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California Affordable Care Act Child Support Workgroup Report

July 10, 2013Presented by the Child Support Directors Association of California

This report is written by HMS under contract with, and based on information and direction from, the Child Support Directors Association of California (CSDA) to lead a multi-disciplinary group though an analysis resulting in a set of specific recommendations relative to the integration of the Affordable Care Act of 2010 and California’s Child Support program. This report is based on assumptions and examples that may be only applicable to the California Child Support Program, and may not apply or be relevant to other programs, situations, or contexts. HMS is a publicly traded company (NASDAQ: HMSY) and is the strategic source for innovative cost containment solutions that benefit government and commercial healthcare program. The views expressed are solely those of the CSDA and do not necessarily reflect the views of HMS.

Executive SummaryCurrently, there are over 17 million children in the Child Support Program, and Child Support Enforcement Programs across the country play a vital role in determining if and how these children have health coverage. The passage of the Patient Protection and Affordable Care Act (ACA) in March 2010 has resulted in a number of stakeholders focusing resources and efforts to meet what has been a longstanding goal of Child Support programs—ensuring that children have healthcare coverage. As a result, it is critical that Child Support programs be fully engaged in ACA policy discussions and rulemaking in order to ensure that the needs of child support eligible children are met and those families in non-traditional structures are treated equitably.

The Child Support Directors Association of California (CSDA) took a proactive approach to this charge by forming a multi-disciplinary workgroup (the California Affordable Care Act Child Support Workgroup) that included representatives from CSDA, local child support agencies (LCSAs), CA State Department of Child Support Services (DCSS), Administrative Office of the Courts (AOC), and the Federal Office of Child Support Enforcement (OCSE).

The objectives of the Workgroup included the following:

» Review the ACA for its impact on California’s Child Support Program including state, local, and court-based operations;

» Lead the development of a comprehensive matrix of issues identified;

» Lead the development of a written gap analysis of major points where the ACA intersects with California’s Child Support Program;

» Lead the development of recommendations or actions required to either implement or mitigate the issues identified; and

» Examine and make recommendations on the “Future Role of the Medical Child Support program” at the national level in establishing and enforcing medical support orders as the ACA becomes operationalized.

Project consultants from HMS Consulting were hired to assist the Workgroup in this effort. Over a five-month period, a series of Workgroup meetings and conference calls were held to accomplish the objectives outlined above.

Key Recommendations

Based on the analysis conducted by the California Affordable Care Act Child Support Workgroup a series of recommendations were developed and separated into two parts: (1) actions needed within the California program and (2) actions needed at the national level to align and support the common goals of the ACA and Child Support.

California Affordable Care Act Child Support Workgroup Report – Executive Summary2

Recommended actions needed within the California Child Support Program:

1. Do not seek legislative changes prior to the January 2014 ACA implementation date.

2. Do not seek to amend current state laws unless federal child support regulations are amended.

3. Encourage Center for Medicare & Medicaid Services (CMS) and Department of Treasury to work closely with the Federal Office of Child Support Enforcement (OCSE) and state child support programs when developing ACA-related regulations or guidance in consideration of the added layer of complexities that families within the Child Support Program face.

4. Encourage tracking of federal regulations as they relate to the ACA and potential impact on the California Child Support Program, and encourage active participation at the national level to share California related experience and perspective.

5. Direct efforts to Federal Office of Child Support Enforcement (OCSE) and other state child support programs offering comments to encourage examination of individual states’ policy regarding the potential impact to child support caseloads under Medicaid Expansion requirements.

6. Direct efforts to California Department of Child Support Services (DCSS) and the California Department of Health Care Services offering comment and recommendations regarding the importance of collaboration for both programs. Include LCSA participation in collaboration meetings.

7. Support ongoing collaboration and shared initiatives between DCSS and the California Health Benefit Exchange and include Local County Child Support Agency (LCSA) participation in collaboration meetings.

8. Establish collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when medical support orders are established or modified after the implementation of the ACA.

9. Child Support Directors Association of California (CSDA) should lead the development of statewide LCSA training on the ACA and intersections with Child Support Program to support informed customer service after the implementation of the ACA.

10. Child Support Directors Association of California (CSDA) should lead the development of a work plan for the creation of FAQ and/or outreach materials to support program staff as they interface with parents, legal professionals, employers, Exchanges, and other child support stakeholders.

Recommended actions needed at the national level:

1. Create a national medical support workgroup to study and determine collaboratively the future of medical child support prior to the issuance of new program regulations.

Conclusion

As this report demonstrates, there is a common goal between the ACA and the Child Support Program to increase healthcare coverage for children and families. The Child Support Program has a history of meeting new challenges with innovation and success. The program has achieved this by keeping the well-being of the children and families served at the core of all decisions. The Child Support Directors Association of California (CSDA) believes that the Child Support Program will rise to the challenge and lead the country in the creation of a new medical support model that improves the well-being of children and families.

The Child Support Directors Association of California respectfully offers this report to the child support community to support the search for this solution.

California Affordable Care Act Child Support Workgroup Report – Executive Summary3

Table of ContentsExecutive Summary .............................................................................................................................................. 2Introduction .......................................................................................................................................................... 5Workgroup ........................................................................................................................................................... 7California Child Support Program ....................................................................................................................... 9Affordable Care Act Background ...................................................................................................................... 10ACA & Child Support Matrix ............................................................................................................................. 14Gap Analysis ....................................................................................................................................................... 15Future of Medical Child Support ....................................................................................................................... 21CSDA Responds to the Challenge ..................................................................................................................... 29Reference Documents ........................................................................................................................................ 31

Appendix A - Matrix .......................................................................................................................................... 33

Individual Mandate ....................................................................................................................................... 34 Employer Requirements ............................................................................................................................... 39 Medicaid Expansion ...................................................................................................................................... 41 Health Insurance Exchange .......................................................................................................................... 45

Appendix B - Gap Analyses ............................................................................................................................... 50

Gap Analysis – 1. Tax Exemption .................................................................................................................. 51 Gap Analysis – 2. Coverage Source .............................................................................................................. 56 Gap Analysis – 3. 5% v. 8% ........................................................................................................................... 61 Gap Analysis – 4. Coverage Gaps ................................................................................................................ 66 Gap Analysis – 5. Tax Penalty ....................................................................................................................... 69 Gap Analysis – 6. Employer Requirements ................................................................................................... 73 Gap Analysis – 7. Employer Reporting ......................................................................................................... 76 Gap Analysis – 8. Medicaid Expansion Overview......................................................................................... 81 Gap Analysis – 9. MAGI ................................................................................................................................ 84 Gap Analysis – 10. CHIP Reauthorization ..................................................................................................... 89 Gap Analysis – 11. Enrollment Simplification ............................................................................................... 91 Gap Analysis – 12. Health Insurance Exchange Overview ........................................................................... 94 Gap Analysis – 13. Tax Credits .................................................................................................................... 100 Gap Analysis – 14. Exchange, Streamlining Enrollment ............................................................................. 104

Appendix C - Others ........................................................................................................................................ 107

C1. 5% of Reasonable Compared to 8% of Household Income Scenarios ................................................ 108 C2. ACA Child Support Guideline Scenarios .............................................................................................. 111 C3. Premium Costs Taken Directly From Covered California Website ...................................................... 118

Glossary of Terms ............................................................................................................................................. 130Contacts ........................................................................................................................................................... 133

California Affordable Care Act Child Support Workgroup Report – Table of Contents4

IntroductionMedical Child Support” is the legal provision of medical, dental, prescription and other healthcare expenses and can include provisions to cover health insurance costs as well as cash payments. The first connection between medical support and child support came in 1977 as an attempt to recoup the costs of Medicaid to public assistance cases under Title XIX of the Social Security Act. Today, federal law and regulations require states to provide for children’s healthcare needs by obtaining health insurance or by other means. Health insurance responsibility can now be placed with either parent, and major initiatives have been undertaken during the past 30 years to improve medical coverage for children in the Child Support Program. The enactment of the 2010 Affordable Care Act (ACA) has significantly impacted the U.S. healthcare system and its participants; however, there are still many questions regarding its impact on the millions of families and dependents that are members of the Child Support system. Recent guidance issued by the Federal Office of Child Support Enforcement (OCSE) has indicated that the role of the program may experience a dynamic shift in agencies’ responsibilities.

California was the first state to enact Exchange legislation following passage of the ACA. Covered California™, California’s version of its state-based health insurance Exchange, is a marketplace where legal residents of the state of California can purchase healthcare coverage. During the month of October 2013, Covered California™ will “go-live” for open enrollment, offering qualified health insurance coverage plans (QHP) for review through the Covered California™ portal. Starting in January 2014, legal residents of California will be eligible to purchase health coverage. In addition, new government programs will offer financial assistance to lower the cost of health insurance including tax credits and cost-sharing subsidies.

Federal, state, and local government stakeholders are collectively attempting to analyze the impact that enactment and implementation of the ACA will have on programs they are entrusted to administer. Because the ACA essentially creates a mandate for each individual to secure health insurance for him or herself and minor child(ren), and creates new duties on government, employers, and individuals, it is important that California’s Child Support Program work in collaboration with other stakeholders to evaluate the ACA’s impact on the program.

In response, the Child Support Directors Association of California (CSDA) established a joint Workgroupto conduct an analysis of the ACA and its impact on California’s Child Support Program. Specifically, the Workgroup was charged with identifying all areas where the implementation of ACA intersects the Medical Child Support Program and conduct an analysis on those intersection points to determine the potential impact where the program does not align and to provide short-term and long-term recommendations.

California Affordable Care Act Child Support Workgroup Report – Introduction (1)5

Workgroup members included the federal Office of Child Support Enforcement (OCSE) including Region IX, the State Department of Child Support Services (DCSS), the Administrative Office of the Courts (AOC), and local county Child Support agencies (LCSA).

This report examines the intersections between the ACA and Medical Child Support requirements and identifies where the two programs do not align or may conflict, such as:

» Setting different standards of compliance in obtaining and maintaining health insurance coverage for IV-D case participants—Custodial Parent (CP) and Non-custodial Parent (NCP)—leading to confusion and potential ACA and medical child support compliance issues

» Potential loss of uniformity in the application of medical child support operating procedures across LCSA and family law courts

» Setting different health insurance enrollment standards for employers as they attempt to comply with ACA and medical child support requirements on behalf of their employees and dependents

Found in this report is an ACA & Child Support Matrix the Workgroup developed that identifies the 18 major intersections in an easy to read, side-by-side format.

In order to prepare for final recommendations, the Workgroup prepared 14 Gap Analyses of the intersections identified in the Matrix. (Some intersections are combined within a single Gap Analysis.) The Gap Analyses are independent studies of specific intersections and provide background and comment on potential legal conflicts, program role conflicts, policy and procedural impacts, and increased need for communication across programs. Each Gap Analysis offers an individual set of recommendations from the Workgroup.

As a final step, the Workgroup examined and made recommendations on the “Future Role of the Medical Child Support program” at the national level in establishing and enforcing medical support orders as the ACA becomes operationalized.

The report concludes with the Workgroup recommendations separated into California focus and National focus, including:

» How the California state and local child support enforcement agencies should proceed to prepare short-term mitigation strategies over the next 12-18 months as the ACA is operationalized in California.

» How federal, state, and local Child Support programs should proceed to develop a long-term strategy regarding the future of medical child support and its role within the mission of the Child Support Program to improve the program’s impact and effectiveness.

California Affordable Care Act Child Support Workgroup Report – Introduction (2)6

WorkgroupThe California Child Support Affordable Care Act Workgroup (Workgroup) was created in February 2013 by the Child Support Directors Association of California (CSDA) on behalf of its members to study and understand the Affordable Care Act (ACA) and the potential impact on California’s Child Support Program.

The CSDA was established in 2001 as a non-profit association to represent the local child support directors of California’s 58 counties. The Association strives to be of service to local child support agencies (LCSA) in their effort to ensure children and families have the financial, medical, and emotional support required to be productive and healthy citizens in our society.

The Workgroup was charged with creating a report that summarized their activities, findings, and recommendations by July 10, 2013 for submittal to CSDA Board for final approval. CSDA contracted with HMS to provide consulting services, facilitate Workgroup discussions and analysis, and to assist with the development of a final report.

The Workgroup met together in person six times and held five supplemental conference calls between February and June 2013. The group studied a variety of reference documents, reviewed federal and state guidance and regulations, and met with subject matter experts on the ACA, Health Insurance Benefit Exchanges, Medicaid, and the Child Support Program. The reference section of this report identifies many of these documents. As with any major piece of legislation the regulatory landscape is constantly evolving. During the Workgroup’s 5-month deliberations, numerous proposed and final regulations and guidance documents were released for consideration and analysis. The last release considered by the Workgroup came on June 26, 2013: CMS final regulation “Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions.” Workgroup documents were housed and produced on the Central Desktop document hosting website.

Workgroup membership was established by CSDA and included a balance of 10 representatives from LCSAs representing large and small counties from different regions within the State. Workgroup leadership and oversight was provided by David Oppenheim, CSDA Executive Director, and Chairperson Kathy Sokolik, Director, Santa Cruz/San Benito Regional.

The Workgroup also included Ad hoc participants from the California Department of Child Support Services (DCSS), Administrative Office of the Courts (AOC), and Region IX HHS Administration for Children and Families (ACF). Ad hoc participants attended the Workgroup meetings in an advisory capacity. The recommendations in this report are those of CSDA and may not necessarily reflect those of the organization the Ad hoc members represent.

California Affordable Care Act Child Support Workgroup Report – Workgroup (1)7

Workgroup Roster

» Lori Cruz – Deputy Director, Los Angeles County

» Natalie Dillon – Assistant Director, Yolo County

» Kari Gilbert – Director, Fresno County

» Tim Hirschberg – Attorney, Ventura County

» David Oppenheim – Executive Director, CSDA

» Julie Paik – Director, Sonoma County

» Terrie Porter – Director, Sacramento County

» IIiana Rodriguez – Director, San Mateo County

» Tex Ritter – Director, Sierra/Nevada Regional

» Kathy Sokolik – Director, Santa Cruz/San Benito Regional

» Sharon Wardale-Trejo – Director, Merced County

Ad Hoc Participants

» Michael Wright – Supervising Attorney/Program Manager, Judicial Council of California— Administrative Office of the Courts

» Elise Wing – Acting Regional Program Manager, Region IX HHS Administration for Children and Families

» Vickie Contreras – Deputy Director, State DCSS

» Charles Mullinaux – Associate Governmental Program Analyst, Department of Child Support Services

» Jonathan Burris – Department of Child Support Services

» Lori Norman – Staff Services Analyst II, Merced County

Guest Attendees – Subject Matter Experts

» Jennifer Burnszynski – Director, Division of Technical Assistance Office of Child Support Enforcement (OCSE)

» David Maxwell Jolly – Chief Operations Officer at California Health Benefit Exchange

» Diane Stanton – Special Consultant for External Affairs, Covered California

» Arika Pierce – Division Vice President, Federal Government Relations, HMS

» Dana Robbins – Analyst, State Government Relations, HMS

HMS Contract Support

» Barbara Saunders – Vice President, Child Support Services, HMS

» Whitney Warrick – Senior Manager, Federal Government Relations, HMS

CSDA would like to thank all the Workgroup members and Ad Hoc participants for their commitment and service to the project. The findings and recommendations will serve to improve child support services provided to the children and families of California.

California Affordable Care Act Child Support Workgroup Report – Workgroup (2)8

California Child Support ProgramEstablished under Title IV-D of the Social Security Act, the Office of Child Support Enforcement (OCSE) provides the administrative and regulatory oversight of the program and states manage and operate the services provided directly to families.

In California, the Child Support Program is state-supervised and county-administered. The California Department of Child Support Services (DCSS) was established by AB 5421 and AB 1962 to be the agency responsible for the oversight and management of the California Child Support Program.

Child Support services are mandated for recipients of CalWorks and available to the general public through a network of 51 county and regional child support agencies referenced as Local Child Support Agencies (LCSAs). LCSAs provide services to approximately 1.4 million children and families. LCSAs locate noncustodial parents, establish paternity, establish and enforce support orders, modify support orders, and collect and pay out child support payments.

The California Child Support Program is the largest in the nation, serving approximately 10% of the nation’s child support cases.

