, where appropriate, using the National Notice unless alternate coverage is allowed in the child support order.  If the noncustodial parent is located through the New Hire directory, states must provide, where appropriate, the National Notice together with an income withholding notice in two days after the date of entry in the State New Hire directory.

[3] Pub. L. 105-200, §401(b) (1998), codified at 42 U.S.C. §651 note (1999).

[4] 29 U.S.C. §1169(a)(5)(C) (1999).

[5] 29 U.S.C. §1169(a)(5)(C)(ii)(1999).

[6] 29 U.S.C. §1169(a) (1999).

[7] Title IV-D of the Social Security Act, 42 U.S.C. §1396g-1 (1999), requires States to have laws under which employers and insurers must enroll a child in health coverage upon application by the custodial parent or IV-D agency when a court or administrative agency orders an obligor to provide health coverage for a child and the obligor is eligible for such coverage but fails to enroll the child.

[8] 42 U.S.C. §666(a)(19)(1998).

[9] Similar concerns regarding uniformity led to the development of the current Order/Notice to Withhold Income for Child Support.  Prior to 1998, the form and content of notices and orders used by States to notify employers of the financial support obligations of noncustodial parents also varied widely.  This lack of uniformity also led to confusion and unnecessary delays.  The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, among other things, requires States to transmit to employers (and other debtors) no later than October 1, 1998, orders and notices for income withholding using a uniform format prescribed by the Secretary of HHS.  Following this directive, the Federal Office of Child Support Enforcement worked with State child support enforcement agencies and representatives from the American Payroll Association, the American Society of Payroll Management, and employers groups to develop the Order/Notice to Withhold Income for Child Support.  In January 1998, this form was issued to the States, and currently is used as the prescribed format in processing child support wage attachments in the Child Support Enforcement Program.  Use of this form by State agencies has greatly simplified the process of wage withholding.

[10] 29 U.S.C. §1169(a) (5)(C) (1998).

[11] See, e.g. 42 U.S.C. 654(26)(B).

[12] 29 U.S.C. §1169(a)(3)(A) (1999).

[13] CSPIA, §401(a)(5)(A)(i), 112 Stat. 660 (1998).

[14] A significant part of the Working Group’s April 13, 1999, meeting was devoted to a discussion and preliminary assessment of the then current draft, which was provided to members of the Working Group.  The Working Group concluded that the April draft Notice did not adequately address the needs and interests of all the parties who would be affected by it, and that members needed additional time to review and comment on subsequent drafts of the Notice, prior to its promulgation by regulation.  Working Group members also expressed concern that employers and plan administrators would be required to comply with interim regulations immediately upon their publication in States that chose to implement the Notice before the mandatory implementation date, October 1, 2001.  The full Working Group considered a revised draft of a proposed Notice at its May 1999 meeting.

[15] Section 1908 of the Social Security Act, 42 U.S.C. §1396g-1 (1999).

[16] 5 USC §8905 (1999).

[17] H.R. 2842, 106^th Cong. 1^st Sess. was introduced on September 13, 1999 and referred to the Committee on Government Reform.

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