On behalf of the Eastern Regional Interstate Child Support Association (ERICSA), the National Child Support Enforcement Association (NCSEA) and the National Council of Child Support Directors (NCCSD) we write to share with you a proposed definition of “reasonable cost” for the purpose of establishing a parental obligation to obtain health care coverage for a child receiving IV-D child support services. These national, non-profit organizations are dedicated to enhancing the well-being of children and families and represent all sectors of the child support community.
The Definition of Reasonable Cost
As you know, federal law requires state child support agencies to pursue provision of medical support in all child support orders whenever such support is available to the non-custodial parent “at reasonable cost.” Federal regulations issued in 1985 define “reasonable cost” for the purpose of establishing a parental obligation to obtain health care coverage in the following manner: “health insurance is considered reasonable in cost if it is employment-based or other group health insurance, regardless of service delivery mechanism.” 45 CFR 303.31(a)(1).
While it might have been appropriate in 1985 to define “reasonable cost” as employment-related or available through other group insurance, employer-based health coverage has changed and is considerably more expensive today. The GAO estimates that in 1980 51% of employers who offered family coverage fully subsidized the cost, but in 1993 only 21% of employers did so.
The Medical Child Support Working Group recognized that this definition no longer corresponds to the changing nature of the national health care landscape. Thus, after extensive analysis and deliberation, the Working Group recommended that the current Federal regulation that deems “reasonable” in cost all employment-related or group-based coverage should be replaced with a standard based on the cost of coverage relative to the income of the parent who provides the coverage. (See the Medical Child Support Working Group Report, Recommendation 9 and related discussion on pp. 3-11 to 3-16.)
During the past year, extensive dialogue has taken place within the child support community surrounding the definition of reasonable cost. In June 2002, ERICSA and NCSEA, in conjunction with the National Women's Law Center (NWLC), endorsed a background paper regarding reasonable cost. NCCSD also sent a letter to Senator Baucus of the Senate Finance Committee, endorsing the same definition that was included in the background paper.
The following definition has gained widespread consensus within the child support community:
States should have the authority to develop an income-based standard as a definition of reasonable cost, or adopt the 5% (of gross income) definition of reasonable cost, as recommended by the National Medical Support Working Group.
A revised definition of reasonable cost would allow state child support agencies to concentrate their efforts on creating enforceable orders and should not result in any revenue loss for state or federal governments, which have no share in medical support orders. A definition revised according to this proposal can benefit both families and states by ensuring that cash and medical support are provided to children by their parents and by preventing the creation of unenforceable medical support orders.
The attached proposal presents a reasonable cost standard that is intended to respond to the needs of the child support community to be able to establish and enforce medical coverage for children. It also conforms to the recommendation of the Medical Support Working Group while, at the same time, allowing a State the flexibility to designate a standard that meets its unique circumstances. See Attachment 1.
Conforming Regulatory Amendments
The proposed standard would replace only one subsection of the current Federal regulation on securing and enforcing medical support obligations. See 45 CFR 303.31(a)(1). The remainder of the regulation, however, would require additional revisions to conform to the proposed reasonable cost standard and the child support statute, as amended by the Child Support Performance and Incentives Act of 1998. Two such revisions are presented in Attachment 2.
In closing, the child support community is committed to improving the prospects of health care coverage for children receiving child support services and we welcome the opportunity to continue working together towards that goal. We strongly urge OCSE to take the necessary steps to promulgate regulations in accordance with the attached proposals.
Please contact Diane Fray, Chair, ERICSA Medical Support Subcommittee and President, NCCSD, at 860-424-5253 e-mail, dmf888@att.net to arrange a meeting or conference call to discuss the next steps for the implementation of our recommendations.
Attachments
ATTACHMENT 1
PROPOSED DEFINITION OF REASONABLE COST
Private1 health care coverage2 shall be presumed3 to be reasonable in cost
if
(1) the cost of such coverage4 relative to the gross income of the parent providing such coverage5 does not exceed five percent6
or
(2) the cost of such coverage does not exceed a percentage or a dollar amount so designated by a State7 using an income-based standard;
Provided, however, that the presumption of reasonable cost may be rebutted by either parent by demonstration that application of the percentage or dollar amount would be unjust or inappropriate in a particular case, based upon the best interests of the child.8
ATTACHMENT 2
PROPOSED CONFORMING AMENDMENTS
In addition to the proposed definition of reasonable cost, we propose the following conforming amendments to the Federal regulation at 45 CFR 303.31:
* Strike the term “health insurance” appearing throughout the regulation and insert in its place the term “health care coverage”;
* Examine whether the phrase “petition the court or administrative authority”, as it currently appears in paragraphs (b)(1), (2) and (4), is consistent with the statutory requirement at 42 U.S.C. 652(f) and should be modified to conform to that statute9.
1 The MCSWG Recommendation 9 pertains to private coverage.
2 Note that the term “health care coverage” is more technically correct than the term “insurance” used in the current regulation 45 CFR 303.31(a)(1).
3 The designated numeric percentage is amenable to automation and “presumed” to be reasonable, setting up the possibility of rebuttal in exceptional circumstances.
4 The cost of coverage may refer to either (a) the cost of adding a child to existing coverage or (b) the cost of obtaining new coverage that will include the child. In some cases, this cost may affect the calculation of cash support in accordance with a State’s child support guidelines.
5 See MCSWG Recommendation 9, proposing a cost/gross income standard.
6 The MCSWG recommends a flat 5% standard.
7 The alternative to the 5% standard is designed to allow for State flexibility.
8 The basis for rebuttal of the presumption of reasonable cost is modeled after the standard for rebuttal applicable to the child support guidelines. See 45 CFR 302.56(g). This language opens the door for relying upon inaccessibility of services or limited scope of coverage as a basis for rebutting the presumption of reasonableness, as well as a potentially adverse impact on the amount of cash support.
9 P.L. 105-200, §401(c)(2)(A), provided that "petition for inclusion of" be stricken and "include" substituted.