The following March 2013 published statistics were provided to the Workgroup from DCSS:

The following is point-in-time data as of April 2013 and represents California IV-D caseload data provided to the Workgroup by DCSS. Data may not include all instances of public and private insurance. Summary data includes what the program knew at that point in time:

Total Number of Cases 1,318,705

Number of Current Assisted Cases 361,199

Number of Formerly Assisted Cases 657,262

Number of Never Assisted Cases 300,244

Number of Cases without Medical Support Ordered 852,411

Number of Children in CA IV-D caseload 1,381,121

Number of Children in CA IV-D caseload with public coverage only

636,332

Number of Children in CA IV-D caseload with private coverage only

138,583

Number of Children in CA IV-D caseload with a combination of both

173,169

Number of CA IV-D caseload with no known coverage

433,037

1Assem. Bill 542, 1998-1999 Reg. Sess., ch. 480, (Cal. 1999). 2Assem. Bill 196, 1998-1999 Reg. Sess., ch. 478, (Cal. 1999).

California Affordable Care Act Child Support Workgroup Report – California Child Support Program9

Affordable Care Act BackgroundIntroduction

The Affordable Care Act (ACA) was signed into law on March 23, 2010. The law seeks to increase access to affordable health insurance beginning in 2014 through a comprehensive set of provisions focused on expanding coverage, controlling healthcare costs, and improving the healthcare delivery system.

In order to level set the conversation and understand how the ACA interacts with the Child Support Program, the Workgroup spent their initial meetings hearing from experts on the ACA. In these meetings, the entire ACA was analyzed and discussed by Workgroup members and consultants in order to effectively understand which sections of the ACA would have an impact on the Child Support program as implementation nears.

The Workgroup found, with regard to the Child Support Program, the law does not contain any language that makes direct changes to the program; however, there are number of sections within the new law that will potentially impact the future of child support. As a result of these meetings, the Workgroup decided to further analyze the following four key sections of the ACA that were determined to have an effect on the Child Support Program: the Individual Mandate, Employer Requirement, Medicaid Expansion, and Health Insurance Exchanges.

» Individual Mandate: Requires that all Americans maintain a minimum level of health insurance coverage or pay a penalty (with some exceptions)

» Employer Requirements: Requires that large employers provide affordable insurance to full-time employees or pay penalties

» Medicaid Expansion: Allows states to expand their Medicaid populations with significant federal assistance

» Health Insurance Exchanges/Marketplaces: Requires that each state establish a health insurance Exchange where certain individuals and businesses can purchase affordable private health insurance

As with any legislation of this magnitude, the law has been met with a number of setbacks, regulation modifications, and subsequent changes. However, after overcoming a number of legal challenges at both the state and federal level, the ACA continues to be the law of the land. States and the federal government are moving at a swift pace to implement these new requirements on time—most of which have a January 1, 2014 deadline.

This portion of the report provides a high-level overview of the four sections of the ACA that the Workgroup determined would have the most impact on the Child Support Program.

California Affordable Care Act Child Support Workgroup Report – Background (1)10

Individual Mandate

Section 1501 of the ACA requires most individuals to maintain minimum essential coverage for themselves and their dependents or pay a penalty. Under the law, minimum essential coverage is defined as coverage under a government-sponsored plan, eligible employer coverage, individual coverage, and grandfathered health plans.

The law provides some exemptions from the mandate penalty, which apply to members of certain religious sects, unlawfully present individuals or those with a nonresident alien status, incarcerated individuals, members of Indian tribes, individuals who have suffered a financial hardship, and individuals who do not have access to affordable minimum essential coverage. This exemption applies to individuals whose required contribution for the lowest-cost self-only coverage is not more than 8% of his or her household income. Additionally, if an individual meets one of the exemption requirements, they must still pay the penalty for their dependents who lack coverage, unless the dependents also qualify for an exemption. Furthermore, with regards to the affordability exemption as it relates to dependents, the required contribution under the employer’s health plan is affordable if the employee’s required contribution for the lowest-cost option that would provide minimum essential coverage to his or her family members (i.e., family plan) is not more than 8% of his or her household income.

Employer Requirements

The ACA also includes a provision that subjects large employers—defined as those with at least 50 full-time employees or full-time equivalents—to penalties if they do not offer affordable health coverage. While the provision does not mandate that an employer offer health insurance to their employees, the ACA imposes penalties on large employers if they do not offer affordable health coverage that provides a minimum level of coverage to their full-time employees, or if at least one of their full-time employees obtains a premium credit through the newly established health insurance Exchange. However, large employers are not subject to a penalty if their full-time employees are eligible for Medicaid or CHIP.

Under the employer provisions of the ACA, employer-sponsored coverage is considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.5% of the employee’s household income for the taxable year. The Internal Revenue Service (IRS) has provided a safe harbor for employers to use the employee’s W-2 income for this calculation since most employers do not readily have information on an employee’s household income. Additionally, employers have the flexibility to designate certain measurement or look-back periods (up to 12 months) during which they will calculate whether a worker is full-time or not. Moreover, the affordability of coverage for the employee’s dependents is based on the same test of self-only coverage (alternatively, the individual mandate uses the required contribution for family coverage).


Medicaid Expansion and Medi-Cal

The ACA requires all states to expand their Medicaid program to all individuals (including childless adults) earning up to 133-138% of the Federal Poverty Level (FPL). Under this provision, the federal government will pay 100 percent of the cost of all newly eligible Medicaid recipients in the state from 2014 to 2016. The federal government’s share will decrease to 95 percent in 2017, 94 percent in 2018, 93 percent in 2019, with the share further reducing to 90 percent beginning in 20223.

The June 2012 Supreme Court decision, however, deemed the Medicaid expansion requirement provision in the ACA unconstitutional, leaving the decision of whether to pursue Medicaid expansion to the individual governors and state legislators. As of this writing, approximately 23 states and the District of Columbia have decided to expand their Medicaid programs. A number of other states are still weighing their decision. The federal government is allowing states to make their expansion decision at any time with no deadline.

Following the passage of the ACA, California was one of the first states to embrace healthcare reform and immediately began work on implementation. Specifically, in November 2010, the Centers for Medicare and Medicaid Services (CMS) approved a California proposal to make several major changes to Medi-Cal, California’s Medicaid program administered by the state Department of Health Care Services (DHCS), and to expand county-based coverage programs for low-income, uninsured residents under what is called a “Bridge to Reform” waiver. This waiver allows state officials to pursue fundamental program changes intended to improve health outcomes, curb spending growth, and prepare the State for the sizeable expansion of Medi-Cal expected in 2014 under the ACA.

Currently, approximately 8.3 million Californians are covered by Medi-Cal, and more than one million new enrollees are expected beginning in 2014. Additionally, children who are currently in the Healthy Families Program—which will be eliminated by 2014—began transitioning into the Medi-Cal program at the beginning of 2013. It is expected that more than 850,000 children will make this transition. Further, another 240,000 to 510,000 Californians who are currently eligible, and not enrolled in the program are expected to enroll by 2019 due to increased awareness of coverage options provided by the ACA4.

After much debate as to whether California Governor Jerry Brown would adopt a county-based or state-based approach for Medi-Cal expansion, Governor Brown released his budget revision in May 2013, which proposes a statewide approach under which the state would expand its existing state-administered Medi-Cal program to cover the expansion population.

California Affordable Care Act Child Support Workgroup Report – Background (3)

3The Commonwealth Fund, Health Insurance Exchanges and the Affordable Care Act: Key Policy Issues, by T. S. Jost, July 2010 4See http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/MedicaidCHIP-Eligibility-Final-Rule-Fact-Sheet-Final-3-16-12.pdf

12

Health Insurance Exchanges and Covered California

The creation of online marketplaces, also known as health insurance Exchanges, was included in the ACA as a means to increase individual access to health insurance by providing consumers with a structured marketplace to purchase health coverage. These Exchanges may be established in one of three ways:

» A state-based Exchange where the state is responsible for creating and managing its own Exchange

» A state partnership Exchange where the state chooses to partner with the federal government to run the Exchange

» A federally-facilitated Exchange where the Department of Health and Human Services (HHS) manages the Exchange solely

At the time of this writing, 17 states have declared a state-based Exchange, 7 states are planning to run a partnership Exchange, and 27 are defaulting to the federal Exchange.

The ACA requires that the Exchanges be operational in every state by January 1, 2014, with the initial open enrollment beginning on October 1, 2013. Additionally, the ACA provides certain requirements for the establishment of Exchanges, while leaving other choices to up to the states5. Further, for those individuals who may not be able to afford a health plan in an Exchange, coverage will be subsidized for individuals in families with income between 100-400% of the Federal Poverty Level (FPL) who are not eligible for Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), or affordable employer-sponsored insurance. The ACA also states that any qualified health plan offered on the Exchange must also be offered as a corresponding child-only plan—open to those individuals who have not yet turned 21 at the start of the plan year—at the same level of coverage.

California was the first state to pass Exchange legislation following passage of the ACA. Covered California™, California’s version of its state-based health insurance Exchange, is a marketplace where legal residents of the State can buy health coverage. According to the Covered California™ site, as of 2014, approximately 2.6 million Californians will qualify for federal financial assistance and an additional 2.7 million who do not qualify for assistance will benefit from guaranteed coverage through Covered California™ or through an insurance company in the individual market. An estimated 2.3 million California residents will enroll in a health plan through Covered California™ by 2017. Starting in October 2015, Covered California™ will be open to employers with 100 or fewer full-time equivalent employees.

5The Lewin Group, Medi-Cal Facts and Figures: A Program Transforms, May 2013.


ACA & Child Support MatrixUpon concluding the study of the ACA and identifying the four key sections from the Act that will have a major impact on the Child Support Program, the Workgroup created an ACA & Child Support Matrix. The Matrix allowed the Workgroup to identify the intersections between the ACA, federal regulations, Office of Child Support Enforcement (OCSE) regulations, and California medical child support laws so that each section could be clearly defined and laid out in an easy-to-read table.

The ACA & Child Support Matrix (Matrix) can be found in Appendix A and is designed in the following way:

Sections

» Individual Mandate: Requires that all Americans maintain a minimum level of health insurance coverage or pay a penalty (with some exceptions)

» Employer Requirements: Requires that large employers provide affordable insurance to full-time employees or pay penalties

» Medicaid Expansion: Allows states to expand their Medicaid populations with significant federal assistance

» Health Insurance Exchanges/Marketplaces: Requires that each state establish a health insurance Exchange where certain individuals and businesses can purchase affordable private health insurance

Columns

» Column 1: Includes the provision of the ACA and/or related US code that the Workgroup determined may intersect or impact the Child Support Program delivery of medical child support services. The language in this column is taken directly from the ACA as originally passed in March 2010.

» Column 2: Includes relevant federal regulations or guidance from the Administration that clarifies or amends the law as written in the ACA in column 1.

» Column 3: Includes any Code of Federal Regulation (CFR) or guidance from OCSE that identifies the medical child support regulation that is most closely related to the ACA provision identified in Column 1.

» Column 4: Includes the most relevant California Family code or guidance regarding OCSE regulations identified in Column 3.

» Column 5: Identifies the intersection between the ACA and Child Support. The Workgroup further categorized these intersections based on the potential impact to the related medical child support service:

» Establishing a Medical Support Order (MSO)

» Enforcing an MSO

» Case maintenance

» Other

The completed Matrix, found in Appendix A, identifies 18 specific intersections that the Workgroup concluded will impact the Child Support Program’s delivery of medical child support services.

California Affordable Care Act Child Support Workgroup Report – ACA & Child Support Matrix 14

Gap AnalysisOnce the Matrix was completed, the Workgroup prepared 14 Gap Analyses based on the 18 major intersections identified in the Matrix. Some intersections were combined into a single Gap Analysis as the discussion and conclusions were parallel.

The Gap Analyses were created by the Workgroup as independent studies of specific intersections, providing background and comment on potential legal conflicts, program role conflicts, policy and procedural impacts, and the need for communication across programs. The Workgroup broke down the analysis into two major categories:

» Regulations: Identification and discussion of where federal and California Child Support regulations intersect, with a specific ACA section from the Matrix, and potential resolutions or recommendations

» Operations: Identification and discussion of where California local business practices, California Child Support Automated System (CCSAS) processes, and forms/documents intersect with a specific ACA section, and the potential resolution or recommendations

Each Gap Analysis offers its own individual set of recommendations from the Workgroup. As part of the decision-making process, each recommendation was weighed against the impact to California’s Child Support Program:

» Current law and regulation

» Implementation timelines

» Funding

» LCSA workload

» Automation

» Local business practice for the family courts and LCSA

California Affordable Care Act Child Support Workgroup Report – Gap Analysis (1)15

The Gap Analyses are numbered sequentially to link back to the Matrix for easy reference. They are located in Appendix B – Gap Analyses and briefly described as follows:

Individual Mandate – The five gap analyses under this section identify and discuss where parents may experience conflict in meeting their ACA and Child Support program responsibilities and provide mitigation strategies of increased collaboration with family law courts along with the development of LCSA training and materials for outreach.

1. Tax Exemption: Under the ACA, the individual responsibility provisions require each individual to have minimum essential coverage or pay a penalty. The individual who could claim the dependent on their federal income tax return is responsible for maintaining coverage for the dependent. Within the Child Support Program, which parent has the federal tax exemption does not play a significant part in the determination of who could be ordered to obtain healthcare coverage under federal child support regulations. The implementation of the ACA, adds a layer of complexity and possible conflict for individuals who are trying to meet both their personal responsibilities and medical support obligations under very different legal constraints.

2. Coverage Source: While Child Support benefit requirements align with the ACA and Covered California minimum essential coverage requirements, Child Support and the ACA do not clearly align regarding the coverage source for maintaining coverage. States are allowed to revise their definition of medical support to include public healthcare coverage, but it is at the point of establishing the medical support order that states face complex issues in the determination of which parent (or both) should be ordered to provide the heathcare coverage.

3. 5% v. 8%: Under the ACA for an individual or their dependent, the affordability exemption from obtaining coverage is defined as no more than 8% of household income. In California, the test for determining if the cost of healthcare coverage is reasonable is 5% of gross income. With the implementation of the ACA, having different standards for exemptions to obtaining coverage may lead to confusion and uncertainty for parents with child support cases, employers, LCSAs, and the courts. The Workgroup examined several income scenarios, found in Appendix C, to compare the different income standards and the possible impact to child support obligations. The Workgroup determined that California’s definition of “reasonable” for child support purposes is already codified in California Family Code and meets the current federal requirements. Without knowing what the future plans will be for the medical child support program at the federal level, redefining affordability would be premature on the part of the California Child Support Program.

4. Coverage Gaps: Under the ACA, a gap in coverage that lasts less than three months qualifies as a short coverage gap and the individual will be exempt from any penalties. In the Child Support Program, once a National Medical Support Notice (NMSN) has been served on an employer, it is the employer’s responsibility to maintain the coverage under NMSN requirements and report changes to coverage to the child support agency. For parents ordered to provide health insurance there are no penalties for gaps in coverage if employer-sponsored insurance (ESI) is not available, reasonable, or accessible. Allowing short coverage gaps that last less than three months places the Custodial Parent (CP) at risk of a tax penalty if the Non-custodial Parent (NCP) is ordered to maintain coverage and fails to do so. For parents involved in child support cases, having “maintaining coverage” requirements that differ may lead to confusion and uncertainty.

5. Tax Penalty: Under the ACA, an individual is liable for the shared responsibility payment (tax penalty) of his/her dependent if he/she claims or may claim the dependent on his/her federal income tax return. Under the Child Support Program it is the ordered parent’s responsibility to ensure that the dependent has healthcare coverage. It is a common scenario within the Child Support Program for the Custodial Parent (CP) to have the tax exemption and the Non-custodial Parent (NCP) who has the obligation to provide the insurance coverage. If the NCP fails to provide insurance coverage, the CP is at risk of having to pay a tax penalty. Federal guidance released on June 26, 2013 clarified that for a CP in the above scenario where the NCP has not enrolled the dependent in healthcare coverage, the CP would be eligible to claim a hardship exemption.


Employer Requirements – The two gap analyses found in this section identify and discuss employers’ new ACA requirements and how this may impact child support caseloads and interactions with employers in re-gards to meeting NMSN requirements.

6. Employer Requirements: Under the employer mandates, the ACA imposes an excise tax on large employers who fail to offer affordable coverage to their full-time employees. In regards to the Child Support Program, employers will still be required to honor National Medical Support Notices (NMSNs) and enroll an employee’s dependent if state law requirements of available, reasonable, and accessible are met. For the California program, it is anticipated that employers will be contacting local Child Support agencies seeking clarification regarding their responsibilities in relationship to the ACA mandates and NMSN requirements. In addition, parents may confuse the employer mandate to offer coverage to an employee and dependents up to the age of 26 and their medical support responsibilities until the age of emancipation and increase their contacts with the child support agency seeking clarification on their responsibilities.

