Department of Labor: 2000032411

Wednesday,
December 27, 2000
Part IV
Department of Labor
Pension and Welfare Benefits
Administration
Department of
Health and Human
Services
Office of Child Support Enforcement
29 CFR Part 2590

45 CFR Part 303
National Medical Support Notice; Final
Rule
VerDate 11<MAY>2000 00:13 Dec 27, 2000 Jkt 194001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\27DER2.SGM pfrm10 PsN: 27DER2
82128 Federal Register / Vol. 65, No. 249 / Wednesday, December 27, 2000 / Rules and Regulations
DEPARTMENT OF LABOR group health plan) who is recognized noncustodial parent that a State court or
under a medical child support order as administrative agency has issued a child
Pension and Welfare Benefits having a right to enrollment under a support order providing for health care
Administration group health plan with respect to such coverage. Under these laws, employers
participant. Upon receipt, the will be required to forward a portion of
29 CFR Part 2590 administrator of a group health plan is the Notice to the appropriate group
RIN 1210–AA72
required to determine, within a health plan administrator and to
reasonable period of time, whether a withhold any necessary employee
National Medical Support Notice medical child support order is qualified, contributions.
and to administer benefits in accordance Section 401(d) of CSPIA added a new
AGENCY: Pension and Welfare Benefits with the applicable terms of each order subparagraph (C) to section 609(a)(5) of
Administration, Labor. that is qualified. Section 514(b)(7) of ERISA. Section 609(a)(5)(C) provides
ACTION: Final rule. ERISA also provides that ERISA that if an administrator of a group health
preemption of State laws does not apply plan which is maintained by the
SUMMARY: This document contains a to QMCSOs and provisions of State law
final rule that promulgates a National employer of a noncustodial parent of a
described in section 1908 of the Social child, or to which such employer
Medical Support Notice to be issued by Security Act (SSA) to the extent that
State agencies as a means of enforcing contributes, receives an appropriately
they apply to a QMCSO.1 completed Notice in the case of such
the health care coverage provisions in a
child support order, and to be treated by 2. The Child Support Performance and child, and the Notice satisfies the
plan administrators of group health Incentive Act conditions of paragraphs (3) and (4) of
plans as a qualified medical child ERISA section 609(a), the Notice shall
Congress enacted section 401 of the
support order under section 609(a) of be deemed to be a QMCSO in the case
Child Support Performance and
Title I of the Employee Retirement of such child.
Incentive Act of 1998 (CSPIA) to amend
Income Security Act (ERISA). Through both ERISA and the SSA. Section 401(b) Section 401(a) of CSPIA mandated
this regulation, the Department of Labor of CSPIA directed the Secretaries of that the Secretaries of Labor and Health
(the Department) is implementing an Labor and Health and Human Services and Human Services jointly establish a
amendment to section 609 (a) of ERISA, to jointly develop and promulgate the Medical Child Support Working Group
made by section 401 of the Child Notice. (the Working Group or MCSWG) whose
Support Performance and Incentive Act Section 401(c) of CSPIA amended purpose was to identify the
of 1998 (CSPIA), Pub. L. 105–200. This section 466(a)(19) of the SSA (contained impediments to the effective
rule will affect group health plans, in part D of Title IV of the SSA) to enforcement of medical support by IV–
participants in group health plans, require States to enact laws requiring D Agencies and to submit a report to the
noncustodial children of such the use of the Notice to enforce medical Secretaries containing recommendations
participants, and State agencies that child support obligations of parents.2 A for appropriate measures to address
administer child support enforcement State agency that administers a child such impediments. CSPIA section
programs. support enforcement program pursuant 401(a) requires the Secretaries to submit
to such laws (IV–D Agency or Issuing a report to Congress within two months
DATES: The regulation is effective of receipt of the Working Group’s report
Agency) will be required to use the
January 26, 2001. that addresses the recommendations
Notice to notify the employer of the
FOR FURTHER INFORMATION CONTACT: contained in the Working Group’s
David Lurie or Susan Rees, Office of 1 Section 1908 of the SSA, 42 U.S.C. 1396g–1, report. CSPIA section 401(g) further
Regulations and Interpretations, Pension conditions State eligibility for Medicaid matching requires the two Secretaries to submit a
and Welfare Benefits Administration, funds on the enactment of certain specified State second report to Congress eight months
(202) 219–8671 (this is not a toll-free laws relating to medical child support. Under
section 1908 States must enact laws under which later, regarding possible legislative
number). insurers (including group health plans) may not changes.
deny enrollment of a child under the health
SUPPLEMENTARY INFORMATION: 3. The Medical Child Support Working
coverage of the child’s parent on the ground that the
1. Background child is born out of wedlock, not claimed as a Group
dependent on the parent’s tax return, or not in
Under section 609(a) of the Employee residence with the parent or in the insurer’s service CSPIA specifically directed the
Retirement Income Security Act of 1974, area. Section 1908 also sets out rules for States to Working Group, among other things, to
require of employers and insurers when a parent is
as amended (ERISA), each group health ordered by a court or administrative agency to make recommendations based on
plan, as defined in ERISA section provide health coverage for a child and the parent assessments of the form and content of
607(1), shall provide benefits in is eligible for health coverage from that insurer or the Notice as developed by the two
accordance with the applicable employer, including a provision which permits the Departments. The Working Group was
custodial parent or the State agency to apply for
requirements of any ‘‘qualified medical available coverage for the child, without regard to composed of 30 members, who
child support order’’ (QMCSO). A open season restrictions. represented the Department and the
QMCSO is a medical child support 2 This requirement is effective for each State on
Department of Health and Human
order issued under State law that creates or after the later of October 1, 2001, or the effective Services (HHS), directors of State IV–D
date of laws enacted by the legislature of such State
or recognizes the existence of an implementing the amendments to the SSA made by and Medicaid agencies, employers
‘‘alternate recipient’s’’ right to receive section 401 of CSPIA, but in no event later than the (including owners of small businesses)
benefits for which a participant or first day of the first calendar quarter beginning after and their trade or industry
beneficiary is eligible under a group the close of the first regular session of the State representatives and certified human
legislature that begins after October 1, 2001. In the
health plan, and which satisfies certain case of a State that has a 2-year legislative session, resource and payroll professionals,
additional requirements contained in each year of such session shall be deemed to be a administrators and sponsors of group
ERISA section 609(a). An ‘‘alternate separate regular session of the State legislature. health plans (as defined in section
Some States, therefore, may not have laws
recipient’’ is any child of a participant mandating the use of the Notice until 2003. Until
607(1) of ERISA), children potentially
(including a child adopted by or placed that time, such States may continue to use medical eligible for medical support, State
for adoption with a participant in a child support orders other than the Notice. medical child support programs, and
Federal Register / Vol. 65, No. 249 / Wednesday, December 27, 2000 / Rules and Regulations 82129
organizations representing State child B. Part A—Notice to Withhold for Instructions to Plan Administrator were
support programs. Health Care Coverage developed to meet the requirements of
The Working Group held a series of As described in the OCSE regulation, CSPIA, as well as coordinate those
nine meetings beginning in March of a State IV–D agency will issue the two- requirements with the existing QMCSO
1999. The initial meetings of the part Notice to an employer who requirements of ERISA section 609(a),
Working Group led the Departments to maintains or contributes to a group because receipt by a plan administrator
a more complete appreciation of the health plan, and employs a of Part B of this Notice is considered
noncustodial parent obligated by a child receipt of a medical child support order
complexity of the issues involved in the
support order to provide medical as defined in ERISA section
development of the Notice. In the
609(a)(2)(B). Part B was also developed
interest of developing a more useful support for his or her children. Part A,
to comply with the requirements placed
Notice, the Departments decided to the ‘‘Notice to Withhold for Health Care
on group health plans under State laws
obtain additional input from the Coverage’’ identifies the obligated
described in SSA section 1908, and to
Working Group, which necessitated employee as well as the child(ren) to
accommodate the requirements for State
taking additional time in developing the whom the order applies. The
agencies to use automated processing of
Notice. Comments from the Working Instructions to Employer inform the
medical child support orders where
Group proved very helpful in the employer of its obligations (i) to transfer
possible.
development of the proposed Part B of the Notice to the administrator Receipt of Part B of the Notice from
regulations issued by the Secretaries on of each group health plan to which the the employer notifies the administrator
November 15, 1999 (64 FR 62054, Notice applies within 20-business days of the group health plan that the named
62074).3 In a meeting held June 8, 2000, of the date of the Notice, (ii) if the employee is obligated by a court or
the Working Group formally approved a Notice is determined to be a QMCSO by administrative child support order to
Report to be submitted to the the plan administrator, to determine provide medical support coverage for
Secretaries. The Report contains 76 whether Federal or State withholding the named child(ren), and that the
recommendations relating to medical limitations or prioritization rules permit named employee is enrolled or eligible
child support enforcement, including the withholding from the employee’s for enrollment under the plan
recommendations concerning the income of the amount required to obtain maintained by or contributed to by the
proposed Notice.4 coverage for the children under the employer. The Notice is to be treated as
terms of the plan, (iii) if appropriate, to an application by the Issuing Agency for
4. The National Medical Support Notice withhold from the income of the health coverage for the child(ren) to the
A. General employee any contributions required extent such application is required by
under the group health plan for such the plan.
The Departments of Labor and HHS coverage, and (iv) to transmit those The Notice is designed to provide the
are jointly promulgating the Notice. The amounts to the group health plan. Part information necessary for the plan
Notice has two parts, Part A, the ‘‘Notice A also includes an Employer Response, administrator to determine, as required
to Withhold for Health Care Coverage,’’ which the employer would use to notify by section 609(a)(5)(A), whether the
and Part B, the ‘‘Medical Support Notice the Issuing Agency if the employer does Notice is a QMCSO under section 609(a)
to Plan Administrator.’’ Also being not maintain or contribute to a group of ERISA, and to enroll the child(ren) as
published in the Federal Register today health plan that offers family health care dependent(s) in the group health plan.
is a parallel regulation issued by the coverage or that the employee is among ERISA section 609(a)(5)(C) provides that
Office of Child Support Enforcement a class of employees that is not eligible if a plan administrator receives an
(OCSE), HHS, under sections 452(f) and for family health coverage under any appropriately completed Notice that
466(a)(19) of the SSA, 42 U.S.C. 652(f) plan maintained by the employer or to satisfies the conditions of paragraphs (3)
and 666(a)(19), as amended by section which the employer contributes, or if and (4) of section 609(a), the Notice
401 of CSPIA. That regulation, at 45 the individual is no longer employed by shall be deemed to be a QMCSO.