7. Employer Reporting: Employers will be required to file annual reports with the IRS identifying each full-time employee and describing the coverage they offer to full-time employees and their dependents. Employers must also provide a statement to each full-time employee with information about the coverage available to the employee. Whether this data would prove to be useful to child support programs is unclear and will need to be studied as final reporting requirements are determined and reported data is gathered.

Medicaid Expansion – The four gap analyses found in this section identify and discuss the new mandates state Medicaid agencies are responding to and how this may impact child support caseloads and increased opportunities for collaboration.

8. Medicaid Expansion Overview: For states that implement Medicaid Expansion, respective Child Support Medical-Only referrals will increase. California was one of the first states to adopt Medicaid Expansion requirements. Already offering Medicaid eligibility up to 250% of poverty level for families/dependent, the California Child Support Program does not anticipate a significant increase in the IV-D caseload due to new federal Medicaid expansion regulations.

9. MAGI: The ACA makes the tax concept of Modified Adjusted Gross Income (MAGI) the basis for determining affordability of healthcare for individuals and their dependents. Under the ACA for an individual or their dependents, the affordability exemption from obtaining coverage is defined as no more than 8% of household income. MAGI income is the total of all types of income including within the household. In California, the test for determining if the cost of healthcare coverage is reasonable is 5% of a parent’s gross income. The application of different income sources between the ACA and the Child Support Program are particularly striking. The ACA definition draws in all members of an individual’s household. The Child Support Program is specifically focused only on the income of the individual who is a party to the child support case. The basis of the Child Support Program is to provide services to parents who live apart from their children. Income from new spouses or other household members including non-married relationships is intentionally disregarded. With the implementation of the ACA, having different standards for exemptions to obtaining coverage may lead to confusion and uncertainty for parents with child support cases, employers, LCSAs, and the courts.

10. CHIP Reauthorization: Funding for CHIP through September 30, 2015 (an additional two years compared to current law), continues the authority for the program through 2019, and requires states to maintain eligibility standards for children in Medicaid and CHIP through 2019. CHIP-eligible children who cannot enroll in the program due to federal allotment caps must be screened to determine if they are eligible for Medicaid and if not would be eligible for tax credits in a plan in the state Exchange. California has already begun to transition Healthy Family participants (Medi-Cal/CHIP) as part of statewide preparation for completing full Medicaid Expansion by January 2014.

17 California Affordable Care Act Child Support Workgroup Report – Gap Analysis (3)

11. Enrollment Simplification: While the Child Support Program was not specifically cited in the ACA as one of the mandated agencies under the enhanced coordination and communication requirements, HHS over the last several years has worked to create opportunities to improve information sharing, system integration, and program coordination among Center for Medicare and Medicaid Services (CMS), Administration for Children and Families (ACF), and the Food and Nutrition Services (FNS), with the goal of expanding access and improving outcomes. Having continued access to Medi-Cal eligibility data will assist child support-related case tracking and maintenance of effort. This data will also assist child support agencies in locating newly eligible adults party to a child support case.

Health Insurance Exchange – The three gap analyses found in this section describe the development of Exchanges and the intersections where parents may access the exchange to purchase healthcare coverage for their dependents and also may obtain tax credits and subsidies to offset the cost of the insurance. Also included are Workgroup comments and discussion on the increased opportunities for collaboration between the Child Support Program and Exchanges.

12. Health Insurance Exchange Overview: In 2010, California was the first state in the nation to enact legislation to implement the provisions of the federal Affordable Care Act by creating a healthcare marketplace—Covered California™. Covered California™ will offer child-only qualified health plans. Premium tax credits and cost-sharing subsidies are available for eligible individuals who purchase child-only plans. With Covered California™ in the final preparations to begin open enrollment in October 2013, the California Child Support Program has ready access to information and resources to study the impact of the ACA on the program in order to make informed decisions about the future of providing medical support services to the child support caseload. Collaborative relationships with Covered California™ and state/local Child Support programs are firmly established and discussions of shared initiatives have begun.

13. Tax Credits: Premium tax credits are available to individuals and families with incomes between 100% of the federal poverty level ($23,550 for a family of four) and 400% of the federal poverty level ($94,200 for a family of four) who purchase coverage in the health insurance Exchange in their state. To receive the credits, individuals must be U. S. citizens or lawfully present in the United States. They cannot receive premium tax credits if they are eligible for other “minimum essential coverage,” which includes most other types of health insurance such as Medicare or Medicaid, or employer- sponsored coverage that is considered adequate and affordable. Only individuals who may claim a dependent for federal tax purposes are eligible to receive a premium tax credit. This may place an ordered parent in a child support case at a financial disadvantage if they attempt to comply with a medical support order by obtaining coverage through a health insurance Exchange.

14. Exchanges—Streamlining Enrollment: Covered California™ will provide the access for individual family members to apply for health insurance affordability programs with each family member having a unique Client Identification Number (CIN). This practice will allow each family member to maintain continuity of coverage because the system can accommodate moving between public and private coverage options according to changes in status or qualifying events (pregnancy, recently unemployed, turned 65, etc.). Additionally, this capability will accommodate unique family dynamics such as one family member with employer-sponsored coverage, another on a Covered California™ qualified plan with a premium subsidy, and a child receiving Medi-Cal. Access to Exchange data may assist local California Child Support agencies in meeting not only medical child support requirements, but also may aid in location efforts. The Child Support Program provides services to individuals from all income levels. Unlike most social service programs, eligibility is not based on income. Officials from DCSS and California’s Health Benefit Exchange have started discussions about outreach initiatives to parents receiving child support services regarding the benefits of the health insurance Exchange.

18 California Affordable Care Act Child Support Workgroup Report – Gap Analysis (4)

Summary of Recommendations

The Workgroup’s gap analysis recommendations are California program-specific. As an early adopter of the ACA, California is on schedule to begin open enrollment in October of 2013 and to meet the January 2014 implementation requirements. CSDA members have a strong sense of urgency to prepare responsibly on behalf of their staff, customers, and interested stakeholders to meet the challenges that will impact the medical support services that are currently provided across the State as the ACA is implemented.

The recommendations provide a roadmap on how the California state and local Child Support enforcement agencies should proceed to prepare short-term mitigation strategies over the next 12-18 months as the ACA is operationalized in California. It should be noted that some recommendations were repeated across Gap Analyses.

The full details and justification for each recommendation can be found in the Gap Analyses provided in Appendix B. A summary of the recommendations is available on the following page.

The recommendations for the California program were a high priority for the Workgroup. They were thoughtfully researched and carefully deliberated by the group. The Workgroup urges CSDA membership and other interested California stakeholders to begin immediately and establish the suggested collaboration workgroups. It is also important to develop ACA training for LCSAs and outreach materials for courts, case participants, employers, and agency staff. With open enrollment through the Exchanges to begin in October 2013, preparations must begin now. The Workgroup has already created a work plan for outreach materials and has developed early stage drafts of call scripts for LCSA staff, as well as FAQs. These drafts have been made available to CSDA as a suggested starting point for further development.

California Affordable Care Act Child Support Workgroup Report – Gap Analysis (3)19 California Affordable Care Act Child Support Workgroup Report – Gap Analysis (5)

RecommendationApplicable

Gap Analysis

1 No short term legislative change are required prior to the January 2014 ACA implementation date. 1-14

2 No changes to current state laws unless federal regulations are amended. 1-14

3

Encourage CMS and IRS to work closely with OCSE and state child support programs when developing ACA related regulations or guidance in consideration of the added layer of complexities that families within the Child Support Program face.

5

4

Encourage tracking of federal regulations as it relates to the ACA and potential impact on the California Child Support Program and encourage active participation at the national level to share California related experience and perspective.

5

5

Share comments with OCSE and other state child support programs to encourage examination of individual states’ policy regarding the potential impact to child support caseloads under Medicaid expansion requirements.

8

6

Share comments and recommendations with DCSS and the California Department of Health Care Services regarding the importance of collaboration for both programs. Include LCSA participation in collaboration meetings.

11

7Support ongoing collaboration and shared initiatives between DCSS and the California Health Benefit Exchange and include LCSA participation in collaboration meetings.

14

8

Establish collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA.

1-5,9-13

9CSDA lead development of statewide LCSA training on the ACA and intersections with Child Support Program to support informed customer service after the implementation of the ACA.

1-14

10

CSDA lead development of a work plan for the creation of FAQ and/or outreach materials to support program staff as they interface with parents, legal professionals, employers, Exchanges, and other child support stakeholders. Establish a collaborative workgroup with DCSS.

1-14


Future of Medical Child SupportAs a final charge, the Workgroup examined the Future Role of the Medical Child Support Program in establishing and enforcing medical support orders as the ACA becomes operationalized. Informal discussions have already begun at the federal level, and four broad policy options have been identified by the child support community. As described more fully below, the Workgroup has discussed the impact of each of these options and the long-term impact each could have on medical child support going forward.

Historical Overview of Medical Child Support

While medical child support requirements have always been a part of the IV-D program, the service delivery complexities have historically caused this service to appear slightly removed from the core mission of the Child Support Program: to locate parents, establish paternity, establish orders, and collect support. Furthermore, because medical support enforcement has never been a part of the child support incentive program, improvements to medical child support services are often not a top priority at either the federal or the state level.

Improvements to the effectiveness of medical child support, however, have been attempted in the past. For example, in 1998, the Child Support Incentive Act (CSPIA) strengthened and expanded the program’s duties, emphasizing the importance of not only establishing medical support orders but also securing private healthcare coverage for children6. CSPIA standardized the communication between Child Support agencies and employers with the development of a National Medical Support Notice (NMSN). The use of the NMSN was required for all state programs and employers, and Plan Administrators were required to accept the notice as a Qualified Medical Support Order (QMSO).

As part of CSPIA, a medical support working group was established, and in 2000 published their report to Congress7. Explained in further detail in the CRS report to Congress, Medical Child Support: Background and Current Policy8, the medical support working group report identified impediments to the effective enforcement of medical child support and offered 76 recommendations for the development of a comprehensive medical child support system.

These recommendations included shifting the focus to both parents sharing the primary responsibility to meet their children’s healthcare needs, streamlining the process for establishing and enforcing medical support orders, and establishing performance measures and incentives for states to support program outcomes.

6P.L. 105-200 the Child Support Performance and Incentive Act of 1998.7 Department of Health and Human Services, Administration for Children and Families, Office of Child Support Enforcement, 21 Million Children’s Health: Our Shared Responsibility, the Medical Child Support Working Group, June 2000.

8CRS Report R43020, Medical Child Support: Background and Current Policy, by Carmen Solomon-Fears, March 21, 2013.

California Affordable Care Act Child Support Workgroup Report – Future of Medical Child Support (1)21

Subsequently, in July 2008, OCSE released AT-08-08 transmitting the release of the final rule, Child Support Enforcement Program-Medical Support9, which included many of the medical support workgroup’s recommendations. The final rule:

» Defined cash medical support

» Required that all support orders in the IV-D program address medical support

» Required that states consider health insurance available to either parent

» Redefined health insurance that is available at “reasonable cost”

» Required health insurance coverage to be “accessible”

» Allowed states to close child-only Medicaid cases under certain circumstances

» Made changes to federal substantial-compliance audit and state self-assessment audit to address medical support requirements

Though CSPIA also required HHS to develop a medical support incentive measure based on a state’s effectiveness in establishing and enforcing medical support orders, this final rule did not include a medical support incentive measure. As referenced in greater detail in the CSR report to Congress, Medical Child Support: Background and Current Policy, HHS did report to Congress in 1999 that a medical support incentive measure could not be set due to limited and invalid data.

Since that time, state Child Support programs continued implementation of the 2008 medical support requirements with varying degrees of success, hampered by lack of funding, competing priorities, and the complex issues surrounding the establishment and enforcement of medical support orders. According to the latest report to Congress, medical support was provided in only 32.9% of child support cases in which medical support was ordered10.

9AT-08-08 Final rule; Child Support Enforcement Program, Medical Support. 10 FY2011 Preliminary Report-Table P-33. OCSE, October 2012


Secure access to healthcare coverage or medical support for children12: » Update medical child support policy and programmatic practices to improve access to

healthcare coverage for children and their parents, and ensure child support agencies have the resources to meet their responsibilities

» Ensure that child support agencies have efficient access to necessary and appropriate private and public health coverage data

» Eliminate barriers and emphasize collaboration among child support, Medicaid, CHIP, state health Exchanges, and Indian Health Services

» Educate legislators and policymakers regarding the evolving role of child support in securing health coverage for children

With the passage of the ACA in March 2010, OCSE has issued guidance to state Child Support programs in the form of Action Transmittals (ATs) and Policy In Question (PIQs) in recognition of the difficulties states faced in implementing all of the required medical child support provisions. The guidance relieved states from making new investments in medical support enforcement to comply with regulatory requirements, allowed states greater flexibility, and encouraged collaboration with regards to the implementation of the ACA until it is determined if further legislative or regulatory changes may be necessary to update medical child support policy. The relevant ATs and PIQs listed below are available in the reference section at the end of this report:

» AT-10-02 SUBJECT: Holding States Harmless from Penalties for Failure to Comply with Medical Support Final Rule State Plan Requirements

» AT-10-10 SUBJECT: State Child Support Enforcement Program Flexibility to Improve Interoperability with Medicaid and CHIP

» AT-11-10 SUBJECT: Notice of changes to the OCSE-157 Form regarding Medical Support

» PIQ 12-02 SUBJECT: Partnering with other programs, including outreach, referral, and case management activities

With the release in April 2013 of the National Child Support Strategic Plan FY 2010–201411, Medical Child Sup-port still remains on OCSE and child support stakeholders’ priority list as one of the eight strategies to carry out the mission of the Child Support program and improve the program’s impact and effectiveness.

11National Strategic Plan 2010 - 2014 OCSE, April 201312National Strategic Plan 2010 - 2014 OCSE, April 2013


Medical Child Support Policy Option Discussion

Over the years, there have been numerous attempts through regulation to strengthen medical child support and remove impediments to increasing the number of children in the IV-D system with healthcare coverage. Despite continued efforts at both the federal and state levels, securing and maintaining medical coverage for children is resource-intensive and complex, resulting in only small incremental gains for the program.

The passage of the ACA allows the opportunity to examine, once again, the role best suited for the Child Support Program. Following a guiding principle that all children should have healthcare coverage at the fore-front and using the findings from the Matrix and Gap Analyses discussed in earlier sections, the Workgroup examined the possible role of medical child support post-ACA implementation.

Across the country, federal and state child support stakeholders are currently reviewing four broad policy op-tions for considerations.

The following are the Workgroup’s comments regarding the four potential policy options:

» None of Our Beeswax – IV-D program would no longer have responsibility for establishing or enforcing medical support orders

» Over the long run, relieves the Child Support Program of a significant body of work that isn’t incentivized

» Allows agencies to realign staff to focus on current performance measures

» Does not promote the goal of ensuring that all children have medical coverage; there are gaps in the ACA—some children would not have coverage

» Wouldn’t have to align child support provisions with the ACA provisions around affordability, availability, type of coverage, and enforcement related to the individual mandate

» Relieves employers of meeting medical support requirements, which may be different from or in addition to the ACA/IRS requirements

» Could eliminate or limit cost recovery opportunities through third party liability (TPL) for Medicaid, and lead to less opportunity for cost avoidance

» Allows for an easier customer service message with less confusion

» Child support role is shifting to serving the entire family. Ending all medical support program responsibilities will cause parents in IV-D caseload to seek assistance from other agencies that may not understand the complexities of their needs


» Show Me the Money – IV-D program’s primary role would be to establish guidelines that allocate

the dependent healthcare costs into appropriate financial orders

» Small cost of medical already built into CA income shares model ($100-$300 annually)

» Must determine whether to build cost of coverage into the child support obligation calculation, or add it as a separate obligation

» May positively impact Medi-Cal cost recovery efforts

» 45 CFR302.55 Medicaid incentive payments to states is a possible funding stream (15% of amount collected)

» Could be as simple as adding a set percentage to all NCP orders

» Orders would still need to address unreimbursed medical expenses (usually 50/50)

» IV-D program’s strength is collecting money

» This option may simplify the process in the long run

» Heavy lift would be initial development of guidelines calculation

» Any increase in the amount of child support ordered will affect state performance in current and arrears collections

» Would OCSE consider excluding cash medical orders from performance measurements?

» Any increase in the amount of child support ordered may impact collectability of orders

» Increasing the dollar amount to families allows for flexibility in decision-making for custodial parent

» Got Coverage? – IV-D program would cede most of its responsibilities to the IRS but would retain its traditional role of providing medical support services for parents who are exempt from ACA mandates

» New role would also include ensuring that children are covered by accessing various data sources to determine if coverage has been obtained

» This option would not necessarily include enforecement. For example, if coverage is not identified, provide outreach to parents

» IV-D responsibilities and performance expectations would need to be clearly defined

» Establishing data exchanges and matching procedures with Medi-Cal, IRS, and Exchanges presents technical challenges and would require major system resources

» Exception-based services can be complex to standardize across states and/or counties

» Would be difficult to track and monitor

» May be resource-intensive depending on federal requirements


» Full Treatment – The IV-D program would retain its current support responsibilities

» This option would likely include full implementation of many facets of the 2008 regulations

» Require data matching to monitor for ongoing coverage

» Require full enforcement. Dependent must be covered with either public healthcare coverage, Employer-Sponsored Insurance (ESI), or a qualified health plan (QHP) obtained through an Exchange

» Align with the ACA at state option where possible

» May cause interstate issues

» Very resource-intensive

» Would require stronger collaboration with Exchange to develop interface to assist in medical support order enforcement

In addition, the Workgroup identified the following considerations that must also be included for all four of the policy options under discussion:

» Knowledgable insiders within the child support community do not think it is likely that Congress would full eliminate medical support or healthcare coverage considerations from the program

» OCSE is not projecting any final regulatory changes for at least 12-18 months

» Child support program has a lot to offer in supporting the goals of the ACA:

» Expertise

» Best practices

» Automation

» Data

» Access

» Any change would involve developing a strategy for existing medical support orders and new orders, which would increase complexity

» Would states be required to have a standardized approach?

» Any change will be complex with a long implementation period (2-4 years or more)


» In all cases, changes would have to be made in the following areas:

» State laws

» Systems

» Forms and documents

» Guidelines

» Websites and materials

» Reporting

» Training

» Would OCSE provide support through increased funding to states to implement changes?

» Will states be incentivized to meet “new” medical support program requirements?

After careful consideration and study, the Workgroup concluded that each of the suggested models presents its own unique set of challenges. It is still unclear at this early stage of ACA implementation whether child support customers are best served if the Child Support Program plays a very active front line role in ensuring healthcare coverage for children in the IV-D caseload, or a support role to other agencies and programs designated by the ACA to ensure healthcare coverage for children. ACA implementation across the country over the next 12-15 months will be at a frantic pace. As an early adopter of the ACA, California is well positioned to meet its implementation goals and time frames, while other states may not be so fortunate. Because the ACA offers states flexibility in such things as Medicaid expansion and whether to set up their own state Exchange or use the federal Exchange, program uniformity may vary greatly across the country. These variations will affect child support-related program decisions.

As experienced by this workgroup during deliberations, through the remainder of 2013 and into 2014, ongoing releases of federal guidance and final regulations will continue to be transmitted, necessitating program adjustments and shifts in priorities. In addition, HHS will be deep in the process of assisting states in their implementation plans as well as implementing the federal Exchange. The IRS will be preparing for new data collection from employers and health insurance Exchanges, as well as establishing procedures for the assessment of possible tax penalties in 2015. Data from tax penalties will most likely not be available until well beyond 2015.

For these reasons, the Workgroup recommends that no final decision regarding the future of medical child support be made until ACA implementation is further along and there is experience and data to support changes to regulations and procedures.

The Workgroup strongly recommends that a coordinated commitment begin immediately with OCSE, state IV-D programs, and other child support stakeholders to develop a strategy that balances and aligns the mission of the medical child support program with the ACA. The Workgroup acknowledges that OCSE, a number of states, and child support-affiliated associations have begun similar discussions and are in early stages of deliberation and study. As this report points out, even without any regulatory changes, states need to prepare for open enrollment beginning October 2013 and its impact on customers and current medical support operating procedures.

The Workgroup recommends that OCSE establish a workgroup, much like the 2000 Medical Support Workgroup. The new workgroup should seek and forge partnerships with a variety of organizations from both the public and private sector to develop short- and long-term solutions regarding the future role of medical child support.


The following is a summary of the Workgroup’s Future of Child Support recommendations:

» No final decision regarding the future of medical child support should be made until ACA implementation is further along and there is experience and data to support changes to regulations and procedures.

» OCSE should establish a National Medical Child Support Workgroup

» Workgroup members should include a balance of:

» US Department of Health & Human Services Administrators

» State IV-D Directors

» Large and small states

» Regional balance

» Agencies from states that are early adopters of the ACA

» Local County IV-D Directors

» Tribal Program Directors

» State Medicaid Directors

» Organizations representing Child Support Professionals

» Judiciary and/or Legal Professionals

» Trade and Industry Representatives

» Child Advocacy Organizations

» Health Benefit Exchange Representatives

» Employers

» Plan Administrators

» National Medical Child Support Workgroup Charge

» Study the intersections between ACA and medical child support requirements

» Identify barriers to effective medical child support

» Provide ongoing guidance to states for short-term solutions pending formal regulatory changes

» Provide recommendations for the creation of a new medical child support model that address

» Balance and alignment with ACA

» Amending relevant law to reduce barriers

» Funding

» Automation

» State flexibility

» Reasonable implementation timeframes

» Guidance on procedures for managing medical support orders established prior to any regulatory changes


CSDA Responds to the ChallengeThe Child Support Program promotes parental responsibility so children receive financial, medical, and emotional support from both parents even when they live in separate households. Nationally, the program supports a fourth of the nation’s children (17 million) from all socioeconomic backgrounds. The California Child Support Program is the largest in the nation providing services to approximately 1.4 million children and families. To increase healthcare coverage for children, state Child Support programs are required to establish and enforce medical support orders for their caseload.

In an effort to increase access to affordable health insurance nationally, Congress passed the ACA, which provides a comprehensive set of provisions focused on expanding coverage, controlling healthcare costs, and improving the healthcare delivery system. Many of the expansion provisions from the ACA will be implemented in January 2014. These provisions will directly impact the children and families that are being served by the Child Support Program. This report is CSDA’s response to the challenges state and local programs will be facing.

In February 2013, the CSDA established an Affordable Care Act Child Support Workgroup made up of local California Child Support agency representatives as well as Ad hoc members from state DCSS, the Administra-tive Office of the Courts, and federal Child Support program experts. Over a five-month period the Workgroup analyzed numerous reference documents, reviewed federal and state guidance and regulations, and met with subject matter experts on the ACA, Medicaid (Medi-Cal), and health insurance Exchanges. The Workgroup created an ACA & Child Support Matrix to capture 18 key intersections between the new law and the Child Support program. Next, the Workgroup developed detailed gap analyses based on the intersection points to define the identified areas of impact and to support the Workgroup’s final recommendations.

After thorough deliberation the Workgroup separated the recommendations into two parts: (1) actions needed within the California program and (2) actions needed at the national level to align and support the common goals of the ACA and Child Support.

The California-specific recommendations focus on how state and local agencies should proceed to prepare short-term mitigation strategies over the next 12-18 months. Provided in detail in this report are recommenda-tions that offer mitigation strategies to:

» Support families in the IV-D program as they adjust to new individual mandates under the law

» Encourage collaboration with family law courts to develop interim solutions that support custodial and non-custodial parents as they navigate to comply with their medical support obligations and their ACA responsibilities

» Encourage continued collaboration between state and local child support agencies with California Health Benefit Exchange and state Health and Human Service agency to support the implementation of the ACA and the goals of the California Child Support Program

» Encourage tracking of federal regulations as it relates to the ACA and potential impact on the California Child Support Program and encourage active participation at the national level to share California-related experience and perspective

» Develop ACA training for LCSA staff so they may be better informed when responding to the needs of local IV-D cases

» Encourage increased collaboration with DCSS to develop FAQs and other outreach materials to support program staff as they interface with parents, legal professionals, employers, Exchanges, and other child support stakeholders

California Affordable Care Act Child Support Workgroup Report – CSDA Responds to the Challenge (1)29

The national recommendations focus on how federal and state Child Support programs should proceed to develop a long-term strategy regarding the future of medical child support and its role within the mission of the Child Support program. The recommendation calls for the formation of a national medical support workgroup to study and determine collaboratively the future of medical child support prior to the issuance of new program regulations.

As this report demonstrates there is a common goal between the ACA and the Child Support Program to increase healthcare coverage for children and families. While the methods taken to achieve this goal may be different, the Workgroup emphasizes that this link must be kept at the forefront of any discussion as efforts are made to align the programs.

The Workgroup believes it is too soon to make substantive program changes at both the state and national level. Rather this report strongly urges that federal and state decision-makers begin immediately to establish a multidisciplinary workgroup to gather data and study trends as the ACA becomes operationalized.

The Workgroup firmly believes there is a role for the Child Support Program that can support the implementation of the ACA. The Child Support Program has a history of meeting new challenges with innovation and success. The program has achieved this by keeping the well-being of the children and families served at the core of all decisions. CSDA believes that the Child Support Program will rise to the challenge and lead the country in the creation of a new medical support model that improves the well-being of children and families.

The Child Support Directors Association of California (CSDA) respectfully offers this report to the child support community to support the search for this solution.

California Affordable Care Act Child Support Workgroup Report – CSDA Responds to the Challenge (2)30

Reference DocumentsAT-08-08 - Final Rule: Child Support Enforcement Program Medical Support

AT -11-10 – SUBJECT; Notice of changes to the OCSE-157 Form regarding Medical Support

AT-10-10 - SUBJECT: State Child Support Enforcement Program Flexibility to Improve Interoperability with Medicaid and CHIP

AT-10-02 - SUBJECT: Holding States Harmless from Penalties for Failure to Comply with Medical Support Final Rule State Plan Requirements

California Laws Pertaining to Medical Support and Health Insurance Assignment Orders – created by the ACA and Child Support Workgroup June 2013

CFR & Medical support code cites – created by the ACA and Child Support Workgroup June 2013

CMS Notice of proposed rulemaking SUBJECT: Medicaid, Children’s Health Insurance, Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing., 78 Federal Register 4593 (22 January 2013) pp. 4593-4724

CMS SUBJECT: Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage Federal Register 78 Federal Register 22. (1 February 2013) pp.17900-17901

CMS Final Regulation Titled; Patient Protection and Affordable Care Act: Exchange Functions Eligibility for Exemptions: Miscellaneous Minimum Essential Coverage Provisions, Published June 26, 2013

CMS guidance SUBJECT: Guidance on Hardship Exemption Criteria and Special Enrollment Periods. Published June 26, 2013

Fact Sheet: Visualizing Health Policy. American Medical Association. Kaiser Family Foundation. March 2013

Frequently Asked Questions; California Health Benefit Exchange. Covered California, 2013. Print

Health Care Reform in Depth: Information for California Counties, UCDAVIS Extension, Center for Human Services. March 19, 2013

Health Plans & Rates for 2014: Making the Individual Market in California Affordable. Covered California, 2013. Print

Internal Revenue Service. Questions and Answers on Employer Shared Responsibility Provisions under the Affordable Care Act. 28 December, 2012

Maxwell Jolly, David. Cover California Overview. Presentation to the CSDA Annual Child Support Conference. Anaheim, CA. May 2013

Moore, Amy. IRS Clarifies Family Health Coverage Mandates. Health Plans, Welfare Plans Covington & Burling LLP, 25 February 2013

Office of Child Support Enforcement. National Strategic Plan 2010 – 2014. April 2013

Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions; Notice of proposed rulemaking, 45 CFR Parts 155 and 156 78 Federal Register 22 (1 February 2013) pp. 7348-7371

31 California Affordable Care Act Child Support Workgroup Report – Reference Documents (1)

Pierce, Arika. Affordable Care Act Overview. Presentation to the CA ACA Child Support Workgroup, Sacramento, CA. February 2013

PIQ-12-02 - SUBJECT: Partnering with other programs, including outreach, referral, and case management activities

Premium Tax Credits: Beyond the Basics. Presentation by Center on Budget and Policy Priorities 22 May 22 2013

Solomon-Fears, Carmen. U.S Congressional Research Service. Medical Child Support: Background and Current Policy, 21 March 2013

The 2013-14 Budget: Examining the State and County Roles in the Medi-Cal Expansion Legislative Analyst’s Office. Retrieved at: www.lao.ca.gov

U.S. Department of Health and Human Services. 21 million children’s health: Our shared responsibility—The medical child support working group’s report to Congress. Washington, DC: DHHS, August 2000

Washington Council Ernst & Young. Legislative Alert; Treasury, IRS Release Notice of Proposed Rulemaking on Health Care Law’s Employer Requirements. December 31, 2012

Washington Council Ernst & Young. The Affordable Care Act: Summary of Employer Requirements. February 2013

32 California Affordable Care Act Child Support Workgroup Report – Reference Documents (2)

Appendix A - Matrix

33

1. Tax Exemption

Part 1: Individual Responsibility Sec 5000(a) Require-ment to maintain minimum essential coverage: Beginning January 1, 2014, nonexempt individual must maintain “min essential coverage” for themselves and any nonexempt person who may be claimed as a dependent of the in-dividual or be subject to a tax penalty.

Who obtains coverage

The provision applies to individuals of all ages, including children and seniors. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible maintaining coverage for the dependent or making the payment if the dependent does not have coverage or an exemption.

If an individual with respect to whom the shared responsibil-ity payment is imposed for a month is another individual’s dependent for the taxable year including that month, the other individual is liable for the shared responsibility pay-ment for the dependent.

Definition of Dependent, as defined by US Code 26 USC Section 152: In the context of the individual mandate, a de-pendent is any individual whom an individual could claim as a dependent on his federal income tax return (whether or not he actually claims the dependent). If more than one person could claim a dependent, the person who actually claims the dependent (or who has priority to claim the dependent, if no one does) is responsible for the penalty.

Individual Mandate

ACA/ US Code IRS, CMS Proposed Final Rules & Guidance OCSE CFR & Guidance California Code & Guidance Intersections

CFR 303.31

The state IVD agency must:

(1) Petition the court or administra-tive authority to include private health insurance that is accessible to the child(ren), as defined by the State, and is available to the parent responsible for providing medical support at reasonable cost, as de-fined under paragraph (a)(3) of this section, in new or modified court or administrative orders for support;

CA Code 3751 Maintenance of Health Insurance Coverage

(2) In any case in which an amount is set for current support, the court shall require that health insurance coverage for a supported child shall be maintained by either or both parents if that insurance is available at no cost or at a reasonable cost to the parent.

(b) I f the court determines that health insurance coverage is not available at no cost or at a reasonable cost, the court’s order for support shall contain a provision that specifies that health insurance coverage shall be obtained if it becomes available at no cost or at a reasonable cost.

Establishing MSO

ACA - Individual who could claim child for federal tax purposes

Child Support - Either parent or both

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2. Coverage Source

Section 5000A( f) Minimum Essential Coverage–5000A(f): Minimum Essential Coverage (1) The term “minimum essential coverage” means any of the following: (A) GOVERNMENT SPONSORED PRO-GRAMS (Medicaid, CHIP, etc.) (B) EM-PLOYER-SPONSORED PLAN (included grandfathered plans) (C) PLANS IN THE INDIVIDUAL MAR-KET (coverage under a health plan offered in the individual market within a State) (D)GRANDFATHERED HEALTH PLAN (coverage under a grandfathered health plan) (E) OTHER COVERAGE

Individual Mandate


CFR § 303.31

(a) For purposes of this section:

(2) Health insurance includes fee for service, health maintenance organization, preferred provider organization, and other types of coverage which is available to either parent, under which medical services could be provided to the dependent child(ren).

3750.

“Health insurance coverage” as used in this article includes all of the following:

(a) Vision care and dental care coverage whether the vision care or dental care coverage is part of existing health insurance coverage or is issued as a separate policy or plan.

(b) Provision for the delivery of health care services by a fee for service, health maintenance organization, preferred provider organization, or any other type of health care delivery system under which medical services could be provided to a dependent child of an absent parent

Establishing MSO

ACA & Child Support - have similar definitions of minimum essential coverage

ACA - Public, ESI, Exchange

Child Support - Private coverage available through ESI or other entity

Definition of essential coverage

IRS FAQ clarifies: Minimum essential coverage does not include specialized coverage, such as coverage only for vision care or dental care, workers’ compensation, disability policies, or coverage only for a specific disease or condition.