C.F.R. 303.32, in addition to the employer. The Plan Administrator Response of
promulgating the Notice, provides The Instructions to Employer in Part Part B is to be completed by the plan
guidance to States on implementing the A also notify the employer (i) of Federal administrator and returned to the
laws required by such sections. These and State limitations on withholding, Issuing Agency and/or the parties, as
laws describe the duties and obligations (ii) of the obligation to comply with any appropriate, to inform them whether the
of employers and State agencies applicable withholding prioritization Notice constitutes a QMCSO. If the
generally with respect to Part A of the law established by the State of the Notice is qualified, the plan
Notice. The Department of Labor’s employee’s principal place of administrator is required to notify the
regulation promulgated herein provides employment and to notify the State Issuing Agency either that the child(ren)
guidance to plan administrators for agency which issued the Notice of the is/are currently or will be enrolled in
processing Part B of the Notice. employee’s termination of employment, coverage offered by the plan, and the
(iii) of the duration of the withholding date of enrollment, or, if the employee
3 In an effort to ensure that the statutorily obligation, (iv) of sanctions that the is not enrolled and there is more than
mandated Notice facilitated IV–D Agency efforts to employer might be subject to for failure one option available, inform the Agency
secure health care coverage for children, consistent to withhold as required by the Notice, of the options from which to elect
with Congressional intent, and taking into account and (v) that the employee is liable for coverage. Part B is also to be used to
the views of the Working Group, the Department notify the Issuing Agency and the
first promulgated the Notice as a proposed
any employee contributions required by
rulemaking rather than as an interim regulation as the terms of the plan. parties of certain waiting periods. In
provided for in section 401(b)(5) of CSPIA. addition, Part B is to be used to notify
4 A copy of the Report is available in the C. Part B—Notice to Plan Administrator the employer to determine whether any
Department’s Public Disclosure Room for the Part B of the Notice, the ‘‘Medical employee contribution necessary for
Pension and Welfare Benefits Administration
(PWBA), Room N5638, 200 Constitution Avenue,
Support Notice to Plan Administrator,’’ coverage can be withheld from the
N.W., Washington, D.C. 20210. The Report is also includes the same information as is employee’s income. If the plan
available at www.pwba.dol.gov. contained in Part A. Part B and its administrator determines that a Notice
received by the plan is not qualified, he item in the Notice requiring the address In response, the Department believes
or she is to complete the Response and of the custodial parent should instead that the responsibilities of the employer
identify the specific reason(s) why the automatically require the address of a and plan administrator to provide
Notice is not qualified, and is to notify substituted State official. Another notifications to the Issuing Agency and
the Issuing Agency and the parties. suggested that the Notice should not the custodial and noncustodial parents
include the addresses of either the as described in the Instructions to the
Discussion of the Comments
custodial or noncustodial parent. Notice are based on the statutory
1. General Responsibilities of the Parties The Department believes the need for requirements of CSPIA and ERISA. In
confidentiality, although arising in only implementing the Notice, the
A. Time Periods
a small proportion of medical child Department attempted to integrate
The Department received several support enforcement cases, is a serious overlapping notification requirements in
comments related to the 40-business day matter. However, the Notice is designed order to make processing as efficient as
period from the date of the Notice to put the State court issuing the possible. Therefore, Part A of the Notice
within which the employer and the plan support order or the IV–D Agency provides that the employer need notify
administrator are to act on the Notice. issuing the Notice in control of only the Issuing Agency if coverage is
Several expressed the view that the confidentiality, by permitting either to not available for one of the enumerated
respective time periods are too long, and substitute the name and address of a reasons on Part A, or, if, after the Notice
suggested that they should be shortened. State official for that of the child and/ is qualified, the employer determines
One of these commenters explained that that coverage is prevented because of
or custodial parent, where appropriate.
under State law, an employer or State or Federal withholding
Plan administrators are required to
insurance carrier is required to enroll a limitations. In these instances, the
honor such substitutions by ERISA
child immediately upon receipt of a Department understands that the Issuing
section 609(a)(3)(A), and the
court order requiring such enrollment. Agency is responsible for notifying the
Department assumes that the employer
One comment requested clarification child and/or parents.
and the plan administrator will respect
regarding whether the 40-business day In the draft Notice submitted by the
this substitution, without specific
period to run from the date of receipt of Working Group to the Departments as
instruction of the Notice to do so. Later
a complete Notice by a plan part of its comments and included in an
arising confidentiality concerns may
administrator, or from the mailing date appendix in its Report to the
of the Notice. also be addressed by section
Secretaries, it was suggested that other
In response, the time periods are 609(a)(5)(B)(iii) of ERISA, which
notification requirements based on
specified in CSPIA. However, in order permits the child to name a
CSPIA or section 609(a) of ERISA, such
to coordinate the requirements representative for receipt of notice from
as of the receipt by the plan
contained in ERISA section the plan.
administrator of a medical child support
609(a)(5)(A)(ii) and section The Department believes that these order (or Notice) and of the qualification
609(a)(5)(C)(ii), the Notice also indicates mechanisms work best with the decision and basis, can be met by the
that the plan administrator would be countervailing considerations under plan administrator by sending Part B of
required to respond more quickly, if ERISA—that the plan administrator is the Notice to the parties as well as the
reasonable. The Department required to send notification of various Issuing Agency. Although this may be
understands that there may be State events to the noncustodial parent whose permissible, some members of the
insurance laws that will apply in eligibility for coverage is the basis of the Working Group were concerned about
medical child support enforcement with Notice and from whose income any confidentiality, and about whether use
respect to insured plans, and assumes necessary employee contribution will be of Part B as a means of providing
that both Federal and State law will be withheld. Further, absent circumstances notifications would satisfy all other
given effect wherever possible. In that warrant confidentiality, it will be statutory obligations. Therefore the
response to the last comment, under more efficient for both the plan Notice as published herein does not
CSPIA, the period runs from the ‘‘date administrator and the custodial parent provide that Part B can necessarily be
of the Notice.’’ HHS has recommended, to be in direct communication on used for all purposes.
and the Department has adopted, the matters such as updated plan
information, resolution of benefit D. Disclosure of Plan Information
rule used for income withholding
notices. Under this interpretation, the claims, reimbursement and other Commenters suggested that the Notice
period runs from the date the Notice is matters of ongoing plan administration. should specify the employer’s and the
issued by the IV–D Agency. plan administrator’s responsibilities
C. Notification Requirements
with respect to disclosure of
B. Confidentiality of Personal Commenters requested guidance that information related to the group health
Information would clarify how the Employer plan or plans covered by a Notice.
Several commenters suggested that Response and the Plan Administrator Another commenter suggested that the
the Notice should include general Response would be used to satisfy the regulation and Notice should clarify
language that warns the employer and employer’s and plan administrator’s which disclosure requirements related
plan administrator to safeguard notification requirements to the Issuing to the Notice can be satisfied by use of
confidential information. Commenters Agency and the custodial and separate documents such as a summary
also suggested that the notification noncustodial parents. Commenters plan description (SPD). Another
responsibilities described in the specifically suggested that the Employer suggested that the plan administrator
respective instructions should be Response and the Plan Administrator should be required to send the
drafted in a manner that would prevent Response should be sent only to the description of coverage only to the
any confidential information from being Issuing Agency. One commenter custodial parent (or substituted official,
disclosed to either the custodial or expressed the view that notification to as appropriate), and not to the Issuing
noncustodial parent. With respect to the the custodial parent duplicates the Agency. Several commenters noted that
specific information content of the State’s duty to inform the custodial the space on the Plan Administrator
Notice, a commenter suggested that the parent that coverage is obtained. Response allocated for a plan
administrator, following qualification, the objective of providing adequate send Part B to the plan administrator.
to provide certain information to the information about the plan or plan These commenters expressed the view
Issuing Agency is inadequate. options. that this would result in more efficient
The Department believes that Other commenters requested that the administration of a Notice. Other
information on group health plans, Notice contain additional information. commenters expressed concern that
including options available under such Several commenters suggested that the notification that coverage is available
plans covered by a Notice, may Plan Administrator Response in Part B when amounts cannot be withheld to
routinely become available to the parties should be modified so that when a plan pay for such coverage may place a
and the Issuing Agency earlier in the administrator provides information burden on plan administrators and, in
process than at the present. The following enrollment, it will include the some cases, certain State agencies. One
Department understands that under group policy number and any other commenter suggested that the plan
State laws described in section relevant information. Another administrator test for withholding as
466(c)(1)(C) of the SSA, employers are commenter suggested that the Response part of the qualification process.
required to provide plan information to should contain an item for the plan In response to the last comment, the
a IV–D Agency in response to its request administrator to inform the Issuing Department concluded that the plan
for such information. Further, after the Agency that enrollment forms have not administrator does not have the
issuance of the underlying support been returned to the plan. Another information or the authority to make
order, the Agency or the custodial commenter suggested that the Notice income withholding or prioritization
parent or other representative of the include an explicit coordination of determinations. Further, the
child may request, and is entitled to benefits provision. Another commenter Departments, as well as the Working
receive from the plan administrator, suggested that the Employer Response Group, also considered and rejected
sufficient information to understand the in Part A should be modified so that it having the employer determine
options available and to assist in can be used by an employer to notify the permissible income withholding within
appropriately completing the Notice. Issuing Agency if coverage pursuant to the 40-business day period, and prior to
Further, upon receipt of Part B from the the Notice has lapsed for reasons such forwarding part B of the Notice to the
employer, the plan administrator is as termination of the employee’s plan administrator for qualification. It is
obligated to provide plan information to employment or elimination of family the understanding of the Departments
the child/custodial parent because coverage by the employer. that it may not be feasible for the
receipt of the Notice triggers the plan The Department has determined that employer to attempt to determine
administrator’s obligation under ERISA the Notice has as its purpose the whether the necessary withholding is
section 609(a)(5)(A) to provide the establishment of a qualified order under possible prior to the time the plan
plan’s QMCSO procedures and any which group health coverage will be administrator determines that the Notice
other information related to the provided to a child. Subsequent changes is a QMCSO because the employer’s
qualification process to the parties. in enrollment or terminations, while payroll office or agent, which usually
Lastly, under Part B of the Notice, the perhaps events subject to notification makes such determinations, often does
plan administrator may be obligated to requirements under Federal or State not have information relating to the
provide information on options under law, are beyond the scope of this Notice. amount of employee contribution
the plan directly to the Issuing Agency The Department also recognizes that the necessary to extend coverage to the
if the employee is not enrolled in any Notice does not contain all information child (ren). Also, where group health
option. that may be useful to the parties. Rather, plans provide different options for
In response to the comments above, the Notice has been designed to alert the coverage, not all options require the
the Department has amended the parties to new obligations and same participant contribution. If the
Instructions to Plan Administrator in procedures, and to remain as employee is not enrolled, the plan
Part B to clarify that the plan streamlined as possible. administrator may be required to qualify
administrator may fulfill the obligation a Notice before an option is selected by
to provide plan information by 2. Specific Responsibilities To Be the Issuing Agency. In those cases, the
forwarding copies of the plan’s SPD, Satisfied Within Statutory Time Periods employer initially may not have enough
provided that the SPD includes information on the amount of
A. The Employer
sufficient information concerning withholding required for coverage.
required contributions, benefit levels, In general, the responsibilities of Although the Department recognizes
and limitations (including geographic or employers are described in the final that the procedure in the Notice may
service area limitations) of the plan or regulation published today by OCSE. result in some delay between
plan options. In general, in order to However one commenter asked the qualification and actual enrollment, the
satisfy the requirements of CSPIA and Department to reconsider the provision Department believes that qualification
ERISA section 609(a), information about in the proposed regulation that only of the Notice as a QMCSO at the earliest
the plan or plan options must be sent to after a Notice is determined to be a possible time is most likely to result in
the IV-D Agency as well as the child and QMCSO by the plan administrator more coverage for children. Further,
custodial parent if requested. This would the employer test withholding with QMCSOs enforced outside the IV-
clarification is intended to preserve the limits and initiate withholding for D system (private QMCSOs), the
flexibility of the plan administrator to contribution to the plan. Several determination concerning income
satisfy the requirement to provide comments suggested that the employer withholding will necessarily take place
adequate information in the most should test whether withholding limits after an order is qualified, because the
efficient and cost effective manner would be exceeded prior to forwarding order generally is relayed directly from
available based on the specific Part B to the plan administrator. the court or administrative agency to the
circumstances of the plan administrator. According to these commenters, if plan administrator. Therefore, under the
While this revision clarifies that the withholding limits would be exceeded, final regulation, as under the proposal,
SPD may be used, it is not intended to the employer should notify the Issuing the employer’s withholding
prescribe or restrict the types of Agency and the custodial parent of the determination takes place after the
documents that may be used to satisfy inability to withhold, and should not qualification of the Notice.