CMS Proposed Rule 45 CFR Parts 155 and 156 clarifies: The Department of Health and Human Services (HHS) has authority to designate additional types of coverage as mini-mum essential coverage.

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3. 5% v. 8%

Section 5000A(e)(1) through5000A(e)(5) describe another category of indi-viduals who are exempt. These include: individu-als who cannot afford coverage (coverage is considered unaffordable if an individual’s contri-bution toward minimum essential coverage is more than 8% of the an-nual household income) taxpayers with income below the tax filing threshold (the amount required to file a federal tax return) members of Native American tribes, individuals who are not U.S. citizens, short coverage gaps, hardships exemption.

Section 5000A(d): The term “applicable individual” means, with respect to any month, an individual other than an individual described in paragraph (2), (3), or (4).(2)Religious Exemp-tions, (3)Those not lawfully present, (4)Incarcerated individuals

Individual Mandate


375 (a)(2)…

Health insurance coverage shall be rebut-tably presumed to be reasonable in cost if the cost to the responsible parent provid-ing medical support does not exceed 5% of his or her gross income. In applying the 5% for the cost of health insurance, the cost is the difference between self-only and family coverage. If the obligor is entitled to a low-income adjustment as provided in paragraph (7) of subdivision (b) of Section 4055, medical support shall be deemed not reasonable, reasonable, unless the court determines that not requiring medical sup-port would be unjust and inappropriate in the particular case.

(b) If the court determines that health insurance coverage is not available at no cost or at a reasonable cost, the court’s order for support shall contain a provision that specifies that health insurance coverage shall be obtained if it becomes available at no cost or at a reasonable cost.

Establishing MSO

ACA - Coverage costs greater than 8% of household income

ACA - Children not covered through ESI or health insurance Exchange could be picked up by public coverage

Child Support - Coverage costs more than 5% of ordered parents gross income or not available through ESI or other entity

Exemptions to obtaining coverage

IRS proposed rule IRS Proposed Rule 26 CFR Part 1 clarifies: Individuals who fall into one of the statutory exemption categories are not subject to a penalty for not maintaining coverage. The exempt individual, however, must still pay the penalty for any dependents who do not have coverage unless the dependents also qualifies for an exemption.

303.31

a) For purposes of this section:

(3) Cash medical support or the cost of private health insurance is considered reasonable in cost if the cost to the parent responsible for providing medical support does not exceed five percent of his or her gross income, at State option, a reasonable alternative income-based numeric standard defined in State law, regulations or court rule having the force of law or State child support guidelines adopted in accordance with § 302.56(c) of this chapter. In applying the five percent or alternative State stan-dard for the cost of private health insurance, the cost is the cost of adding the child(ren) to the existing coverage or the difference between self-only and family coverage.

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4. Coverage Gaps

5000A(e)(4) Months During Short Coverage Gaps: Individual will be treated as having mini-mum essential coverage for a month as long as they have coverage for at least one day during that month.

Individual Mandate


3866 Commencement of Coverage; Selection of Plan(a) The employer, or other person

providing health insurance, shall take steps to commence coverage, consistent with the order for the health insurance coverage assignment, within 30 days after service of the assignment order upon the obligor under Section 3764….

Enforcing MSO

ACA - Coverage lapses over three months

Child Support - Employer respon-sible for maintaining coverage Under NMSN as long as employee employed

Child Support - Coverage gaps are allowable if ESI is not available, reasonable, or accessible to ordered parent

Maintaining coverageIRS Proposed Rule26 CFR Part 1 clarifies: A gap in coverage that lasts less than three months qualifies as a short coverage gap and the indi-vidual will be exempt for any penalties. If an individual has two short coverage gaps during a year, the short coverage gap exemption only applies to the first or earlier gap in the individual’s taxable year.

CFR § 303.32 National Medical Support Notice.c) Mandatory procedures. The State must have in effect and use procedures under which:

(3) Employers must transfer the NMSN to the appropriate group health plan providing any such health care coverage for which the child(ren) is eligible (excluding the severable Notice to Withhold for Health Care Coverage directing the employer to withhold any mandatory employee contributions to the plan) within twenty business days after the date of the NMSN.

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5. Tax Penalty

Sec 5000A(b) Shared Responsibility Pay-ment: (b) 1. If an appli-cable individual fails to maintain min essential coverage for one or more months starting in 2014, unless they fall in the exemption category, they must pay a penalty.

Sec 5000A(c) Amount of Penalty: The annual penalty for not having minimum essential coverage will be the greater of a flat dollar amount per individual or a percentage of the individual’s taxable income. For any depen-dent under the age 18, the penalty is one half of the individual amount.

Individual Mandate


3768 Failure to Comply with a Valid As-signment Order

(a) An employer or other person providing health insurance who willfully fails to comply with a valid health insurance coverage as-signment order entered and served on the employer or other person pursuant to this ar-ticle is liable to the applicant for the amount incurred in health care services that would otherwise have been covered under the insurance policy but for the conduct of the employer or other person that was contrary to the assignment order.

(b) Willful failure of an employer or other person providing health insurance to comply with a health insurance coverage assignment order is punishable as contempt of court under Section 1218 of the Code of Civil Procedure.

Enforcing MSO

ACA - Individual who claims dependent on federal tax return is liable for the shared responsibility payment

ACA - 2014 is the greater of $95 per adult and $47.50 per child. Maximum of $285 per family or 1% of income over the tax filing threshold

Child Support - Responsibility to follow NMSN requirements is on the employer

Taken from NMSN noticePOSSIBLE SANCTIONS

An employer may be subject to sanc-tions or penalties imposed under State law and/or ERISA for discharging an employee from employment, refusing to employ, or taking disciplinary action against any employee because of medical child support withholding, or for failing to withhold income, or transmit such withheld amounts to the applicable plan(s) as the Notice directs. Sanctions or penalties may be imposed under State law against an employer for failure to respond and/or for non-compliance with this Notice.

Enforcement remedies /penalties

IRS Proposed Rule26 CFR Part 1 lists the annual penal-ties for 2014: The amount of any payment owed takes into account the number of months in a given year an individual is without coverage or an exemption.

2014 payment: Greater of $95 per adult and $47.50 per child under age 18 (maximum of $285 per family) or 1% of income over the tax-filing threshold

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6. Employer Requirements

Section 1513 Shared Responsibility for Employers Section d(2)(A): “Applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preced-ing calendar year.

6. Employer Requirements (continued)

Section 1513/Depen-dent CoverageSEC. 4980H (a): Large employer subject to penalty if they fail to offer to its full-time employees (and their dependents) the op-portunity to enroll in minimum essential cov-erage under an eligible employer-sponsored plan.


ACA/ US Code Federal OSCE Intersections

3866 Commencement of Coverage; Selection of Plan(a) The employer, or other person providing health in-surance, shall take steps to commence coverage, consistent with the order for the health insurance coverage assignment, within 30 days after service of the assign-ment order upon the obligor under Section 3764….3773.

(b) After the court has ordered that a parent provide health insurance coverage, the local child support agency shall serve on the employer a national medical support notice in lieu of the health in-surance coverage assignment order. The national medical support notice may be com-bined with the order/notice to withhold income for child support that is authorized by Section 5246. (c) A national medical sup-port notice shall have the same force and effect as a health insurance coverage assignment order.

Employers exempt from enrollment:• Employee is unknown to

employer• Do not offer dependent

coverage• Employee not eligible• Cost of premium exceeds

state or federal withholding limits

Establishing MSO

ACA - Employer mandates are based on employer size, coverage

ACA - Small employers are not subject to shared respon-sibility regulations

Child Support - Size of employer does not impact Medical support regulations

Child Support - Impact on number of employers that will no longer meet the definition of available and reasonable is unknown at this time

Enforcing MSO

ACA - Employers face tax penalties for non-compliance

Child Support - Employer requirements do not change, must enroll if coverage is available, reasonable, and accessible are met

Establishing MSO

ACA - Large employers must offer dependent coverage. There is not an affordability test for the cost of dependent

Child Support - Impact on number of large employers that will no longer meet the definition of available and reasonable is unknown at this time

California Code

IRS FAQ clarifies: The shared responsibility requirement applies to employers who had 50 full-time employees in 2013, or a combination of full-time and part-time employees that equals at least 50.

IRS Proposed Rule clarifies: In 2014, if an employer meets the 50 full-time employee threshold, the employer generally will be liable for an Em-ployer Shared Responsibility payment only if they do not offer health cov-erage to 95% of their full-time employees and at least one FTE receives a premium tax credit through an Exchange or the coverage offered was not affordable to the employee or meet minimum value requirements.

IRS Proposed Rule clarifies: Employers will be considered to have satisfied the requirement to cover dependents of full-time employees in 2014 if they take steps towards offering coverage to dependents during the 2014 plan year.The proposed rule requires that to be treated as “offering” coverage, an employer must offer coverage to its full-time employees and to their dependents. The IRS defines “dependents” for these purposes as the employee’s children as defined in IRC Section 152(f)(1) (i.e., the son, daughter, stepson, stepdaughter or eligible foster child of the employee) who have not attained age 26. A child would be a dependent until the day before his or her 26th birthday.

CFR § 303.32 National Medical Support Notice.

c) Mandatory procedures. The State must have in effect and use procedures under which:(3) Employers must transfer the NMSN to

the appropriate group health plan pro-viding any such health care coverage for which the child(ren) is eligible (exclud-ing the severable Notice to Withhold for Health Care Coverage directing the employer to withhold any mandatory employee contributions to the plan) within twenty business days after the date of the NMSN

CFR § 303.32 National Medical Support Notice.(a) Mandatory State laws. States must have laws, in accordance with section 466(a)(19) of the Act, requiring procedures specified under paragraph (c) of this section for the use, where appropriate, of the National Medical Support Notice (NMSN), to enforce the provision of health care coverage for children of noncustodial parents and, at State option, custodial parents who are required to provide health care coverage through an employment-related group health plan pursuant to a child support order and for whom the employer is known to the State agency.

Employers exempt from enrollment:• Employee is unknown to employer• Do not offer dependent coverage• Employee not eligible• Cost of premium exceeds state or federal

withholding limits

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7. Employer Reporting

SEC. 1514. Reporting of Employer Health Insur-ance requirements


ACA/ US Code Federal OSCE Intersections

Taken from NMSN formAn employer receiving this legal notice is required to complete and return Part A.1. This Notice was determined to be a “qualified medical child support order”, on ________. Complete Response 2 or 3, and 4, if applicable. 2. The participant (employee) and alternate recipient(s) (child(ren)) are to be enrolled in the following family coverage. a. The child(ren) is/are currently enrolled in the plan as a dependent of the participant. b. There is only one type of coverage provided under the plan. The child (ren) is/are included as dependents of the participant under the plan. c. The participant is enrolled in an option that is providing dependent coverage and the child(ren) will be enrolled in the same option. d. The participant is enrolled in an option that permits dependent coverage that has not been elected; dependent coverage will be provided. Coverage is effective as of __/__/____ (includes waiting period of less than 90 days from date of receipt of this Notice). The child(ren) has/have been enrolled in the following option ( if plan is insured, identify provider, policy and group numbers):_____________________. Any necessary withholding should commence if the employer determines that it is permitted under State and Federal withholding and/or prioritization limitations

Case Maintenance

ACA - Employer will report to IRS on W-2 coverage source and cost to employer

ACA - IRS will notify employers when em-ployees claim premium tax credits

Child Support - employer required to complete and submit Part A or B of the NMSN to issuing child support agency

California Code

IRS Proposed Rule clarifies: IRS will notify employers when their employees claim the premium tax credit and will give employers an op-portunity to respond.

Starting in 2015 (for coverage provided in 2014), employers will be required to file annual reports with the IRS identifying each full-time employee and describing the coverage they offer to full-time employees and their dependents. Employers must also provide a statement to each full-time employee with information about the coverage available to the employee.

When a lower-income person purchases individual coverage through an Exchange and claims a premium tax credit, the IRS will use the reported information to determine whether the person is eligible for affordable minimum-value coverage from his or her employer. If the person has em-ployer coverage, the person will not qualify for the premium tax credit. If the person is a full-time employee and does not have employer coverage, the employer might owe the excise tax.Reporting Employer Provided Health Coverage in Form W-2: The Afford-able Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.

The amount reported does not affect tax liability, as the value of the em-ployer excludible contribution to health coverage continues to be exclud-ible from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits so they can be more informed consumers.

Taken from NMSN form

An employer receiving this legal Notice is required to complete and return Part A.1. This Notice was determined to be a “qualified medical child support order”, on ________. Complete Response 2 or 3, and 4, if applicable. 2. The participant (employ-ee) and alternate recipient(s) (child(ren)) are to be enrolled in the following family coverage. a. The child(ren) is/are currently enrolled in the plan as a dependent of the participant. b. There is only one type of coverage provided under the plan. The child(ren) is/are included as dependents of the participant under the plan. c. The participant is enrolled in an option that is providing dependent coverage and the child(ren) will be enrolled in the same option. d. The participant is enrolled in an option that permits dependent coverage that has not been elected; dependent cover-age will be provided. Coverage is effective as of __/__/____(includes waiting period of less than 90 days from date of receipt of this Notice). The child(ren) has/have been enrolled in the following option ( if plan is insured, identify provider, policy and group numbers):___________________________. Any necessary withholding should com-mence if the employer determines that it is permitted under State and Federal with-holding and/or prioritization limitations

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8. Medicaid Expansion Overview

TITLE II – ROLE OF PUBLIC PROGRAMSSubtitle A – Improved Access to MedicaidSec. 2001. (a): Coverage for Individuals With In-come at or Below 133% of the Poverty Line- (VIII) Creates a new mandatory Medicaid eligibility category for all such “newly-eligible” individuals with income at or below 133 percent of the Federal Poverty Level (FPL) beginning January 1, 2014. Also, as of January 1, 2014, the mandatory Medicaid income eligibility level for children ages six to 19 changes from 100% FPL to 133% FPL. States have the option to provide Medicaid coverage to all non-individuals above 133% of FPL through a State plan amendment. Eligible individuals include: all non-elderly, non-pregnant individu-als who are not entitled to Medicare (e.g., childless adults and certain parents)

CMS Proposed Rule – Sec 15. Medical Support Payments: Proposed to allow an applicant to enroll in Medicaid prior to establishing paternity and obtaining medical support at ap-plication, but that enforcement of actual measures to cooperate happen following enrollment in coverage.

Medicaid Expansion


OCSE PIQ 12.02: Clarifies that certain activities are allowable child support expenditures under title IV-D of the Social Security Act (the Act) if they are incidental and related to establishing paternity, or establishing, modifying, enforcing, and obtaining support.

Medi-Cal – California’s Medicaid program

On January 1, 2014, Medi-Cal expansion will go into effect.

Federal government will pay 100% of the cost of this expansion from 2014 to 2016, gradually reducing the federal share to 90% of the cost by 2020.

Medi-Cal currently covers 7.6 million low-income Californians (children, parents, and pregnant women, seniors, disabled).

More than four out of five enrollees are children, youth, or women, and Latinos comprise over half of the caseload.

More than one million low-income Californians will be newly eligible for Medi-Cal under program expansion.

Medi-Cal enrollment projected to rise in 2013 as 853,000 children shift from the Healthy Families Program. Final shift no later than September 1.

Case Maintenance

ACA - Expands coverage for incomes at or below 133% of poverty

Child Support - No significant impact to child support caseload as Medi-CA eligibility is 250% of FPL for households with children

Child Support - No significant change to # of good cause/nonco-operation as CA program does not accept medical only referrals

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9. MAGI

INCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED GROSS INCOMESec. 2002.(a) Income eligibility for non-elderly determined using modified gross income: Beginning January 1, 2014, States required to use modified gross income to determine Medicaid eligibility, the same measure used in the State Exchanges. (b) Income disregards and (c) asset tests would no longer apply in Medicaid, except for long-term services and supports. Exist-ing Medicaid income counting rules would continue to apply for certain exempted groups including (1) individuals that are eligible for Medicaid through another pro-gram, (2) the elderly or Social Security Disabil-ity Insurance (SSDI) program beneficiaries, (3) the medically needy, (4) enrollees in a Medicare Savings Program, and (5) the disabled.