B. The Plan Administrator paragraphs (3) and (4) of section 609(a) any available coverage. In addition, the
One commenter suggested that the is deemed to be a QMCSO. The proposal Notice provides boxes for the Agency to
regulation should specify or clarify what provided in relevant part that a Notice select a particular type of coverage,
responsibilities the plan administrator is appropriately completed if it contains although the number has not been
must fulfill within the applicable 40- the name of an Issuing Agency, the increased from the proposal.
business day period. This commenter name and mailing address of an The Department also has added
expressed the view that such employee who is a participant under the clarification in the final regulation as to
clarification would assist IV-D Agencies plan, the name and mailing address of how the Notice will satisfy the
in developing automated systems for one or more alternate recipient(s), and if requirements of ERISA section 609(a)(3)
sending inquiries to those plan the family group health care coverage and (a)(4). Under subparagraph (A) of
administrators who do not fulfill their required by the child support order is section 609(a)(3) a QMCSO must
duties in a timely manner. One identified and available. One include information identifying the
commenter suggested that the regulation commenter expressed concern that the employee and child. Subparagraph (B)
should provide that the 40-business day language in the proposal requiring that requires a reasonable description of the
period shall not run while a plan family group health care coverage must type of coverage to be provided or the
administrator does not have ‘‘complete’’ be ‘‘identified and available’’ might be manner in which such coverage is to be
information. A commenter also interpreted as requiring the Issuing determined, and subparagraph (C)
suggested that to correspond with such Agency to include the name and address requires a description of the period to
guidance, the Notice should be modified of the plan. This commenter suggested which such order applies.
to contain a space for the plan that the Department substitute language It is the view of the Department that
administrator to inform the Issuing that would lessen the likelihood of such the Notice satisfies ERISA section
Agency that it cannot satisfy its a misinterpretation. 609(a)(3)(A) by including the necessary
obligations within the 40-business day Several other comments were made identifying information in Part B that
period because Part B is incomplete or regarding the identification of the type also satisfies the CSPIA requirement
there is insufficient information for it to of coverage required in the proposed contained in section 609(a)(5)(C) of
determine if the named child can be Notice. Commenters generally requested being ‘‘appropriately completed.’’ The
covered by the plan. This commenter clarification that a ‘‘reasonable Department interprets ERISA section
explained that some plans verify that a description’’ of the type of coverage as 609(a)(3)(B) as being met initially by
named child is eligible under the terms required by ERISA 609(a)(3)(B) would having the Issuing Agency identify on
of the plan before qualifying an order. be satisfied by a description consisting the Notice some or all of the group
In response, the Department believes of ‘‘any coverage available under the health plan options to be considered.
that an appropriately completed Notice plan,’’ and that the ‘‘type of coverage’’ Upon receipt of the Notice, the
will have sufficient information for it to provision in the Notice should be employer will identify whether group
be deemed a QMCSO, although modified accordingly. Other health coverage with dependent
additional steps may need to be taken commenters suggested that the ‘‘type of coverage is available to this employee
before the enrollment is effective. If a coverage’’ provision should be prior to forwarding part B of the Notice
plan administrator receives Part B from expanded so that an Issuing Agency to the plan administrator. The final
the employer, the employer has already may enforce orders that provide more regulation now provides that if an
confirmed that group health coverage is specific types of coverage. Commenters employer offers a number of different
available and that the employee who is suggested that this could be done by types of benefits (e.g., dental,
the noncustodial parent is enrolled or providing an exhaustive list of boxed- prescription) through separate plans and
eligible for enrollment, and, therefore, items that could be checked by the receives a Notice on which the Issuing
that the child is eligible under the Issuing Agency or by providing empty Agency has not specified which or all
Notice for enrollment under the plan lines for this purpose. are covered by the Notice, the employer
In response to these comments, the
(unless over the age limit for dependent should assume all, and forward copies
Department has clarified in the final
coverage under the plan). In addition, of Part B of the Notice to each plan
regulation that a Notice is appropriately
both ERISA section 609(a) and State administrator. Further, if a Notice is
completed within the meaning of
laws described in section 1908 of the received by the administrator of a group
section 609(a)(5)(C) if it identifies an
SSA have eliminated a number of health plan with several options (e.g., a
Issuing Agency and an employee of an
eligibility criteria that may have been an fee for services option and a managed
employer, enrolled or eligible for
issue in the past, such as exclusions of care option) and the employee is not
enrollment in a group health plan
children on Medicaid or Medicaid sponsored by the employer or to which enrolled, the ERISA section 609(a)(3)(B)
eligible or born out of wedlock, from the the employer contributes, who is a requirement will be satisfied because
definition of ‘‘dependent.’’ Therefore, noncustodial parent obligated by a State the Notice directs the plan administrator
the Department believes that court or administrative order to provide to obtain an election from the Issuing
qualification of the Notice can be medical child support for one or more Agency after the Notice is qualified.
accomplished well within the 40- children named in the Notice, and also Finally, ERISA section 609(a)(3)(C) is
business days provided by CSPIA. identifies the underlying support order. satisfied by the Notice specifying that
However, the Issuing Agency is not the period of coverage may only end for
3. Qualification by the Plan
required to provide the name and the child(ren) when similarly situated
Administrator
address of a group health plan on a dependents are no longer eligible for
A. Description of Coverage Provided in Notice because a Notice can be used to coverage under the terms of the plan, or
the Notice enforce a child support order that upon the occurrence of certain specified
The proposed regulation at section establishes a general obligation to events.5
2590.609–2(a) provided, as required by provide health care coverage. In 5 Section 1908(a)(2)(C) and (3)(C) of the SSA sets
section 609(a)(5)(C) of ERISA, that an recognition, the Department has out rules for States to require that, when a child is
‘‘appropriately completed’’ Notice that changed the Notice to provide a box to provided health care coverage by an parent’s
also satisfies the requirements of be checked by the Issuing Agency for insurer pursuant to a court or administrative order,
Under ERISA section 609(a)(4), a recognized as a QMCSO. As described should contain spaces for the employer
QMCSO cannot require a plan to above, the only information necessary to inform the Issuing Agency that the
provide new types or forms of benefits on the Notice is the identity of the named employee is not eligible for
not otherwise provided under the plan, Issuing Agency, the identification of an coverage because of a waiting period,
except to the extent necessary to meet underlying order providing for medical and to describe such waiting period.
the requirements of a State law child support, and the names and Under section 701(b)(4) of ERISA, as
described in section 1908 of the SSA. addresses of the employee and the added by the Health Insurance
The Notice satisfies this section because child(ren) (or substitutes where Portability and Accountability Act
it provides that the child(ren) will only appropriate). It is the view of the (HIPAA), a waiting period is the period
be covered as dependents, or be Department that identification of the that must pass with respect to an
enrolled only in an option provided order on the Notice is sufficient individual before the individual is
under the plan available to other evidence of the existence of the eligible to be covered for benefits under
dependents, and the Instructions inform underlying support order. The plan the terms of the group health plan. The
the plan administrator of the restrictions administrator may take Part B of the Department believes that under some
relating to section 1908 of the SSA. Notice at face value, and is not obligated circumstances, such as when an
The Department has made several (nor should undertake under normal employer receives a Notice for a newly
small changes in the final regulation circumstances) to make an inquiry into hired employee, or where the Notice
consistent with this discussion, as well the bona fides of a Notice or Order requires enrollment of the employee for
as other small changes to simplify the under state law. In addition, if any of enrollment of the child, such waiting
Notice by removing guidance available the necessary information has been periods will apply to the employee and
to the parties elsewhere. omitted but is reasonably available to child. As under the proposed regulation,
the plan administrator, the Notice the Department believes that a Notice
B. Other Qualification Matters
should not fail to be qualified solely should be qualified regardless of the
A commenter requested that the because of such omission. applicability of a waiting period. The
Notice should indicate which items to A commenter suggested that the final MCSWG in Recommendation #39 of its
be completed by the Issuing Agency are regulation should provide that a plan Report suggested that the employer
essential for the effectiveness of the administrator would be deemed to have should be responsible for applications
Notice with respect to the plan not breached its duties if such plan subject to a waiting period of 90 days or
administrator. This commenter administrator has acted in good faith to more, or if the waiting period is
explained that an Issuing Agency might comply with the regulation. ascertained by some other means such
hesitate to provide some items of Under ERISA section 609(a)(6), if a as hours worked.
information listed in the Notice, such as plan administrator acts in accordance In response to public comments and
child’s social security number, or might with the fiduciary standard of conduct concerns of the Working Group, the
not have an employer’s EIN. Another in treating a medical child support order Notice clarifies that if more than ninety
suggested that the Department provide as being (or not being) a qualified days remain of the waiting period, or if
guidance regarding the omission of medical child support order, then the it is measured by some other means, the
information that a plan administrator plan’s obligation to the participant and plan administrator qualifies the Notice,
can reasonably obtain or determine. each alternate recipient shall be and returns Part B to the employer and
Another commenter suggested that, discharged to the extent of any payment the Issuing Agency without completing
consistent with ERISA section made pursuant to such act of the the enrollment. Upon notification from
609(a)(3)(A), the Notice should clarify fiduciary. In addition, the Department the employer of satisfaction of the
that a plan administrator may not fail to believes that the Notice is designed to period, the plan administrator
qualify a Notice solely because the be presumptively qualified when it completes the enrollment process.