Medicaid Expansion


Definition of “reasonable”

Sec. 303.31 a) For purposes of this section:

(3) Cash medical support or the cost of private health insurance is considered reasonable in cost if the cost to the par-ent responsible for providing medical support does not exceed five percent of his or her gross income, at State option, a reasonable alternative income-based numeric standard defined in State law, regulations or court rule having the force of law or State child support guidelines adopted in accordance with § 302.56(c) of this chapter. In applying the five percent or alternative State standard for the cost of private health insurance, the cost is the cost of adding the child(ren) to the existing coverage or the difference between self-only and family coverage.

4058.

(a) The annual gross income of each parent means income from whatever source derived, except as specified in subdivi-sion (c) and includes, but is not limited to, the following:

(1) Income such as commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article.

(2) Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.

(3) In the discretion of the court, employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts.

(b) The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children.

(c) Annual gross income does not include any income derived from child support payments actually received, and income derived from any public assistance program, eligibility for which is based on a determination of need. Child sup-port received by a party for children from another relationship shall not be included as part of that party’s gross or net income

Establishing MSO

ACA - MAGI now standard used across programs

Child Support - Gross income is income standard

42


10. CHIP Reauthorization

ADDITIONAL FEDERAL FINANCIAL PARTICIPA-TION FOR CHIP.Sec. 2101(a): Provides funding for CHIP through September 30, 2015 (an additional two years compared to current law), continues the authority for the program through 2019 and requires states to maintain eligibility standards for children in Medicaid and CHIP through 2019.

CHIP eligible children who cannot enroll in the program due to federal allotment caps must be screened to determine if they are eligible for Med-icaid and if not would be eligible for tax credits in a plan in the State Exchange.

States will receive a 23%age point increase in their federal match rates beginning fiscal year 2016 through fiscal year 2019. This provision also increases outreach and enrollment grants by $40 million, makes some children of public employ-ees eligible for CHIP, and precludes transitioning coverage from CHIP to the Exchange without Secretarial certification. It also requires insurers in the Exchange to report to the Secretary on pediatric quality measures.

Medicaid Expansion


Healthy Families – (CA)

By September 1, 2013 approximately 853,000 children shift from the Healthy Families Program onto Medi-Cal. Currently on phase two of shift.

Case Maintenance

ACA - Shifting children in Healthy Families program to Medi-Cal

Child Support - Will allow increased collaboration between programs

43


11. Enrollment Simplification

Subtitle C – Medicaid and CHIP Enrollment SimplificationSec. 2201. Enrollment Simplification and Coordination with State Health Insurance Exchanges: Allows indi-viduals to apply for and enroll in Medicaid, CHIP or the Exchange through a State-run website. Requires State Medicaid and CHIP programs and the Exchange to coordinate enrollment procedures to provide seamless enrollment for all programs.

Medicaid Expansion


Medi-Cal will: Adopt a simpler standard for determining family income and eliminate the asset test for most Medi-Cal enrollees; allow Californians to apply for Medi-Cal through a website being developed by the HBEX; and adopt eligibility verification procedures that rely to the greatest extent possible on electronic data sources instead of paper documents.

Case Maintenance

ACA - Access to child support data for outreach efforts for Medicaid expansion

Child Support - Access to Medi-Cal data for newly eligible single adults with child support cases for locate purposes

Child Support - Updating case records regarding Medi-Cal eligibility status

CMS Proposed Rule – §155.345: Proposes enhanced coordination and communication between the Exchange and state Medicaid/CHIP agencies. Proposes a phased-in approach for the use of combined eligi-bility notices, with a January 1, 2015 deadline for Exchanges to imple-ment the use of a combined eligibility notice. Proposes that the agree-ment the Exchange enters into with agencies administering insurance affordability programs addresses the responsibilities of each agency to, as of January 1, 2015, in order to provide for a combined eligibility notice (to the extent feasible) promptly and without undue delay to an applicant and the members of his or her household. Proposes that prior to January 1, 2015, the Exchange include coordinated content into the notice of eligibility determination provided to the individual when state Medicaid/CHIP agencies transfer an individual’s account to the Exchange, or that the Exchange issue a combined eligibility notice when the Exchange is the last agency to make an eligibility determination, ex-cept for an eligibility determination for Medicaid on a non-MAGI basis.

§435.1205: Clarifies the alignment with Exchange initial open enroll-ment period. Proposes that during the period of October 1, 2013 to January 1, 2014, state Medicaid and CHIP agencies would accept the single streamlined application in use by the, as well as electronic accounts of individuals submitting applications to and transferred by the Exchange, and generally fulfill the responsibilities set forth in §435.1200 to effectuate enrollment of individuals in the appropriate insurance affordability program effective January 1, 2014. For eligibility effective in 2013, proposes that states either use the single streamlined application or in the electronic account, requesting any additional information from the individual needed, or inform the individual of the opportunity to submit a separate application and information on how to do so.

§435.1200: Medicaid agency responsibilities for coordinated eligibility and enrollment process with other insurance affordability programs.

To the maximum extent feasible, we propose that, effective January 1, 2015, individuals will receive a single notice communicating the determination or denial of eligibility for all applicable insurance affordability programs and for enrollment in a QHP through the Ex-change, rather than separate notices from the Medicaid and/or CHIP agencies and the Exchange.

In the absence of a combined eligibility notice, we propose that coordinated content is required to ensure that applicants and beneficiaries are informed of the status of their application with respect to other insurance affordability programs. Proposes provisions to coordinate appeals processes for states that either delegate authority to conduct appeals to an Exchange or retain the appeals function to reduce administrative and consumer burden. 44


12. Health Insurance Exchanges Overview

AFFORDABLE CHOICES OF HEALTH BENEFIT PLANS.SEC. 1311. (b) (1) American Health Benefit Exchanges: Establishes that each State shall, not later than January 1, 2014, establish an American Health Benefit Exchange that:(A) facilitates the purchase of qualified health plans;(B) provides for the establishment of a Small Business Health Options Program (SHOP Exchange)(2) MERGER OF INDI-VIDUAL AND SHOP EXCHANGES: A State may elect to provide only one Exchange in the State for providing both Exchange and SHOP Exchange services to both qualified ndividuals and qualified small employers, but only if the Exchange has adequate resources to assist such individuals and employers.

Health Insurance Exchanges


On January 3, 2013 California received conditional approval from the U.S. Department of Health and Human Services (HHS) for its state-based Exchange.

Covered California™ is working on a “Bridge Plan” as a solution for situations when people’s incomes place them on the line between Medi-Cal and Covered California subsidized coverage. The problem that arises in the scenario is continuity of care. The proposed Bridge Plan will promote continuity of care and affordability by altering contracts with Medi-Cal Managed Care Plans to extend to families whose income is between 138% and 200% of FPL.

3750. (b) Provision for the delivery of health care services by a fee for service, health maintenance organization, preferred provider organization, or any other type of health care delivery system under which medical services could be provided to a dependent child of an absent parent

Establishing MSO

ACA - Establishes Exchanges to facilitate the purchase of QHP

Child Support - Private coverage available through ESI or other entity

CFR § 303.31 (a) For purposes of this section:(2) Health insurance includes fee for service, health maintenance organization, preferred provider organization, and other types of coverage which is available to either parent, under which medical services could be provided to the dependent child(ren).

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12. Health Insurance ExchangesOverview (continued)

Subtitle D—Available Coverage Choices for All Americans PART I— Establishment of Qualified Health PlansSec. 1301. (a) Qualified health plan defined: Re-quires qualified health plans to be certified by Exchanges, provide the essential health benefits package, and be offered by licensed insurers that offer at least one quali-fied health plan at the silver and gold levels.

SEC. 1302. ESSENTIAL HEALTH BENEFITS RE-QUIREMENTS: Defines the Essential Benefit package as coverage that: (1) provides for the essential health benefits defined below; (2) limitscost- sharing as required below; and (3) provides either the bronze, silver, gold, or platinum level of coverage.



The Exchange released a draft report in July 2012 on QHP options and recommenda-tions based on stakeholder feedback. Initial recommendations on plan and network design included requiring all QHPs to offer all metal tiers, limiting each issuer to propose 2- 3 products per geographic region, and stan-dardizing family tiers and tier ratios.

3750. “Health insurance coverage” as used in this article includes all of the following:


(b) Provision for the delivery of health care services by a fee for service, health main-tenance organization, preferred provider organization, or any other type of health care delivery system under which medical services could be provided to a dependent child of an absent parent Covered California™ will have a child only plan.

Establishing MSO

CS/ACA - Minimum essential coverage requirements are similar

Establishing MSO

Child Support - Can access Covered California™ site to obtain premium costs when establishing MSO

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CFR § 303.31

(a) For purposes of this section

(2) Health insurance includes fee for service, health maintenance organiza-tion, preferred provider organization, and other types of coverage which is available to either parent, under which medical services could be provided to the dependent child(ren).


12. Health Insurance ExchangesOverview (continued)

SEC. 1302. (f) Child- ‐only Plans: If a qualified health plan is offered through the Exchange in any level of coverage specified under subsec-tion (d), the issuer shall also offer that plan through the Exchange in that level as a plan in which the only enrollees are individuals who, as of the beginning of a plan year, have not attained the age of 21, and such plan shall be treated as a qualified health plan.



Establishing MSO

ACA - Exchanges must offer at least one child only plan

Child Support - Child only plans may encourage ordered parents to utilize exchanges to seek coverage when ESI is not available

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13. Tax Credits

Subtitle E— Affordable Coverage Choices for All AmericansPart I—Premium Tax Credits and Cost-Sharing Reductions

Sec. 1401(a) Sec 36(b). Refundable tax credit providing premium assistance for coverage under a qualified health plan: Amends the Internal Revenue Code to provide tax credits to assist with the cost of health insurance premiums.

Sec. 1402. Reduced cost-sharing for individuals enrolling in qualified health plans: The standard out-of-pocket maximum limits ($5,950 for individuals and $11,900 for families) would be reduced to one-third for those between 100-200% of poverty, one-half for those between 200-300% of poverty, and to two-thirds for those between 300-400% of poverty. The plan’s share of total allowed costs of benefits would be increased to 90% for those between 100-150% of poverty (i.e., the individual’s liability is limited to 10% on average) and to 80% for those between 150-200% of poverty (i.e., the individual’s liability is limited to 20% on average). The cost-sharing assistance does not take into account benefits mandated by States.

Subpart b--eligibility determinations

Sec. 1411. Procedures for determining eligibility for Exchange participation, premium tax credits and reduced cost-sharing, and individual responsibility exemptions. The Secretary shall establish a program for determining whether an individual applying for coverage in the individual market by a qualified health plan offered through an Exchange, or who is claiming a premium tax credit or reduced cost-sharing, is a citizen or national of the United States or an alien lawfully present in the United States and meets the income and coverage requirements; whether an indi-vidual’s coverage under an employer-sponsored health benefits plan is treated as unaffordable; and whether to grant a certification attesting that, for purposes of the individual responsibility requirement, an individual is entitled to an exemption from either the individual responsibility requirement or the penalty imposed by such section.


ACA/ US Code CMS Proposed Final Rules & Guidance OCS OSCE CFR & Guidance Intersections

Covered California’s™ primary target population reflects 5.3 million Califor-nia residents projected to be uninsured or eligible for tax credit subsidies in 2014 (2.6 million who qualify for subsidies and are eligible for Covered California™ quali-fied health plans).

For those eligible for subsi-dies, their contribution to the total premium is fixed on a range between 2% and 9.5% of income.

Enforcing MSOACA - Individual may qualify for premium tax credit or subsidy through Exchange

Child Support - Individual could receive a tax credit and not be in compliance with MSO

Child Support - Ordered parent may be required to enroll child at exchange but not be eligible for tax credit

California Code & Guidance

IRS Final Rule: The premium assistance credit amount is calculated on sliding scale starting at two percent of income for those at or above 100% of poverty and phasing out to 9.8% of income for those at 400% of poverty. The reference premium is the second lowest cost silver plan available in the individual market in the rating area in which the taxpayer resides. The premium assistance credits do not take into account benefits mandated by States. Employees offered coverage by an employer under which the plan’s share of the total allowed costs of benefits provided under the plan is less than 60% of such costs or the premium exceeds 9.8% of the employee’s income are eligible for the premium assistance credit. This section also provides for rec-onciliation of the premium assistance credit amount at the end of the taxable year and for a study on the affordability of health insurance coverage by the Comptroller General.

CMS Proposed Rule – §155.320: Proposes that the Exchange incorporate SSA benefits when verify-ing annual household income for MAGI purposes. Proposes to clarify when additional verification is necessary to substantiate an expected increase in projected annual household income. Proposes to clarify the circumstances under which annualized current income data will be sufficient to support an expected decrease in projected annual household income (using the same 10% threshold from the Exchange final rule that is used when comparing with annual income data). CMS Proposed Rule – §155.310: Proposes changes that correspond to the change in §155.335 that specifies that the Exchange will re-determine eligi-bility on an annual basis for all qualified individuals, not only enrollees.

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14. Exchange, Streamlining Enrollment

Sec. 1413. Streamlining of procedures for enrollment through an Exchange and State Medicaid, CHIP, and health subsidy programs: Requires the Secretary to establish a system for the residents of each State to apply for enrollment in, receive a determination of eligibility for participation in, and continue participation in, applicable State health subsidy pro-grams. The system will ensure that if any individual applying to an Exchange is found to be eligible for Medicaid or a State children’s health insurance program (CHIP), the individual is enrolled for assistance under such plan or program.



Covered California™ will have the capability for individual family members to apply for different Health Insurance Affordability Programs. A family scenario could include a spouse on employer-spon-sored coverage, an individual on a Covered California™ qualified-plan with a premium subsidy and a child on Medi-Cal. Each family member will have a unique Client Identification Number (CIN). Continuity of coverage for each family member can be maintained because the system can accom-modate moving between public and private coverage options according to changes in status or qualifying events (pregnancy, recently unemployed, turned 65, etc.).

Case MaintenanceACA - Access to child support data for outreach efforts

Child Support - Access to Exchange data of participants for location efforts

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Appendix B - Gap Analyses

50

Definition of Dependent

26 USC Section 152: In the context of the individual mandate, a dependent is any individual whom an individual could claim as a dependent on his federal income tax return (whether or not he actually claims the dependent). If more than one person could claim a dependent, the person who actually claims the dependent (or who has priority to claim the dependent, if no one does) is responsible for the penalty.

Intersections

DiscussionThe ACA and child support laws place different responsibilities upon individuals for obtaining healthcare coverage for their dependents.

Under the ACA, the federal government, state governments, insurers, employers, and individuals are given the shared responsibility to reform and improve the availability, quality, and affordability of healthcare coverage in the United States. The individual responsibility provisions require each individual to have minimum essential coverage or pay a penalty. The individual who could claim the dependent on their federal income tax return is responsible for maintaining coverage for the dependent.

Current child support law evolved during a time when the focus was to enroll dependents within the child support caseload in private healthcare coverage that was available, accessible, and of reasonable cost. In the vast majority of situations, only employer-sponsored insurance met the criteria; therefore, federal regulations allow states the flexibility to order one or both parents to obtain healthcare coverage to increase the opportunity that more dependents would be enrolled in private healthcare coverage. Which parent has the federal tax exemption plays no part in the determination of who could be ordered to obtain healthcare coverage under federal child support regulations.

Gap Analysis - 1. Tax ExemptionSection 5000(a): Beginning January 2014 a nonexempt individual must maintain “minimum essential coverage” for themselves and any nonexempt person who may be claimed as a depen-dent of the individual, or be subject to a tax penalty.

»

California Affordable Care Act Child Support Workgroup Report - 1. Tax Exemption - Individual Mandate

Affordable Care Act Child Support

Establishment 1. Individual who could claim child for federal tax purposes

1. Either parent or both

Enforcement N/A N/A

Case Maintenance N/A N/A

Other N/A N/A

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California Tax Dependency Exemption

A California trial court has the authority under California case law to allocate the dependency exemptions between parties and to order the parties to execute and deliver the documents necessary to transfer the exemption to the other party13. The court has broad authority to determine this issue.

The allocation of the dependency exemption under the California child support guidelines can make a significant difference in the party’s net income and thus, the dollar amount of the child support obligation. Most California child support guideline calculators have an option that shows the impact of the tax exemption on the child support obligation.

Approximately 1/3 of California child support orders have an allocated dependent tax exemption. For the remaining cases, the order is silent. If there is no court-allocated dependency exemption, parties to the case are required to follow IRS tax codes regarding the claiming of the exemption.