address of a substituted official is reaches the plan administrator. However, if the plan provides a waiting
entered in place of the address of the Therefore, in most cases, a plan period of ninety days or less, or if ninety
child (alternate recipient). Another administrator must pay benefits in days or less remain of a longer waiting
commenter suggested that the Notice accordance with the applicable period, the plan administrator qualifies
should include a statement that it serves requirements of an appropriately the Notice, and processes the
as evidence of the underlying child completed Notice. enrollment, notifying the parties,
support order. This commenter C. Waiting Periods including the Issuing Agency, of the
explained that including this statement effective date.
is necessary to ensure that the medical The proposed Notice did not
specifically address how the application D. Notification to Issuing Agency of
support provisions of the underlying Multiple Enrollment Options
child support order can be implemented of a waiting period would affect
upon the receipt of the Notice without qualification and enrollment. The The proposed Notice provided that,
requiring any additional documentation. preamble accompanying the proposal following qualification, in the event that
Although the Notice provides for provided in relevant part that ‘‘if Part B more than one enrollment option would
information designed to assist the is appropriately completed, the plan be available to an alternate recipient, the
parties, such as the EIN of the employer administrator must treat the Notice as a plan administrator would use the Plan
and social security numbers of the QMCSO, even if there is a waiting Administrator Response to notify the
parties, not all of these items are period to enroll in the plan.’’ Several Issuing Agency of these options. The
necessary for the Notice to be commenters suggested that the Agency would then choose the option in
regulations and the Notice should which the child(ren) would be enrolled.
the child may only be disenrolled if the employer provide guidance regarding the Several commenters suggested that
or insurer is provided satisfactory evidence that the responsibilities of the respective parties the Plan Administrator Response (and
order is no longer in effect, the child is or will be following notification to the Issuing any corresponding Instructions) should
enrolled in comparable coverage which will take
effect no later than the effective date of
Agency that enrollment is subject to a be modified so that the notification to
disenrollment, or the employer eliminates family waiting period. Several commenters the Issuing Agency regarding multiple
health coverage for all of its employees. suggested that the Employer Response enrollment options also includes the
cost of dependent coverage for each where the plan administrator has the without any further action by the
option. These commenters explained flexibility to provide the needed Issuing Agency. There was also a
that, in the event that limitations on information by supplying the recommendation that if a plan has a
withholding would prevent an employer appropriate existing documents rather ‘‘default option’’ that it applies with
from withholding sufficient amounts for than adding information to the Notice. respect to enrollment pursuant to a
contribution to a plan, information Therefore, the Department believes that qualified medical child support order,
regarding cost of coverage would permit procedures in the final regulation and then it should be permitted to follow
an Issuing Agency to address this Notice will satisfy the concern of the that option if the Issuing Agency does
problem by modifying the amount Working Group, although the suggestion not respond within 20-business days
withheld for cash support or selecting in Recommendation #36 was not regarding its choice from among the
an option that requires employee specifically implemented. available options.
contribution within the limitations. With respect to Recommendation #37 Another commenter recommended
Additionally, some of these of the MCSWG, the Department that if the named child is currently
commenters suggested that the Plan recognizes the need for information to enrolled as a dependent under the terms
Administrator Response (and any be exchanged if an option is to be of the plan, but other options are
corresponding Instructions) should be selected, but is reluctant to require the available, the plan administrator would
modified so that notification regarding plan administrator to make a use the Plan Administrator Response to
multiple enrollment options also determination regarding accessible notify the Issuing Agency of the
includes a description of any service enrollment options. This determination availability of options, and the child’s
area limitations. Such information is better placed with the Agency. enrollment would not change unless the
would permit the Issuing Agency to Therefore the Department believes it is Agency directs otherwise by returning
choose an option that could provide not appropriate to implement enrollment forms.
benefits to an alternate recipient. Recommendation #37 of the MCSWG. In response, the Department
The MCSWG in Recommendation #36 understands that some medical child
suggested that if some or all options E. Issuing Agency Responsibility To support orders are general in nature, in
under the plan are limited to specific Choose Enrollment Option part because such orders may be used to
geographic service areas, then (in The Department received several obtain coverage from a succession of
addition to sending the Plan comments that expressed concern employers and/or group health plans.
Administrator Response to the Issuing regarding the requirement that the However, where a plan has only one
Agency) the plan administrator should Issuing Agency choose from among option, there will be no need to make
provide information to the Agency that available options. Some of these a selection. This is reflected in the final
would allow that Agency to determine comments explained that there may be regulation. Further, in response to
whether the coverage would be inadequate staff to carry out this comments, under the final regulation,
accessible to the child, although if the function, that such interaction may even if there are multiple options under
child is outside the plan’s service area, cause delays in enrollment, and that the plan (e.g., a fee for services option
the plan administrator should be such interaction may hinder automation and a managed care option), if the child
instructed to enroll the child in the plan of the child support enforcement is already enrolled, enrollment will
unless the Agency notifies the plan system. One commenter requested that continue unchanged. Also, based on the
otherwise. The MCSWG suggested in the Issuing Agency not be made concerns expressed by State agencies,
Recommendation #37 that if the plan responsible for requiring the non- the final Notice does not provide the
administrator cannot determine the custodial parent to change coverage, Issuing Agency with the opportunity to
child’s zip code or location from the unless Federal legislation is passed that change the noncustodial parent’s
Notice, the plan administrator should be would require States to include this existing coverage. Therefore, if the
instructed to contact the Issuing Agency requirement in the State child support employee is already enrolled in an
to obtain sufficient information to enforcement plans. Several commenters option with dependent coverage, or
determine which options would be suggested, as an alternative, that in the with dependent coverage available, the
accessible to the child or to provide event multiple options are available, the plan administrator should enroll the
sufficient information to the Agency to plan administrator should contact one child with no further action by the
make such a determination. or both parents to choose an enrollment Issuing Agency. Thus, in most cases,
In response, the Department believes option. Another suggested alternative coverage will be provided
that the majority of these concerns will was that, in the event multiple options automatically, with no further
be alleviated because the addition of are available, the employer would involvement by the Issuing IV–D
automatic enrollments in the final provide the plan administrator with agency.
Notice decreases the likelihood that the information regarding withholding The Department recognized, however,
Issuing Agency will need to select limits (in this respect, Part A should be that there needed to be some
coverage. Furthermore, as discussed revised so that the Issuing Agency mechanism to implement Notices that
previously, the Department assumes clarifies the limit) and costs of options, are QMCSOs where the employee is not
that the parties, including the Issuing and the Notice should instruct the plan enrolled, the employer provides options
Agency, will have received adequate administrator to enroll the named child under a group health plan, and no
information regarding the required in the option that can be accommodated option is specified in the Notice.
contributions, benefit levels, and by the amounts that may be withheld in Because the Issuing Agency is enforcing
limitations (including geographic accordance with applicable withholding one parent’s child support obligations,
limitations) of the plan or plan options, limits. the Department believes that it is not
in the form of an SPD or other Others recommended that if the appropriate to permit either parent
documents provided by the plan named employee is already enrolled in alone to choose the coverage. The
administrator. In general, the family coverage and the named child is Department also does not believe it is
Department believes that the Notice will in the plan’s service area, then the plan feasible to adopt the suggestion that the
be used most efficiently when it remains administrator should be instructed to plan administrator choose the
as short and simple as possible, and enroll the child in such coverage enrollment option because the
Department does not believe that the only coverage if it otherwise would not State laws described in section 1908 of
plan administrator should be required to provide such coverage. Another the SSA require plans and employers to
make such discretionary choices requested clarification regarding permit the custodial parent to enroll the
regarding coverage. The Department, whether a Notice could require child, with the implication that the
therefore, concluded that the choice enrollment of an employee and an court ordered group health coverage is
should be made by the Issuing Agency alternate recipient in two separate not dependent on the acquiescence of
on behalf of the child. Placing the plans. That commenter expressed the the employee, the noncustodial parent.
decision with the Issuing Agency also view that a Notice could require
Another commenter expressed the
may give that Agency the opportunity to enrollment in only one plan.
Under ERISA section 609(a)(4), a view that requiring an employee who is
adjust the cash/medical obligation, in
QMCSO cannot require a group health presently enrolled in a plan to change
order to make appropriate coverage
plan to offer a type or form of benefit options from individual coverage to
available, and to take into account any
not otherwise provided under the plan, include dependent coverage might be
assignment of rights to the Medicaid
except as required by a State law inconsistent with Treasury regulations
agency.
Lastly, the Notice now provides that enacted pursuant to section 1908 of regarding permissible election changes
if a group health plan offers options, SSA. Therefore, a plan is not required in ‘‘cafeteria’’ plans.
and the employee is not enrolled, and to provide dependent-only coverage if In response, the Department
the plan has a default option, the child the plan does not otherwise provide understands that final Treasury
should be placed in that option if the such coverage, or offer enrollment in regulations under section 125 of the
IV-D agency does not respond to the different plans, unless one plan offers Internal Revenue Code (IRC) permit a
plan administrator within 20 business dependent-only coverage. However, the section 125 ‘‘cafeteria’’ plan to change
days. Even if the plan does not provide Department believes that it is clear from an employee’s election to provide
a default option, the Department the passage of ERISA section 609(a) and coverage for a child who is a dependent
understands that the OCSE regulations, SSA section 1908 that Congress of the employee (including a child of
also published today, are designed to intended plans to enroll children either divorced parent 6 if a medical
ensure that the Issuing Agency will covered by medical child support child support order requires coverage
select an option promptly. However, in orders, if the parent is eligible, whether for the child).7 Likewise, a section 125
the event that the Issuing Agency does or not the parent is currently enrolled. ‘‘cafeteria’’ plan may permit a
not, the plan administrator may wish to Therefore, if a plan does not provide participant to make an election change
contact the Agency to ensure that each dependent-only coverage, it must enroll, to cancel coverage for such a child if a
child is placed in appropriate coverage without regard to open season medical child support order requires
as soon as reasonably possible. restrictions, the child and the parent
another individual to provide coverage
The Department recognizes that, covered by the Notice if otherwise
for such child.8
under these procedures, delays after the qualified.
Notice is deemed to be a QMCSO may B. Optional Enrollment C. ‘‘Unlawful refusal to enroll’’
occur in the rare instance that a plan Provision
Several commenters suggested that
does not have a default option and the
the regulation and the Notice should The Department received several
Issuing Agency does not respond
clarify that an employee may be comments regarding the ‘‘unlawful
promptly. The Department also
enrolled involuntarily if this is refusal to enroll’’ provision in the
recognizes that this part of the process
necessary for the enrollment of a named proposed Notice. One commenter
is not necessarily amenable to
child pursuant to a Notice. In contrast, requested that the regulation clarify
automation. This process nonetheless
other commenters objected to the whether open enrollment restrictions,
provides a child at least as great a
requirement that an employee may be such as those imposed by HMOs, could
chance of obtaining coverage as a child
enrolled involuntarily in a plan if this be applied to enrollment pursuant to a
covered by a private QMCSO, or as a is necessary for enrollment of an
child receiving enforcement services Notice. Another suggested that the
alternate recipient. Under such provision should further provide that
under the State child support circumstances, one commenter
enforcement system that existed before enrollment cannot be denied on the
suggested that the employee instead ground that a child has a preexisting
CSPIA. With a private QMCSO, there is should be given the right to enroll
no mechanism, unless the parents agree, condition that would otherwise make
voluntarily, but should not be forced to the child ineligible for coverage.
short of returning to the state court or enroll.
administrative agency that issued the The Department has carefully In response, the Department notes
order, to choose between available considered these comments and has that enrollments pursuant to a Notice
options. Prior to CSPIA, furthermore, decided to publish the final regulation are to be made without regard to open
State agencies often had difficulty as proposed. The QMCSO provisions season restrictions (which generally are
obtaining medical child support at all. clearly were enacted under the limited periodic opportunities to enroll
Nevertheless, the Department is assumption that the employee involved in the plan). This requirement is derived
soliciting comments regarding might not be enrolled in the applicable from SSA section 1908(a)(2) and (3).
approaches by which any remaining coverage. The Department does not
delays in providing coverage may be believe that Congress intended QMCSOs 6 See section 105(b) of the IRC.
reduced or avoided. to be given effect only where the
7 The Department notes that a flexible spending
arrangement (as defined in IRS proposed regulation
4. Enrollment in Coverage and Types of employee consents to enrollment. 26 CFR 1.125–2 Q&A 7(c), 54 FR 9460) or medical
Benefits Rather, it is the Department’s savings account (as defined in section 220 of the
interpretation that the underlying order IRC), which may be offered as part of a section 125
A. Type of Coverage establishing the medical child support ‘‘cafeteria’’ plan, that is subject to Title I of ERISA
is a group health plan as defined under ERISA
One commenter requested guidance obligation requires the plan section 607(a), and thus is subject to the
regarding whether a Notice would administrator to provide benefits in requirements of ERISA section 609(a).
require a plan to provide dependent- accordance with its terms. In addition, 8 See 65 FR 15548, 15552 (March 23, 2000).
However, new enrollees may be subject could challenge certain aspects of the child support order under ERISA
to pre-existing condition limitations.9 Notice qualification process. section 609(a), to the extent possible.
In response to the comment regarding Commenters requested guidance
D. Period of Coverage regarding what entity constitutes an
income withholding, the Instructions to
A commenter suggested that language the employer on Part A of the Notice ‘‘issuing agency’’ that is permitted to
should be added to the ‘‘period of explain that the employee may contest issue a Notice. One suggested that
coverage’’ provision so that the the wage withholding based on a ‘‘issuing agency’’ means the courts and
disenrollment of a child upon provision mistake of fact (such as the identity of IV–D or child support enforcement
of evidence that the order is no longer the obligor), and that to contest such agencies; others suggested that it means
in effect would be permitted only when enforcement, the employee should only IV–D or child support enforcement
such evidence is provided by the contact the Issuing Agency. State law agencies. Commenters, including the
Issuing Agency. Another commenter governs the circumstances under which MCSWG in Recommendation #27 of its
requested guidance on the meaning of the employee may challenge the Report, reasoned that the relevant
‘‘comparable coverage’’ in this underlying State court order that statutory provisions contemplate an
provision. establishes the support obligation. ‘‘issuing agency’’ that is a child support
The Department recognizes the Lastly, in response to the comment enforcement agency, and that such
concern raised by these comments. The regarding the qualification process, it is guidance will clarify that the specific
relevant provisions of the Notice require the Department’s view that the plan’s requirements contained in section
that coverage may only be terminated if QMCSO procedures should explain the 609(a)(5)(C) of ERISA will not apply
the plan administrator is provided employee’s ERISA remedies, including with respect to a Notice that is not
‘‘satisfactory’’ written evidence that the the information that the plan issued by IV–D Agency, and that only
support order is no longer in effect. In administrator’s determination whether a Notices issued by IV–D Agencies will be
response to the second comment on this notice is a QMCSO is a fiduciary act that deemed QMCSOs.
section, it is the Department’s view that is subject to challenge in Federal court In response, the Department notes
‘‘comparable coverage’’ as used in the under ERISA. that it is clear that CSPIA contemplates
‘‘period of coverage’’ does not mean that the Notice is to be issued by State
6. Effective Date and Use IV–D agencies. It is also clear, however,
identical, but generally means coverage
that is similar in scope to the current A. General use of the Notice that Congress did not intend to
coverage and that would provide invalidate existing or alternative child
Several commenters suggested that support enforcement efforts outside of
approximately the same type and extent the Notice should contain language
of coverage to the child or children. The the IV–D system. The obligations
clarifying that, pursuant to sections imposed by section 609(a)(5)(C) of
term ‘‘comparable coverage’’ appears in 401(e) and (f) of CSPIA, it is intended
section 1908 of the SSA, but is not ERISA apply only with respect to those
to effect enrollment in plans established Notices issued by State IV–D agencies.
defined. The Health Care Financing or maintained by state and local However, a Notice received from a
Administration (HCFA) is responsible governments and churches, which are source other than a IV–D Agency may be
for interpretations of those provisions of generally exempt from ERISA, as well as valid for purposes of enrolling a child.
the SSA, and it is the understanding of group health plans subject to ERISA. Plan administrators are advised that
the Department that HCFA intends to These commenters note that, in such orders are ‘‘medical child support
promulgate regulations that will include accordance with section 466(a)(19) of orders’’ as defined in ERISA section
a discussion of the term ‘‘comparable the Social Security Act, State child 609(a)(2)(B), that the procedures
coverage.’’ support enforcement agencies will be mandated by section ERISA 609(a)(5)(A)
E. Other Termination Matters required to send the Notice to an and (B) remain applicable with respect
employer regardless of whether the to such orders, and that if such orders
The Department received several group health plan maintained by that
comments related to the employee satisfy the ERISA requirements, they are
employer is subject to ERISA. These QMCSOs.
contributions necessary for coverage. commenters express concern that
Commenters requested guidance because the Notice refers specifically to B. Effective Date
regarding whether a plan would be ERISA, it may be misinterpreted as The NPRM proposed an October 1,
required to provide benefits if an applicable only to ERISA-covered plans. 2001, effective date for the final
employer cannot withhold a sufficient The Department agrees with this regulation, which coincides with the
amount because of the application of comment. The Notice has been revised earliest date on which States, under
withholding limits. to clarify its use with respect to church section 401(c)(3) of CSPIA (as amended
It is the Department’s view that if the plans and plans of state and local by section 4(b) of Pub. L. 105–306), will
necessary employee contributions governments. be required to use the Notice to enforce
cannot be made because of income A commenter asked whether a Notice the health care coverage provisions of
withholding limitations, the plan is would be effective for enrollment child support orders.
under no obligation to continue purposes if sent directly to a plan The Department received a number of
coverage. administrator by an Issuing Agency. comments related to the effective date of
5. Challenges The Department believes that most, if the regulation. One commenter
not all, States will continue the practice requested clarification as to when use of
A number of comments requested of sending medical child support orders, the Notice may begin. This commenter
clarification regarding how an employee including, when adopted by each State, noted that some States may begin to use
could contest income withholding or the Notice, to employers for the Notice prior to the proposed
enforcement, as is required under effective date of the Labor regulation.
9 Under section 702 of ERISA, as added by
CSPIA. However, if a plan administrator Commenters also requested guidance
HIPAA, enrollment cannot be denied because of a
preexisting condition, and section 701 of ERISA
receives a Notice directly from an regarding whether the promulgation of
limits the period for which such conditions can Issuing Agency, it should be the Notice would invalidate orders
affect eligibility for benefits. administered as if it were a medical being treated as qualified medical child
support orders prior to the effective under section 3(f)(4) of the Executive provides guidance to plan
date, and, in any case, whether a Notice Order. Consistent with the Executive administrators once Part B has been
would need to be issued with respect to Order, the Department has undertaken transmitted to a plan administrator. Part
these orders. These commenters also an assessment of the costs and benefits B incorporates the provisions of the
questioned whether a Notice may be of this regulatory action. The analysis is CSPIA as it pertains to the Employment
used to enforce only those child support detailed below, following a description Retirement Income Security Act
orders issued after the effective date of of the medical child support process (ERISA). Specifically, Part B would
the final Notice regulation. and its relationship to this regulation. implement section 609(a)(5)(C) of Title
Section 401(d) of CSPIA, which added I of ERISA, which was added by section
section 609(a)(5)(C) to ERISA, did not Overview
401(d) of CSPIA to provide specific
contain a delayed effective date as The medical child support process rules for plan administrators to follow
section 401(c)(3) does. The Department requires that a State child support upon receipt from an employer of Part
understands that some States will begin enforcement agency (State agency) issue B.
to use the Notice upon its final a notice to the employer of a For purposes of this economic
publication. The Department believes noncustodial parent, who is subject to a analysis, the Department estimated the
such use is permissible and has child support order issued by a court or benefits and costs of the regulation
therefore amended the effective date administrative agency, informing the relative to the costs of processing child
provision for the regulation to be employer of the parent’s obligation to support orders in the current
effective 30 days after publication. After provide health care coverage for the environment. The benefits and costs of
that date, if a plan administrator child(ren). The employer must then the rights conferred by the statute and
receives Part B from the employer, the determine whether family health care current practices for processing medical
plan administrator must operate in coverage is available for which the child support orders are included in the
accordance with section 609(a)(5)(C) of dependent child(ren) may be eligible, baseline and are therefore not
ERISA and 29 CFR 2590.609–2. The and if so, the employer must notify the considered benefits or costs of the
Department also believes that Congress administrator of each plan covered by regulation. These include the rights for
did not intend to invalidate previously the Notice. The plan administrator is enrollment in a plan, as well as
issued and qualified medical child then required to determine whether the increased health care coverage and the
support orders, and that Congress dependent child(ren) are eligible for attendant increases in claims costs faced
intended that the Notice could be used coverage under a plan. If eligible, the by employee benefit plans. The
to enforce orders issued prior to the plan administrator is required to enroll Department is not aware of any analysis
passage of CSPIA. the dependent child(ren) in an presently available that seeks to
appropriate plan. quantify the costs and benefits of the
Economic Analysis Under Executive Even with a medical child support medical support order provisions of
Order 12866 process in place, State agencies and CSPIA and, therefore, is not presenting
Under Executive Order 12866 (58 FR administrators of group health plans estimates of the costs and benefits of the
51735, Oct. 4, 1993), the Department have experienced difficulties in statute in conjunction with evaluating
must determine whether a regulatory obtaining medical coverage for children the incremental cost and benefits of
action is ‘‘significant’’ and therefore of noncustodial parents due to problems discretion exercised in the regulation.