RegulationsDiscussion

The Workgroup has determined that no short-term legislative change for this intersection is required prior to the January 2014 ACA implementation date.

In the future, if the IV-D program maintains responsibility for establishing Medical Support Orders (MSOs), consideration should be given to include the option for states to consider the designation of a dependency tax exemption, in most cases, to the parent responsible for obtaining coverage.

It should also be noted that currently in California, the custodial parent (CP) is generally not a party to the child support action until after entry of an order/judgment. In California, the agency prepares and serves a Proposed Judgment that becomes the Judgment by default if no Answer is filed. Given that the CP is not a party to the action, the agency cannot enter an order that the CP provide medical insurance coverage. However, existing state law requires that one or both parents be ordered to provide coverage. Therefore, the non-custodial parent (NCP) is ordered to provide the coverage by default. Further complicating the default situation is the fact that only the court, not the local child support agency, can allocate the dependency exemption.

Recommendation(s)

1. No short-term legislative change is required prior to the January 2014 ACA implementation date

2. No changes to current state laws unless federal regulations are amended

California Affordable Care Act Child Support Workgroup Report - 1. Tax Exemption - Individual Mandate

13 Monterey County v. Cornejo, 53 Cal.3d 1271;283 Cal. Rptr.405. (1991)

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OperationsDiscussion - Local Courts

Under the ACA, the allocation of the tax exemption plays an integral part in identifying the individual who may have to pay a tax penalty if dependent coverage is not maintained as identified in Gap Analysis - 5. Tax Penalty.

Currently, AB1058 commissioners and family law judges determine the allocation of the dependency exemption as a part of the child support order determination. The MSO currently has no relevance to the allocation of the tax exemption.

With the implementation of the ACA, the allocation of the tax exemption may impact one or both parties’ ability to comply with the ACA.

The scenario below is very common in the Child Support Program:

CP has the dependent residing in the household and will be claiming the dependent for the taxable year under ACA requirements. The CP is identified as the individual liable for maintaining minimum essential coverage for said dependent.

NCP has an MSO for the dependent requiring enrollment of the dependent in employer-sponsored insurance or other coverage entity.

If the NCP fails to meet their court-ordered obligation (MSO) to provide healthcare coverage for the dependent, it may result in the CP facing the assessment of a tax penalty for the dependent claimed if the CP is unable to maintain minimum essential coverage for the dependent on their own.

Current California medical support and child support laws and practices can have a significant impact on the amount of child support and the ability to comply with medical and child support orders, as well as with the ACA. Any consideration of a change in existing policy and practices should evaluate the impact on the calculation of guideline child support and ability to comply with related court orders. Appendix C2 includes a summary of existing California medical support and child sup-port laws as they impact the calculation of support. Also included are a variety of guideline child sup-port scenarios and the resulting child support amounts. These scenarios include a common scenario under existing practices, varying impacts of allocating the dependency exemption to either the CP or NCP, and treating the cost of the child’s coverage as additional support rather than the current prac-tice of deducting from the payer’s income.

(A parallel discussion can be found in Gap Analysis – 13. Premium Tax Credits and 3. 5% v. 8%.)

California Affordable Care Act Child Support Workgroup Report - 1. Tax Exemption - Individual Mandate53

Recommendation(s) The implementation of the ACA in January 2014 adds a layer of complexity and possible conflict for individuals who are trying to meet both their personal responsibilities and medical support obligations under very different legal constraints. California trial courts have the flexibility to change procedures regarding the allocation of the dependent exemption. Based on this fact, the Workgroup makes the following recommendations, as a short-term solution, to decrease conflict and possible confusion for the parties of a child support case during the first year of ACA implementation:

1. Establish collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when Medical Support Orders (MSOs) are established or modified after the implementation of the ACA and develop a work plan to:

Operations & Policy» Determine the feasibility and impact of new or modified child support orders having a specific

finding of the dependency exemption to one of the parties to the order.

» Develop guidelines on the allocation of the dependent exemption when:

» Establishing or modifying MSOs

» Stipulations

» Default judgments

» Encourage the allocation of the dependency exemption be given to the party ordered to provide health insurance coverage for the child

» If both parties are ordered to provide coverage the following factors should be considered:

» CP should be allocated the tax exemption in most cases to allow greater control and flexibility for the CP, as health insurance coverage can be fluid.

» Consider allocating the tax exemption to the NCP in cases where the NCP has stable employment with employer-sponsored insurance that meets the test of reasonable, and NCP has the available financial resources to support the coverage.

» Determine the feasibility and impact of aligning the definition of “reasonable” with the ACA definition of affordable

» Research and examine barriers that may arise when a CP is not a party to the child support action until after entry of an order/judgment

» Any consideration of a change in existing policy and practices should evaluate the impact on the calculation of guideline child support and ability to comply with related court orders

» Track and review impact of any temporary solutions

Communication & Outreach

» Identify and develop FAQ and scenarios for use by AB1058 commissioners and family law judges regarding the issue

» Support training of AB1058 commissioners and family law judges

» Completion October 2013


Systems & Interfaces

» Review and update judicial and/or LCSA MSO related documents as needed

Discussion - LCSA

The Workgroup identified this intersection may have impact on the day-to-day operations of the LCSA. It is anticipated that case members will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements and to ask for additional supportive services.

Part of the LCSA training will include information regarding the definition of “qualifying events” to enroll through the Exchange outside of open enrollment periods. For the child support caseload, change of employment, loss of current employer coverage, and establishment of a medical support order are considered qualifying events.

Recommendation(s)

Operations & Policy

1. CSDA-led development of ACA training and intersections with Child Support program

» Investigate cost and level of effort for onsite regional training versus webinar training



2. CSDA-led development of a work plan for the creation of FAQ and/or outreach materials for statewide use by child support professional

» Establish collaborative workgroup with DCSS for development of materials

» Internal and external materials

» LCSA» DCSS» CP & NCP» Employers» Other identified stakeholders

» Identify types of media: brochure, FAQ, state webpage

» Training plan for LCSA & DCSS



» Update LCSA and state website links as needed


Essential Coverage

IRS FAQ clarifies: Minimum essential coverage does not include specialized coverage, such as coverage only for vision care or dental care, workers’ compensation, disability policies, or coverage only for a specific disease or condition.

Coverage Sources

The term ”minimum essential coverage” means any of the following: (A) GOVERNMENT SPONSORED PROGRAM(S) (Medicaid, CHIP, etc.) (B) EMPLOYER-SPONSORED PLAN (including grandfathered plans) (C) PLANS IN THE INDIVIDUAL MARKET (coverage under a health plan offered in the individual market within a state) (D) GRANDFATHERED HEALTH PLAN (coverage under a grandfathered health plan) (E) OTHER COVERAGE

Intersections

DiscussionEssential Coverage

Child support benefit requirements align with the ACA and Covered California minimum essential coverage requirements. California SB 951 and AB 1543 define California minimum coverage as the Kaiser small group HMS 30. This is the benchmark policy for California. Dental and vision policies will be included in Qualified Health Plans (QHP) offered through Covered California.

Coverage Sources

Child support and ACA do not clearly align regarding the coverage source for maintaining coverage.

An individual under the ACA meets the minimum essential coverage requirement if their dependent is provided coverage through public sources such as Medicaid, SSI, and Tricare, as well as private sources such as employer-sponsored insurance or insurance obtained through a health insurance Exchange.

Within the Child Support Program, Medical Support program requirements have traditionally focused on obtaining private coverage for dependents within the child support caseload if the coverage offered through the private source meets the definitions of available, reasonable, and accessible. Health insurance in child support regulations is defined as a fee-for-service, health maintenance organization or preferred provider organization, and “other” types of coverage that are available to either parent, under which medical services could be provided to the dependent child(ren).

Gap Analysis - 2. Coverage Source Section 5000A(f) Minimum Essential Coverage: Essential coverage definition and coverage sources

»


Establishment1. Have similar definitions of

essential coverage

2. Public, ESI, Exchange

1. Private coverage offered through ESI or other entity

Enforcement N/A N/A


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 2. Coverage Source - Individual Mandate56

Until the passage of the ACA, employers were essentially the only private source that offered this type of health insurance coverage.

OCSE AT 10–10 allowed states to update medical support policies to enhance collaboration with Medicaid and CHIP to improve enrollment of eligible children. This includes the option to define medical support to include private health insurance as well as other healthcare coverage such as Medicaid, CHIP, other state coverage plans, and cash medical support.

OCSE AT 11-10; Changes to OCSE 157 report - change to the definition of medical support is that publicly funded programs will now be included in the definition of medical support regardless of whether there is an order for a cash contribution. Thus, the changes to the OCSE-157 medical support instructions will provide states with the option to define medical support to include private health insurance as well as other publicly funded healthcare coverage such as Medicaid, CHIP, other state coverage plans, and cash medical support.

By allowing states to broaden their definition of medical support to include public healthcare coverage, state reporting can now more clearly reflect the number of children in the IV-D caseload with some type of medical coverage. The California Child Support Program allows this type of reporting. Where the ACA and Child Support Program do not align is at the point of order establishment. States, including California, must still make a determination of responsibility regarding which parent must ensure that the child(ren) has coverage. It is very rare for a court or administrative authority to actually order a parent to enroll their child(ren) in public healthcare coverage. This is one of the main contributing factors to the common practice of ordering both parents to obtain healthcare coverage for their child(ren).

Discussions and recommendations combined with Gap Analysis 12. Health Insurance Exchange Overview, which provides details of health insurance Exchange requirements support this section and are supplemented or repeated below as needed.


CA Family code 3750 defines health insurance coverage to include all of the following:


(b) Provision for the delivery of healthcare services by a fee-for-service, health maintenance organization, preferred provider organization, or any other type of healthcare delivery system under which medical services could be provided to a dependent child of an absent parent.

Recommendation(s)



Operations Discussion – Local Courts

CA Family code 3751(a) (2): In any case in which an amount is set for current support, the court shall require that health insurance coverage for a supported child shall be maintained by either or both parents if that insurance is available at no cost or at a reasonable cost to the parent.

California Affordable Care Act Child Support Workgroup Report - 2. Coverage Source - Individual Mandate57

CA code allows for the establishment of an MSO for one or both parties to the case. Current practice within the CA Child Support Program during the establishment of an MSO is generally to order both parents to provide and maintain coverage for the children if it is available at no or reasonable cost. If known, the cost of the premium is included in the guidelines calculation when determining the Child Support obligation.

Federal regulations allow states the option not to enforce CP medical support orders. California has taken this option and does not enforce against the CP. In situations when both parents are ordered to provide coverage, if the CP has the child enrolled in public healthcare, it is standard practice for the courts and the LCSAs to consider the CP as compliant with his/her MSO. It is also the current practice for courts not to order CPs to enroll their child in public healthcare even if it appears they meet the eligibility requirements.

For the NCP to remain compliant with their MSO, he/she must provide and maintain insurance coverage for the dependent if it is available at no or reasonable cost, regardless of whether the dependent is enrolled in public healthcare. It is the current practice for the courts and LCSAs to consider the NCP compliant with his/her MSO if healthcare coverage through his/her employer is not available, reasonable, or accessible. At this time NCPs are not required to pursue healthcare coverage for their dependent from “other entities.”

California code for health insurance, by definition, includes “other entity.” Prior to the ACA, an instance of “other entity” as an available insurance source in California was rarely an option.

As of January 2014, if the NCP who is ordered to obtain healthcare for the dependent fails to cover the child, or if insurance is not available or reasonable through ESI or an Exchange, the CP may be penalized under the ACA for failing to maintain minimum essential coverage if the CP claims the dependent for tax purposes. The CP would be exempt from a tax penalty if they have covered the dependent though public, ESI, or an Exchange.

Recommendation(s)

The practice of ordering both parents to provide healthcare coverage adds a layer of complexity for the California Child Support Program when establishing and enforcing MSOs. After the implementation of the ACA in January 2014, the financial and personal responsibility for the CP to ensure that the dependent has healthcare coverage will increase dramatically. CA trial courts have the flexibility to change procedures when making a determination if either or both parents should be ordered to maintain health insurance coverage for their dependent. LCSAs have always worked closely with the AB 1058 commissioners and family law facilitators to develop standardized filings and recommendations for the establishment or modification of MSOs. To encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA, the Workgroup makes the following recommendations.

As discussed in Gap Analysis – 1. Tax Exemption, currently in California, the CP is generally not a party to the child support action until after entry of an order/judgment. In California, the Child Support agency prepares and serves a Proposed Judgment that becomes the Judgment by default if no Answer is filed. Given that the CP is not a party to the action, the agency cannot enter an order that the CP provide medical insurance coverage. However existing state law requires that one or both parents be ordered to provide coverage. Therefore, the NCP is ordered to provide the coverage by default. Further complicating the default situation is the fact that only the court, not the local child support agency, can allocate the dependency exemption.

58 California Affordable Care Act Child Support Workgroup Report - 2. Coverage Source - Individual Mandate

1. Establish a collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when MSOs are established after the implementation of the ACA and develop a work plan to do the following:

Operations & Policy

» Identify best practices and develop guidelines regarding:

» The current practice of ordering both parents to provide healthcare coverage

» Consideration should be given to ordering only the CP to provide healthcare coverage to allow for greater control and flexibility in meeting the healthcare needs of the dependent

» Consideration should be given to ordering the NCP to provide coverage in cases where the NCP has stable employment with employer sponsored insurance that meets the test of reasonable, and the NCP has the financial resources to support the coverage

» If child is eligible and enrolled in Medi-Cal, determine if CA code and/or current practice should be modified to:

» Current Orders: Consider both parties as compliant with the MSO regardless of NCP financial ability to obtain private healthcare for dependent. Continue sending NMSN if new employer is located (current practice)

» New or Modified Orders: Determine if the practice to order both parents to obtain healthcare coverage if the dependent is enrolled in Medi-Cal remains the preferred practice

» Identify possible barriers for stipulations and default judgments

» Research and examine barriers that may be caused when a CP is not a party to the child support action until after entry of an order/judgment

» Make no change to current code or current practice until federal intent regarding medical support responsibilities is determined

» Determine consistent response when insurance is not available or reasonable through ESI. Should child support actively encourage the ordered party to go to the Exchange and obtain a QHP that will meet the definition of reasonable?

» Track and review impact of solution


» Identify and develop FAQ and scenarios for use by AB1058 commissioners and family law judges » Support training of AB1058 commissioners and family law judges » Completion October 2013


» Review and update judicial and/or LCSA MSO-related documents as needed

Discussion – LCSA

The Workgroup identified this intersection may have impact on the day-to-day operations of the LCSA. It is anticipated that case members will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements and to ask for additional supportive services.


Recommendation(s)

Operations & Policy

1. CSDA-led development of ACA training and intersections with Child Support Program




2. CSDA-led development of a work plan for the creation of FAQs and/or outreach materials for statewide use by child support Professionals

» Establish collaborative workgroup with DCSS for development of outreach materials






Exemptions to obtaining coverage IRS Proposed Rule 26 CFR Part 1 clarifies: Individuals who fall into one of the statutory exemption categories are not subject to a penalty for not maintaining coverage. The exempt individual, however, must still pay the penalty for any dependents that do not have coverage unless the dependent also qualifies for an exemption.

DiscussionCurrent federal regulations define reasonable cost in Section CFR section 303.31 (3) 303.31 (a) For purposes of this section: (3) Cash medical support or the cost of private health insurance is considered reasonable in cost if the cost to the parent responsible for providing medical support does not exceed five percent of his or her gross income at State option, a reasonable alternative income-based numeric standard defined in State law, regulations, or court rule having the force of law or State child support guidelines adopted in accordance with § 302.56(c) of this chapter. In applying the five percent or alternative State standard for the cost of private health insurance, the cost is the cost of adding the child(ren) to the existing coverage or the difference between self-only and family coverage. This allows state flexibility to define reasonable cost.

Under current CA code, 3751.(a) (1) Support orders issued or modified pursuant to this chapter shall include a provision requiring the child support obligor to keep the agency designated under Title IV-D of the Social Security Act (42 U.S.C. Sec. 651 et seq.) informed of whether the obligor has health insurance coverage at a reasonable cost and, if so, the health insurance policy information. (2) In any case in which an amount is set for current support, the court shall require that health insurance coverage for a supported child shall be maintained by either or both parents if that insurance is available at no cost or at a reasonable cost to the parent. Health insurance coverage shall be rebuttably presumed to be reasonable in cost if the cost to the responsible parent providing medical support does not exceed 5 percent of his or her gross income. In applying the 5 percent for the cost of health insurance, the cost is the difference between self-only and family coverage.