subject to review by the Office of encountered in establishing what The Department’s analysis indicates
Management and Budget (OMB). constitutes a qualified medical child that the benefits of the regulation
Section 3(f) of the Executive Order support order (QMCSO). In response to substantially exceed the costs. There are
defines a ‘‘significant regulatory action’’ these and other problems affecting the two types of economic effects of the
as an action that is likely to result in a child support process, the Child regulation: (1) The more general and
rule (1) having an annual effect on the Support Performance Incentive Act of primarily indirect societal welfare gains
economy of $100 million or more, or 1998 (CSPIA) was enacted. associated with facilitating access to
adversely and materially affecting a As required by CSPIA, the health care for dependent children, and
sector of the economy, productivity, Department and HHS are jointly (2) the direct administrative benefits
competition, jobs, the environment, promulgating a uniform National and costs associated with implementing
public health or safety, or State, local or Medical Support Notice (Notice) to be standardized Notices. The new
tribal governments or communities (also used throughout the child support procedures will promote timeliness in
referred to as ‘‘economically process by State agencies, employers, processing medical child support orders
significant’’); (2) creating serious and plan administrators. This Notice is and accuracy in identifying a medical
inconsistency or otherwise interfering intended to simplify the issuance and child support order as a QMCSO, thus,
with an action taken or planned by processing of medical child support providing dependent children greater
another agency; (3) materially altering orders, provide standardized access to health care on a regular and
the budgetary impacts of entitlement communication between State agencies, timely basis. The new procedures will
grants, user fees, or loan programs or the employers, and plan administrators, and also increase efficiency and decrease
rights and obligations of recipients create a uniform process for the administrative costs per Notice that
thereof; or (4) raising novel legal or enforcement of medical child support. arise when a non-standardized notice
policy issues arising out of legal The Notice has two parts, Part A, the system is replaced by a standardized
mandates, the President’s priorities, or ‘‘Notice to Withhold for Health Care notice system.
the principles set forth in the Executive Coverage,’’ and Part B, the ‘‘Medical The Department’s analysis relies on
Order. Support Notice to Plan Administrator.’’ the basic assumption that plans incur a
Pursuant to the terms of the Executive The HHS regulation establishes baseline cost to process notices in the
Order, it has been determined that this procedures that would be followed once current manner. Each notice is assumed
regulation raises novel legal or policy the Notice has been transmitted by the to be unique, requiring individualized
issues arising out of legal mandates. State to the employer and by the effort. The first standardized Notice
Therefore, this regulation is employer to the plan administrator. received by a plan administrator is
‘‘significant’’ and subject to review Thus, the Department’s regulation expected to require the same time as the
unique notices previously received. In will result from standardization. The affected in the aggregate by the
addition, however, it is assumed that degree of the net benefit is a function of regulation due to the relative
many plan administrators will invest in the size of the plan. All large plans infrequency of their receiving medical
establishing new procedures upon (those with at least 100 participants) are child support notices.
receiving the first Notice in anticipation expected to benefit almost immediately, The estimated net benefits and costs
of offsetting this start-up cost in future as they are expected to receive multiple of the regulation in the first three years
savings associated with standardization. notices the first year, thereby recovering of implementation are summarized in
The processing time for each second their costs to implement new the table which follows. As shown, the
and subsequent Notice is assumed to be procedures through decreases in time regulation is estimated to result in
significantly reduced. Plan spent handling subsequent Notices. savings of $26.6 million in the first year,
administrators who do not have a An aggregate net benefit is also reducing total processing costs by nearly
reasonable expectation of receiving expected for smaller plans (those with one-half. The savings which accrue to
subsequent Notices are assumed to 10–99 participants) although the initial plans will increase over the years as a
simply continue to process Notices as costs associated with procedural progressively greater proportion of the
before and therefore to be unaffected by changes will be repaid through savings Notices yield savings. The analysis
the regulation. over a longer period of time. The indicates a net savings of $31.4 million
Based on its analysis, the Department benefits for this group is shown to grow in the second year increasing to $34.3
believes that significant net benefits will progressively larger over time. Very million by year three with a total
derive from the direct costs and benefits small plans (those with fewer than 10 aggregate savings of $92.3 million over
of the administrative efficiencies which participants) are not expected to be the period.
Cost of invest- Cost of proc- Net savings

Baseline cost ment under essing under under regula-
(millions) regulation regulation tion
(millions) (millions) (millions)
Year 1 .............................................................................................................. $62.3 $5.7 $30.0 $26.6

Year 2 .............................................................................................................. 62.3 3.5 27.4 31.4
Year 3 .............................................................................................................. 62.3 3.1 24.9 34.3
Years 1–3 ........................................................................................................ 186.9 12.3 82.3 92.3
The more general societal welfare response to this comment, it is the Costs of the Regulation
gains that are expected to arise from Department’s view that plan fiduciaries
improvements in the economic security must take appropriate steps to ensure The only cost of this regulation is the
and health of children are not taken into that plan procedures are designed to be start-up cost incurred by ERISA-covered
account in the summary of net benefits cost effective and to minimize expenses plans to set up procedures to conform
because they cannot be specifically associated with the administration of with the format of the Notice.11 This
quantified. A detailed discussion of the medical child support orders.10 The start-up process is assumed to require
development of estimated costs and Department believes the cost of one hour of a professional’s time at an
benefits follows. contracting out legal services, when it is hourly rate of $45. It is assumed that
cost effective and reasonable to do so, to plan administrators will complete this
Discussion of the Comments
be a baseline cost. If multiemployer work themselves, rather than purchase
As mentioned above, the Department plans contract out legal services, they services. The cost is incurred the first
made changes to the Notice to are currently incurring the cost when time a plan receives a medical child
incorporate the public’s comments. support order under the standardized
processing medical child support
These changes to the Notice, however, Notice format. For plans with 100 or
orders. As such, any legal costs
did not significantly decrease or more participants, this start-up cost is
increase the costs or benefits under the associated with the processing of such
an order that are reasonably and incurred entirely in the first year, since
regulation. every one of these plans receives its first
prudently incurred should be included
The Department did receive one standardized Notice in year one. The
in the baseline cost. Assuming that
comment about the assumptions used in start-up cost for these plans is $1.7
calculating the economic analysis. The multiemployer health plans continue
the current practice of contracting out million. Among plans with 10 to 99
commenter believed that, unlike other participants, each year a fraction
health plans, multiemployer health legal services to review the Notice when
it is cost effective and reasonable, this receives a medical child support order
plans would have outside counsel and incurs a start-up cost in response.
review the notices. Multiemployer also will be a cost under the regulation.
Thus, increasing the cost under the As a result, their aggregate start-up cost,
health plans are maintained pursuant to
regulation will offset any net savings estimated at $4.0 million in year one,
bona fide collective bargaining
that would result from increasing the falls over time. Plans with fewer than 10
agreements and for the benefit of
baseline cost. The result would be a net participants receive these Notices too
employees represented by a union in the
collective bargaining process. Based on change of zero. Therefore, for the infrequently to make the investment in
the current practice of having outside economic analysis, the Department has establishing cost effective procedures
counsel reviewing qualified domestic decided not to calculate multiemployer
11 Plans sponsored or maintained by State and
relations orders (QDROs), the health plan costs separately at higher
local governments and by churches are not subject
commenter believed that plan hourly rates. to Title I of ERISA pursuant to section 4(b)(1) and
administrators for multiemployer plans (2) of ERISA. However, such plans may be required
would have outside counsel review the 10 See Advisory Opinion 94–32, August 4, 1994, to comply with the Notice under section 401(e) or
notices for multiemployer plans. In footnote 4. (f) of CSPIA.
and will be unaffected by the Direct benefits of the Notice will fewer then 10 participants will not
standardized Notice. accrue to plans, State agencies, anticipate near-term savings and
employers, parents, and children. Part B therefore will not invest in new
Benefits of the Regulation
will reduce the inefficiencies inherent procedures but will continue to incur
The introduction of a uniform notice in current practice, which often require baseline costs, estimated at $2.3 million
with clear instructions may improve plan administrators to work with annually on aggregate.
health care quality for children by medical child support notices that differ Plans with 10 to 99 participants will
preventing delays and denials of from State to State and from individual invest in procedures when they receive
enrollment in group health care plans, to individual. Consequently, confusion their first Notice, and will recover their
thereby encouraging early intervention arises as to what constitutes a QMCSO, cost and realize net savings within a few
in the treatment of disease and illness. and often as a result, the medical years or less on average. On aggregate as
The social welfare loss resulting from support is not provided. Specifically, a group, these plans will realize net
uninsured children is well documented benefits will accrue to plan savings beginning in year three. Their
in economic literature. Based on administrators because they will all aggregate baseline processing costs are
analysis of the March 1999 Current receive a standardized Notice which is estimated at $7.6 million annually.
Population Survey conducted by the easy to comprehend and to administer. Under the regulation, their aggregate
Bureau of the Census, 15 percent of all This will limit the plans’ risk of combined costs of processing and
children (or 11.1 million) are currently exposure to errors in determining which establishing new procedures will
uninsured. The lack of private insurance orders are QMCSOs and lead to the decline from $11.4 million in year one
generally increases the likelihood that accurate identification of the dependent to $7.4 million in year three, with
needed medical treatment will be children eligible for enrollment in a savings increasing in subsequent years.
delayed or forgone, and that the group health plan. Finally, Part B will Plans with 100 or more participants
ultimate costs of medical treatment will promote one of the objectives of the will invest in new procedures in the
be shifted to public funding sources. child support process, which is to first year and will typically recover their
The link between uninsured children ensure access to medical care coverage cost and realize net savings in that same
and the deficiencies of the existing child for children. year. Their aggregate cost will fall from
support process is demonstrated in the In the first year of a standardized $52.4 million annually under the
legislative history of CSPIA.12 The Notice system, the total cost to private baseline to $22.8 million under the
legislative history indicates that there is employer group health plans of regulation in year one and to $18.3
a lack of effective communication of processing medical child support orders million in year two.
medical child support information is expected to drop from the current Except where noted to the contrary,
between the State agencies and plan level of $62.3 million to $35.7 million. the assumptions and methods
administrators. State agencies typically This estimate is derived as follows. underlying these estimates are the same
send employers an administrative notice HHS projects that there will be 1.2 as those underlying the Department’s
million new child support orders with estimates of the effects of its proposed
(that varies from State to State, and
collections each year. Adjusting this Notice regulation. These assumptions
sometimes among different counties or
figure to exclude orders received by and methods are detailed the Notice of
courts within a State) of an employee’s
employers with no ERISA-covered plans Proposed Rulemaking (64 FR 62054,
medical child support obligations,
or not offering family health coverage, November 15,1999).
which many plan administrators
contend do not comply with current and to add orders that are not new Alternative Approaches Considered
ERISA requirements. Although all child orders but that arise from job changes,
the Department of Labor estimates that A number of alternative approaches to
support orders are required to have a this regulation were considered. The
plan administrators of ERISA-covered
medical support component, only a first drafts of the Notice presented to the
group health plans will receive a total
reported 60 percent of all child support MCSWG consisted of two parts and
of 770,000 Notices annually. The
orders actually have this medical provided a number of defaults which
baseline cost (absent this regulation) to
support component. decreased the discretion required in
handle these notices is estimated to be
In addition, the legislative history responding to the Notice and was
$62.3 million annually. This assumes 1
cites a 1996 GAO review of State child particularly streamlined. This version
hour and 45 minutes processing time at
support enforcement programs which was rejected after members of the
a $45 hourly professional’s rate, plus 2
determined that at least 13 States were MCSWG noted that feedback to the
minutes in photocopying time at a $15
not petitioning to include a medical Issuing Agency regarding the nature of
clerical rate, and $0.37 for materials and
support component in their child coverage available and its effective date
postage per required response.
support orders, and 20 States were not The Department assumed that plans was essential to the effective
enforcing existing medical child support that invest in new procedures to process enforcement of medical child support
orders. The number of children who are standardized Notices will cut their obligations. A second version of the
uninsured as a direct result of failures processing time to 35 minutes. Whether Notice was developed which included
of this medical child support process is or how quickly ongoing savings from four parts and provided for more
unknown. However, any reduction in faster processing will offset the one-time responses to the Issuing Agency. Again
the number of uninsured children that cost of establishing new procedures will the MCSWG provided commentary,
can be accomplished by the regulation depend on how many Notices a plan responding that this version was too
will produce substantial benefits for the receives. The probability of a plan complicated and cumbersome. A third
health of those children, and preserve receiving a Notice in a given year is a version of the Notice was developed.
public resources for those without function of the number of participants This version provided feedback to the
access to private coverage. in the plan. The probability is low for Issuing Agency, yet it was more
12 144 Cong. Reg. S7318 (daily ed. June 26, 1998)
very small plans, but high for large streamlined and comprehensible. It
(Legislative History of Senate and House plans. enabled the Issuing Agency to select the
Amendemnts to the Child Support Performance and Following this reasoning, the coverage that would ultimately be
Incentive Act of 1998, ub. L. No. 105–200). Department concluded that plans with provided to the child(ren) from the
options available to the participant/ the number of instances among those believes that assessing the impact of this
noncustodial parent. Enabling Issuing plans in which it is reasonable for plans rule on small plans is an appropriate
Agencies to make this selection, rather to use outside counsel to process the substitute for evaluating the effect on
than having the child automatically Notices is expected to be limited, the small entities. The definition of small
placed in a default coverage option, Department continues to consider its entity considered appropriate for this
ensured that the child would receive original hour and cost burden estimates purpose differs, however, from a
meaningful and accessible coverage to be appropriate. definition of small business based on
from among the particular options size standards promulgated by the Small
Regulatory Flexibility Act
available under the plan. The final Business Administration (SBA) (13 CFR
version, as published here, reflects more The Regulatory Flexibility Act (5 121.201) pursuant to the Small Business
streamlining. Also, some public U.S.C. 601 et seq.) (RFA), imposes Act (5 U.S.C. 631 et seq.). PWBA
comments to the proposed regulation certain requirements with respect to solicited comments on the use of this
and Notice have been incorporated. For Federal rules that are subject to the standard for evaluating the effects of the
example, the Department simplified the notice and comment requirements of proposal on small entities. No
Notice by removing guidance available section 553(b) of the Administrative comments were received with respect to
to the parties elsewhere. For a complete Procedure Act (5 U.S.C. 551 et seq.) and the standard. Therefore, a summary of
discussion of comments, see above. which are likely to have a significant the final regulatory flexibility analysis
economic impact on a substantial based on the 100 participant size
Paperwork Reduction Act number of small entities. Unless an standard is presented below.
In accordance with the Paperwork agency certifies that a rule will not have PWBA is promulgating this regulation
Reduction Act of 1995 (44 U.S.C. 3501– a significant economic impact on a because it is required to do so under
3520)(PRA 95), the Department substantial number of small entities, section 401(b) of the Child Support
submitted the information collection section 604 of the RFA requires the Performance and Incentive Act of 1998
request (ICR) included in Part B, agency to present a final regulatory (CSPIA) (Pub. L. 105–200). CSPIA
Medical Support Notice to Plan flexibility analysis at the time of the requires the Department of Labor and
Administrator of the National Medical publication of the notice of final the Department of Health and Human
Support Notice (Notice) to the Office of rulemaking describing the impact of the Services (HHS) to jointly develop and
Management and Budget (OMB) for rule on small entities. Small entities promulgate by regulation a National
review and clearance at the time the include small businesses, organizations, Medical Support Notice (Notice). The
Notice of Proposed Rulemaking (NPRM) and governmental jurisdictions. content of the Notice is prescribed by
was published in the Federal Register For purposes of analysis under the the statute. Thus, as outlined in the
(November 15, 1999, 64 FR 62054). RFA, the Pension and Welfare Benefits economic analysis section of this
OMB approved the Notice under OMB Administration (PWBA) considers a preamble, the benefits and costs
control number 1210–0113. The small entity to be an employee benefit attributable to the regulation are those
approval will expire on January 31, plan with fewer than 100 participants. associated with the discretion exercised
2003. The basis for this definition is found in by the Department only in the format of
The Department solicited comments section 104(a)(2) of ERISA, which the Notice. The statute affords no
concerning the ICR in connection with permits the Secretary of Labor to regulatory discretion with respect to
the NPRM. The Department received prescribe simplified annual reports for application of the statutory
only one comment addressing its pension plans which cover fewer than requirements to entities of differing
burden estimates. Although the original 100 participants. Under section sizes. Nevertheless, analysis of the
burden estimates relied on the 104(a)(3), the Secretary may also impact of the regulation indicates that
assumption that all Notices would be provide for simplified annual reporting in the aggregate, small plans with
processed in-house by plan and disclosure if the statutory between 10 and 99 participants will
administrative staff, the commenter requirements of part 1 of Title I of benefit from standardization of medical
expressed the differing view that ERISA would otherwise be support Notices, and that net benefits to
multiemployer health plans will use the inappropriate for welfare benefit plans. these plans will grow progressively
services of outside counsel to process Pursuant to the authority of section larger over time. Very small plans, those
Notices, and incur greater costs as a 104(a)(3), the Department has with fewer than 10 participants, are not
result. The Department recognizes that previously issued at 29 CFR 2520.104– expected to be affected by this
in limited circumstances it may be cost- 20, 2520.104–21, 2520.104–41, rulemaking because it is assumed that
effective, and therefore reasonable, for 2520.104–46 and 2520.104b-10 certain due to the infrequency of their receipt
multiemployer health plans to employ simplified reporting provisions and of Notices, these plans will continue to
outside counsel to process medical limited exemptions from reporting and handle medical child support notices as
child support orders. However, to the disclosure requirements for small plans, they do in the existing environment.
extent that the use of outside counsel including unfunded or insured welfare The objective of the regulation is to
may have been cost effective for a plan plans covering fewer than 100 introduce Part B—Medical Support
due to the fact that the plan received participants and which satisfy certain Notice to Plan Administrator (Part B),
differing medical child support orders other requirements. which implements section 609(a)(5)(C)
from different States, or from different Further, while some large employers of Title I of ERISA, which was added by
counties or courts within a State, the may have small plans, in general most section 401(d) of CSPIA. Section
uniformity introduced by use of the small plans are maintained by small 609(a)(5)(C) of ERISA provides that a
Notice should reduce the need to use employers. Both small and large plans Notice is deemed to be a Qualified
outside counsel to determine whether may enlist small third party service Medical Child Support Order (QMCSO)
any particular Notice is qualified. providers to perform administrative if the plan administrator of a group
Because the number of multiemployer functions, but it is generally understood health plan which is maintained by the
health plans is small relative to the total that third party service providers employer of a noncustodial parent or to
number of plans (approximately 2,000 transfer their costs to their plan clients which the employer contributes,
of a total of 2.5 million), and because in the form of fees. Thus, PWBA receives an appropriately completed
Notice which meets the requirements small entities. The establishment of State representatives generally
for a qualified medical child support different compliance requirements or an supported the development of the
order under section 609(a)(3) and (4) of exemption from compliance for small Notice. They viewed the Notice as
ERISA (which provides the entities was not considered in light of necessary to overcome difficulties that
informational requirements for a the goal of this rulemaking. Differing State agencies had previously
qualified order and restrictions on new compliance schemes for small entities experienced in securing medical child
types of benefits). New ERISA section would frustrate the objective of support from group health plans
609(a)(5)(C) also establishes new providing a nationally uniform medical available to noncustodial parents. The
requirements for plan administrators to child support notice to be used by all Department agreed that the Notice was
enroll alternate recipient(s) in a group State Agencies and to be easily needed not only to comply with
health plan and to notify the identified by employers, plan CSPIA’s mandate to issue regulations,
appropriate state agency, noncustodial administrators and parents. but also to maximize access to private
parent, custodial parent and alternate group health insurance for children. The
recipient(s). Thus, the legal basis for the Federalism Statement Under Executive following discussion summarizes the
regulation is found in ERISA section Order 13132 major concerns of State agencies and the
609(a)(5); an extensive list of authorities When an agency promulgates a responses offered by the Department in
may be found in the Statutory Authority regulation that has federalism the final regulation.
section, below. implications, Executive Order 13132 (64 Early in the development of the
The direct impact of compliance with FR 43255, August 10, 1999) requires the Notice, State representatives on the
Part B of the Notice will fall upon agency to provide a federalism summary Working Group made recommendations
ERISA-covered group health plans. impact statement. Pursuant to section which guided the Departments in
Plans with 10 to 99 participants will 6(c) of the Order, such a statement must developing the format of the Notice.
benefit from a net aggregate reduction in include a description of the agency’s State representatives expressed a strong
costs under the standardized Notice consultation with State and local preference that the Notice resemble to
system. Their baseline cost to process officials, a summary of their concerns the extent possible the uniform Order/
Notices is estimated at $7.6 million, or and the agency’s position supporting the Notice to Withhold Income for Child
$85 per plan, annually. Under the need to issue the regulation, and a Support currently used by State
regulation, the combined cost to process statement of the extent to which the agencies to enforce child support orders.
Notices and establish new procedures to regulation meets the concerns of State They noted that this standardized
process standardized Notices will and local officials. This final regulation withholding form has facilitated child
decline from $11.4 million, or $127 per has been identified as having federalism support income withholding and is
plan, in year one to $7.4 million, or $83 implications within the meaning of the already familiar to employers. Also,
per plan, in year three. The savings will Order. State representatives requested that the
increase in subsequent years as the start- Notice include a feedback loop to the
up investment is recouped by more This regulation is mandated by Issuing Agency in the event that
plans. provisions of the Child Support coverage was not available to the
Plans with fewer than 10 participants Performance and Incentive Act (CSPIA) noncustodial parent through the
receive Notices infrequently and that were enacted in response to employer’s group health plan. The
therefore would be unlikely to recoup difficulties that State child support Departments agreed that incorporating
start-up costs from future savings from enforcement agencies had experienced both features would ease the
processing subsequent Notices. These in enforcing medical child support enforcement of medical child support
plans therefore are not expected to orders. In particular, many State obligations.
establish new procedures for processing agencies, as well as the National Child In comments received following the
standardized notices but will continue Support Enforcement Association, an publication of the proposal, State
to incur baseline costs of $2.3 million, organization representing State child agencies generally objected to the
or $81 per plan, annually. support enforcement agencies, requirement to choose from among the
The basis for these estimates is participated in the legislative process options available under the
summarized in the discussion of that resulted in CSPIA’s passage. CSPIA noncustodial parent’s group health plan.
Executive order 12866, presented above. provided specific guidance on the They also objected to the possibility that
No federal rules have been identified content of the National Medical Support selecting the most appropriate option
that duplicate, overlap, or conflict with Notice (Notice) and provided for the for the child could entail changing the
this regulation. As discussed previously establishment of the Medical Child noncustodial parent’s existing coverage.
in the economic analysis under the Support Working Group, which State representatives stated that they
Executive Order, a number of included seven representatives of State lacked the resources and expertise
alternatives to this regulation were child support enforcement directors and necessary to make such decisions and
considered. At least three distinct State Medicaid/SCHIP directors. This requested that the choice be either
versions of the Notice were developed group was tasked by statute to make automatic or made by another party. In
prior to arriving at this final version. recommendations based on assessments response, the Department included
Prior drafts were critiqued by the of the form and content of the Notice, several default options intended to
Medical Child Support Working Group, which it provided both prior to its automate the selection as much as
which included representatives from the issuance in proposed form as well as possible, minimizing the instances in
small business community. Based on during the comment period. In addition, which the Issuing Agency must choose.
commentary received from the Working approximately 15 State child support These default options have eliminated
Group and the general public, the enforcement agencies submitted the possibility that a noncustodial
Agencies feel that this version of the comments on the proposed regulation parent’s existing coverage would change
Notice provides the minimum independently during the comment based on a selection by the Issuing
information necessary to comply with period. These recommendations proved Agency. However, in cases where the
section 609(a)(5)(C) of ERISA and very helpful to the Departments in group health plan offers multiple
imposes the least economic impact on developing the final regulation. coverage options and the noncustodial
parent has not elected coverage, the clarify that, in any case in which such 2. The authority citation for part 2590
Department determined that it was most a waiting period applies, enrollment is revised to read as follows:
appropriate for the Issuing Agency to will be processed upon the satisfaction Authority: 29 U.S.C. 1027, 1059, 1135,
make the selection. The Department of the waiting period. When a shorter 1171, 1194; Sec. 4301, Pub. L. 103–66, 107
concluded that, in this narrow range of waiting period applies (less than 90 Stat. 372 (29 U.S.C. 1169); Sec. 101, Pub. Law
cases, the Issuing Agency is in the best days) the Plan Administrator Response 104–191, 101 Stat. 1936 (29 U.S.C. 1181);
position to make the selection includes a space for the plan Secretary of Labor’s Order No. 1–87, 52 FR
consistent with the best interests of the administrator to indicate when coverage 13139, April 21, 1987.
child. will become effective, accounting for 3. Part 2590 is amended by
In addition, in cases where the Issuing any remaining days in such a waiting redesignating Subparts A, B, and C as
Agency must choose a coverage option period. Subparts B, C, and D, respectively and
from several available under a group Regarding the type of health care
a new Subpart A is added to read as
health plan, State agencies requested coverage selection on Parts A and B,
follows:
that the Plan Administrator Response of several State agencies commented that
Part B of the Notice indicate whether many child support orders are general Subpart A—Continuation Coverage,
the various options serve geographically in nature and do not order specific types Qualified Medical Child Support
limited areas, and the additional cost to of coverage. They requested that this Orders, Coverage for Adopted Children
the participant to enroll the child(ren) portion of the Notice include a general
in each option. State agencies stated that selection such as ‘‘any health coverage § 2590.609–1 [Reserved]
this information would assist them in available’’ rather than requiring the
§ 2590.609–2 National Medical Support
making coverage selections. After much Issuing Agency to select from a specific
Notice.
deliberation, the Department decided type of coverage. The Department
not to require this information directly included such a selection in the final (a) This section promulgates the
on the Plan Administrator Response. Notice as well as guidance in the National Medical Support Notice (the
Instead the Department has included a regulation directing plan administrators Notice), as mandated by section 401(b)
requirement that the plan administrator to provide all available coverage where of the Child Support Performance and
provide descriptions of each option to the Issuing Agency has failed to indicate Incentive Act of 1998 (Pub. L. 105–200).
the Issuing Agency which include this any type of coverage. If the Notice is appropriately completed
information, such as summary plan and satisfies paragraphs (3) and (4) of
Small Business Regulatory Enforcement section 609(a) of the Employee
descriptions. In the interest of
Fairness Act Retirement Income Security Act
expediting the processing of Notices,
reducing the length of the Notice, and The rule in this action is subject to the (ERISA), the Notice is deemed to be a
easing the burden on plan provisions of the Small Business qualified medical child support order
administrators, the Department has not Regulatory Enforcement Act of 1996 (5 (QMCSO) pursuant to ERISA section
required plan administrators to U.S.C. 801 et seq.) (SBREFA), and has 609(a)(5)(C). Section 609(a) of ERISA
duplicate this information on the Plan been transmitted to Congress and the delineates the rights and obligations of
Administrator Response. Comptroller General for review. the alternate recipient (child), the
State agencies requested that the participant, and the group health plan
Unfunded Mandates Reform Act
Notice clarify that it applies both to under a QMCSO. A copy of the Notice
ERISA-covered and non-ERISA plans as For purposes of the Unfunded is available on the Internet at http://
intended by CSPIA. They commented Mandates Reform Act of 1995 (Pub. L. www.dol.gov/dol/pwba.
that non-ERISA plans may not honor the 104–4), as well as Executive Order (b) For purposes of this section, a plan
Notice because much of the language in 12875, this rule does not include any administrator shall find that a Notice is
the proposed Notice referred to ERISA. Federal mandate that may result in the appropriately completed if it contains
In response, the Department included expenditure by state, local and tribal the name of an Issuing Agency, the
language in the Notice clarifying its governments in the aggregate, or by the name and mailing address (if any) of an
application to State and local private sector, of $100,000,000 or more employee who is a participant under the
government plans, as well as church in any one year. plan, the name and mailing address of
plans, and eliminated some of the Statutory Authority one or more alternate recipient(s)
ERISA legal terminology. (child(ren) of the participant) (or the
States requested that they be informed Sections 505 and 609(e) of ERISA name and address of a substituted
when a noncustodial parent is not (Pub. L. 93–406, 88 Stat. 894, 29 U.S.C. official or agency which has been
eligible for coverage under the 1135 & 1169(e)). Section 401(b) of substituted for the mailing address of
employer’s group health plan due to a CSPIA (Pub. L. 105–200, 112 Stat. 645). the alternate recipient(s)), and identifies
waiting period and that the Notice List of Subjects in 29 CFR Part 2590 an underlying child support order.
clarify the obligations of the parties (c)(1) Under section 609(a)(3)(A) of
Employee benefit plans, Health care, ERISA, in order to be qualified, a
when a waiting period applies. State
agencies noted that in the case of a long Medical child support, Pensions, medical child support order must
waiting period, it may be in the best Reporting and recordkeeping clearly specify the name and the last
interest of the child to attempt to secure requirements. known mailing address (if any) of the
alternative coverage during such a For the reasons set forth above, Part participant and the name and mailing
waiting period. The Department 2590 of Title 29 of the Code of Federal address of each alternate recipient
responded by including in the Plan Regulations is amended as follows: covered by the order, except that, to the
Administrator Response a mechanism extent provided in the order, the name
PART 2590—RULES AND
for the plan administrator to notify the and mailing address of an official of a
REGULATIONS FOR GROUP HEALTH
Issuing Agency that a long or State or a political subdivision thereof
PLAN REQUIREMENTS
indeterminate waiting period applies. In may be substituted for the mailing
addition, the preamble and the 1. The part heading is revised to read address of any such alternate recipient.
instructions on Part B of the Notice as shown above. Section 609(a)(3)(B) of ERISA requires a
reasonable description of the type of enrolled, the Issuing Agency will make (2) The Notice satisfies the conditions
coverage to be provided to each such a selection after the Notice is qualified, of ERISA section 609(a)(4) because it
alternate recipient, or the manner in and, if the Issuing Agency does not requires the plan to provide to an
which such type of coverage is to be respond within 20 days, the child will alternate recipient only those benefits
determined. Section 609(a)(3)(C) of be enrolled under the plan’s default that the plan provides to any dependent
ERISA requires that the order specify option (if any). of a participant who is enrolled in the
the period to which such order applies. (4) Section 609(a)(3)(C) of ERISA is plan, and any other benefits that are
(2) The Notice satisfies ERISA section satisfied because the Notice specifies necessary to meet the requirements of a
609(a)(3)(A) by including the necessary State law described in such section
that the period of coverage may only
identifying information described in 1908.
end for the alternate recipient(s) when
§ 2590.609–2(b). (e) For the purposes of this section, an
similarly situated dependents are no
(3) The Notice satisfies ERISA section ‘‘Issuing Agency’’ is a State agency that
longer eligible for coverage under the
609(a)(3)(B) by having the Issuing administers the child support
terms of the plan, or upon the
Agency identify either the specific type enforcement program under Part D of
of coverage or all available group health occurrence of certain specified events.
Title IV of the Social Security Act.
coverage. If an employer receives a (d)(1) Under ERISA section 609(a)(4),
Signed at Washington, DC this December
Notice that does not designate either a qualified medical child support order 15, 2000.
specific type(s) of coverage or all may not require a plan to provide any
Leslie Kramerich,
available coverage, the employer and type or form of benefit, or any option,
Acting Assistant Secretary, Pension and
plan administrator should assume that not otherwise provided under the plan,
Welfare Benefits Administration, Department
all are designated. The Notice further except to the extent necessary to meet of Labor.
satisfies ERISA section 609(a)(3)(B) by the requirements of a law relating to
instructing the plan administrator that if medical child support described in Note: The following appendix will not
appear in the Code of Federal Regulations.
a group health plan has multiple section 1908 of the Social Security Act,
options and the participant is not 42 U.S.C. 1396g–1. BILLING CODE 4510–29–P
[FR Doc. 00–32411 Filed 12–26–00; 8:45 am]

BILLING CODE 4510–29–C

Department of Labor: 2000032411

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Department of Labor: 2000032411

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Wednesday,

December 27, 2000

29 CFR Part 2590

Cost of invest- Cost of proc- Net savings

Year 1 .............................................................................................................. $62.3 $5.7 $30.0 $26.6

[FR Doc. 00–32411 Filed 12–26–00; 8:45 am]

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