Gross income includes income from all sources, wages, commissions, business income, rents, unemployment, social security, disability, pensions, taxable and non-taxable sources. For a complete definition of gross income as defined under California Family Code 4058e please reference Gap Analysis – 9. MAGI.

Gap Analysis - 3. 5% v. 8% Section 5000A(e)(1) through 5000A(e)(5): Categories of individuals who are exempt include individuals who cannot afford coverage (coverage is considered unaffordable if an individual’s contribution toward minimum essential coverage is more than 8% of the annual household income), taxpayers with income below the tax filing threshold (the amount required to file a federal tax return), members of Native American tribes, individuals who are not U.S. citizens, individuals with short coverage gaps, and individuals with a hardships exemption.

»


Establishment

1. Coverage costs greater than 8% of household income

2. Children not covered through ESI or Exchanges could be picked up by public coverage

1. Coverage costs greater than 5% of ordered parents gross income, or not available through ESI or other entity

Enforcement N/A N/A


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 3. 5% v. 8% - Individual Mandate61

Section 2002 of the Affordable Care Act makes the tax concept of Modified Adjusted Gross Income (MAGI) the basis for determining affordability of healthcare for individuals and their dependents. Under the ACA for an individual or their dependent, the affordability exemption from obtaining coverage is defined as no more than 8% of household income. MAGI income is the total of all types of income as defined under Section 36B(d)(2) of the Internal Revenue Code of 1986. For a more detailed discussion of the use of MAGI as the income standard across programs compared to child supports use of Gross Income as an income standard, please reference Gap Analysis – 9. MAGI.

Under the ACA requirements, this affordability test is applied separately to the parent and the dependent, which could lead to situations where the parent has access to affordable minimum essential coverage through their employer, but the dependent is exempt due to the unaffordability and the higher cost of family/dependent coverage.

The application of different income sources between the ACA and the Child Support Program are particularly striking. The ACA definition draws in all members of an individual’s household. The Child Support Program is specifically focused only on the income of the individual who is a party to the child support case. The basis of the program is to provide services to parents who live apart from their children. Income from new spouses or other household members including non-married relationships is intentionally disregarded.


With the implementation of the ACA, having different standards for exemptions to obtaining coverage may lead to confusion and uncertainty for parents with child support cases, employers, LCSAs, and the Courts. The Workgroup reviewed the pros and cons of recommending the alignment of the child support definition of reasonable to the ACA definition of affordable. Specific income scenarios were examined comparing different income standards.

Found in Appendix C, the Workgroup examined scenarios based on income and premium costs to examine when an individual may be exempt from obtaining healthcare coverage for a dependent under the ACA but ordered to enroll the dependent under a medical support order.

Premium costs were taken directly from the Covered California™ website. (Reference Appendix C) The calculator defaults to the silver plan.

The scenarios covered five income groups ranging from a TANF recipient to a very high wage earner with an annual income of $75,000. (Reference Appendix C)

As shown in Appendix C, it was to be expected that at certain income levels under the ACA affordability test, the individual would not be exempt from obtaining healthcare coverage for themselves but the individual would be exempt from obtaining healthcare coverage for the dependent. Yet in the same scenario, under the child support reasonableness test, an MSO order would be established and the individual would be ordered to enroll his/her dependent in ESI.

(Parallel discussions can be found in Gap Analysis – 1. Tax Exemption and 13. Premium Tax Credits)

62 California Affordable Care Act Child Support Workgroup Report - 3. 5% v. 8% - Individual Mandate

At this time the Workgroup is recommending not to align the current definition of “reasonable” from 5% of gross income found at California Family code, 3751.(a) (1) to the ACA definition of “affordable” as 8% of household income for the following reasons:

» Knowledgable insiders within the child support community cautioned states not to make major changes to state medical support regulations until ACA implementation begins and historical data can be gathered. Once the Exchange opens, child support will have real-time data regarding premiums for the Exchange and employers, as well as stratification of coverage across coverage sources

» The definition of “reasonable” for child support purposes is already codified in CA Family Code and meets the current federal requirements. Without knowing what the future plans will be for the medical support program at the federal level, undertaking a change this significant would be premature on the part of the California Child Support Program

» Legislation would have to be prepared and passed

» Support for the change would need to be sought from the AB1058 commissioners, family law judges, and other child support stakeholders

» LCSA and family law court procedures would have to be changed

» LCSA staff, AB1058 commissioners, and family law judges would need to be trained

» System changes would have to be developed for CCSAS

» Guideline calculators would have to be updated

» State and local websites would have to be updated

» State, local, and judicial forms, documents, and notices would have to be amended

» Outreach and FAQ would have to be developed for parents and employers

» Based on the scenarios provided above, keeping the current definition of “reasonable” would likely result in an increased number of dependents in the IV-D caseload being covered with private healthcare coverage

» Existing California statutes provide that new spouse income should not be included in any type of child support determination, with only a few exceptions

» Obtaining the MAGI amount for MSO determination would extend the length of time to establish an MSO

» When establishing or modifying a child support obligation and MSO, two different sets of income would need to be requested, explained, and obtained, adding a layer of complexity and increas-ing the possibility of different jurisdictions applying different rules

Recommendation(s)





While the recommendation at this time is not to change the child support definition of reasonable, the Workgroup does recommend that the issue continue to be studied.

Recommendation(s)


Operations & Policy

» Determine the feasibility and impact of aligning the definition of reasonable with the ACA definition of affordable

» Closely monitor federal workgroups, rules, and guidance on the issue


» Identify and develop FAQs and scenarios for use by AB1058 commissioners and family law judges regarding the issue




N/A

Discussion – LCSA

The Workgroup identified this intersection may have impact on the day-to-day operations of the LCSA. It is anticipated that case members and employers will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements and to seek clarification on the different definitions of reasonable and affordable between child support and the ACA.

Recommendation(s)

Operations & Policy






2. CSDA-led development of a work plan for the creation of FAQs and/or outreach materials for statewide use by child support professionals










Maintaing Coverage

IRS FAQ clarifies: A gap in coverage that lasts less than three months qualifies as a short coverage gap and the individual will be exempt from any penalties. If an individual has two short coverage gaps during a year, the short coverage gap exemption only applies to the first or earlier gap in the individual’s taxable year.

Intersections

DiscussionUnder current CFR 303.32 and California code 3866, once a NMSN has been served on an employer, it is the employer’s responsibility to maintain the coverage under NMSN requirements and report changes to coverage to the child support agency or face possible contempt charges.

For parents ordered to provide health insurance there are no penalties for gaps in coverage if Employer-Sponsored Insurance (ESI) is not available, reasonable, or accessible. As discussed under Gap Analysis – 2. Coverage Source, prior to the ACA, the instance of an “other entity” as an available insurance source in California was rarely an option. Common practice for LCSAs is not to actively require the ordered parent to pursue coverage if they cannot obtain coverage through their employer.

Allowing short coverage gaps that last less than three months once again places the CP at risk of a tax penalty if the NCP is ordered to maintain coverage and fails to do so. For parents involved in child support cases, having “maintaining coverage” requirements that differ may lead to confusion and uncertainty.


The Workgroup has determined no short-term legislative change for this intersection is needed prior to the January 2014 ACA implementation date.

Long-term program and regulatory recommendations will be included in the Workgroup’s discussion of the Future of Medical Support Enforcement and the four OCSE potential program recommendations.

Gap Analysis - 4. Coverage Gaps Section 5000A(e)(4) Months During Short Coverage Gaps: Individual will be treated as having minimum essential coverage for a month as long as they have coverage for at least one day during that month.

»


Establishment N/A N/A

Enforcement

1. Coverage lapses over three months

1. Employer responsible for maintaining coverage under NMSN requirements as long as employee is employed

2. Coverage gaps are allowable if employer sponsored insurance (ESI) is not available, reasonable, or accessible to the ordered parent


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 4. Coverage Gaps – Individual Mandate66

Recommendation(s)



Operations Discussion – Courts

The issues discussed in Gap Analysis – 2. Coverage Source regarding the practice of ordering both parents to provide health insurance coverage relate to the conflicting requirements between child support and the ACA regarding maintaining coverage requirements.

The Workgroup believes this topic must be included in the collaboration workgroup to be established with the family law courts.

Recommendation(s)


Operations & Policy

» Identify best practices and develop guidelines regarding:



» Consideration should be given to ordering the NCP to provide coverage in cases where the NCP has stable employment with employer-sponsored insurance that meets the test of reasonable, and the NCP has the financial resources to support the coverage

» If a child is eligible and enrolled in Medi-Cal, determine if California code and/or current practice be modified to:

» Existing Orders: Consider both parties as compliant with the MSO regardless of NCP’s financial ability to obtain private healthcare for dependent. Continue sending NMSN if new employer is located (current practice)

» New or Modified Orders: Determine if the practice to order both parents to obtain healthcare coverage if a dependent enrolled in Medi-Cal remains the preferred practice


» Make no change to current code or current practice until federal intent regarding medical support responsibilities are determined

» Determine consistent response when insurance is not available or reasonable through ESI. Should child support actively encourage the ordered party to go to the Exchange and obtain a QHP that will meet the definition of reasonable?

» Track and review impact of solution


» Identify and develop FAQ and scenarios for use by AB1058 commissioners and family law judges » Support training of AB1058 commissioners and family law judges » Completion October 2013

67 California Affordable Care Act Child Support Workgroup Report - 4. Coverage Gaps – Individual Mandate


» Review and update Judicial and/or LCSA MSO-related documents as needed

Discussion – LCSA

The Workgroup has identified this intersection may have impact on the day-to-day operations of the LCSA.

It is anticipated that case members will be contacting the LCSA to ask about their responsibilities in relationship to the ACA mandates and MSO requirements, and to ask for additional supportive services.

In general, CA employers are cooperative about meeting their NMSN enrollment responsibilities. Employers though are often not reliable about reporting to the LCSA when coverage changes or lapses due to change of employment or changes in pay. LCSA provides a change of circumstance form with all NMSN to ease the reporting responsibilities; however, employers do not consistently take advantage of the provided form. Employers will need to be reminded of their continued MSO responsibilities.

Recommendation(s)

Operations & Policy














68 California Affordable Care Act Child Support Workgroup Report - 4. Coverage Gaps – Individual Mandate

IRS Proposed Rule 26 CFR Part 1 lists the annual penalties for 2014. The amount of any payment owed takes into account the number of months in a given year an individual is without coverage or an exemption.

2014 Payment: Greater of $95 per adult and $47.50 per child under age 18 (maximum of $285 per family) or 1% of income over the tax-filing threshold. These penalties will be assessed in 2015 after individuals file their tax returns.

Intersections

DiscussionCurrent child support practice links Medical Support Orders (MSOs) to Employer-Sponsored Insurance (ESI). Upon receipt of an NMSN it is the employer’s responsibility to follow medical support notice requirements or face possible contempt of court findings. There are no penalties for an ordered parent if an employer fails to follow the NMSN.

In the proposed rule, the IRS states than an individual is liable for the shared responsibility payment (tax penalty) of his/her dependent if he/she claims or may claim the dependent on his/her federal income tax return.

The following scenario is very common in the Child Support Program and demonstrates the potential conflict between CPs and NCPs.

Scenario

A CP has the dependent residing in the household and will be claiming the dependent for the taxable year. The NCP has a medical support obligation for the dependent requiring enrollment of the dependent in employer sponsored insurance or other covered entity.

Gap Analysis - 5. Tax Penalty Section Sec 5000A(b) Shared Responsibility Payment (b) 1: If an applicable individual fails to maintain minimum essential coverage for one or more months starting in 2014, they must pay a penalty unless they fall in the exemption category.

»



Enforcement

1. Individual who claims dependent on a federal income tax return is liable for the shared responsibility payment

2. Penalty for 2014 is the greater of $95 per adult and $47.50 per child under the age of 18. Maximum of $285 per family or 1% of income over the tax filing threshold

1. Responsibility to follow NMSN requirement is on the employer


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 5. Tax Penalty – Individual Mandate69

Potential Conflicts

1. The NCP fails to meet his/her court-ordered obligation to provide healthcare coverage (medical support order) for the dependent, resulting in the CP facing the possible assessment of a shared responsibility payment for the dependent claimed if the CP is unable to maintain minimum essential coverage for the dependent on his/her own.

2. When completing a federal tax return, the CP may not be able to accurately attest to any coverage gaps for the liable dependent for the taxable year. According to 26 USC § 6055 – Reporting of Health Insurance Coverage, health insurance issuers are required to provide annual coverage statements about individuals for whom minimum essential coverage is provided. Here, we assume the statement for dependents would be provided to the individual who has enrolled the dependent in healthcare coverage (in this case, the NCP), not the individual who claims the dependent on their federal tax return.

3. Within the Child Support Program, there are often communication deficiencies between the CP and the NCP which may result in the CP having problems securing proof of coverage for the dependent to determine if there were any coverage gaps within the taxable year. This could seriously impede the CP in meeting his/her federal tax return filing deadlines, and may cause the CP to submit incorrect information. As a result, the CP could potentially be placed in the untenable position of not knowing until after the fact if he/she was facing the assessment of a shared responsibility payment.

Additionally, the Workgroup discussed the possibility that if the level of the tax penalty is lower than the annual cost to cover the dependent, some parents may opt to pay the tax penalty rather than meet their medical support responsibilities.


The Workgroup has determined no short-term legislative change for this intersection is required prior to the January 2014 ACA implementation date.

During deliberations the Workgroup examined possible solutions that could be shared with both CMS and the Department of Treasury that would relieve the CP in paying a shared responsibility payment for not maintaining minimum essential coverage as described in the above scenarios.

Center for Consumer Information and Insurance Oversight(CCIIO) (CMS) to either:

» Create a hardship exemption at 155.605(g) for CP in the above scenario where the NCP has not enrolled the dependent in healthcare coverage; or

» Create a new exemption category under Sec 5000A(d-e) for the CP with tax exemption where the NCP has an MSO

Department of Treasury

» Not assess the shared responsibility payment for individuals in this scenario as proposed in §1.5000A-5 Administration and Procedure as a reasonable cause for not meeting the mandate; or

» Provide relief, waive, or abate the assessed shared responsibility payment in § 1.5000A-5

Administration and Procedure for individuals who report this scenario or similar scenarios as a reasonable cause for not meeting the mandate

70 California Affordable Care Act Child Support Workgroup Report - 5. Tax Penalty – Individual Mandate

Published on June 26, 2013 CMS released final regulations titled, “Patient Protection and Affordable Care Act; Exchange Functions; Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions.” On that same date CMS also published; Guidance on Hardship Exemption Criteria and Special enrollment Periods.

The Workgroup was pleased to note that under the guidance CMS clarified14 that Marketplaces may consider the following circumstances in determining what constitutes a hardship under 45 CFR 155.605(g)(1) if they prevent an individual from obtaining coverage under a QHP, which include:

» An individual who is a child who has been determined ineligible for Medicaid and CHIP, and for whom a party other than the party who expects to claim him or her as a tax dependent is required by court order to provide medical support. We note that this exemption should only be provided for the months during which the medical support order is in effect

This supported the Workgroups suggested solution as mentioned above and was determined by members to resolve a major conflict for custodial parents in child support cases.

The Workgroup was also pleased to note in in IRS Proposed Rule 26, no changes to Section 6402(c) – Offset of Past Due Support Against Overpayments, which requires the Secretary of the Treasury to apply a reduction under this subsection first to the amount certified by the state as past due support under Section 464 of the Social Security Act before any other reduction is allowed by law.

The Federal Tax Offset program is an extremely effective collection method for the Child Support Program and the families depending on those collections. In the most current report to Congress released by the Office of Child Support Enforcement (FY2011), $2.2 billion was collected from the Federal Tax Offset program. Any changes to the hierarchy found in Section 6402 would negatively impact the effectiveness of the Federal Tax Offset program and payments to families.

Recommendation(s)



3. The Workgroup recommends that efforts be directed to OCSE, Department of Treasury, and HHS to review the requirement that Health Insurers provide annual coverage statements to the policy holder. The Workgroup also recommends that these entities be encouraged to consider requiring health insurance issuers to provide CPs access to annual coverage statements.

Health insurance issuers will be required to provide annual coverage statements to the individual making the premium payments. In many cases this information will be provided to the NCP as the individual covering the dependent, but it will be the CP who will claim the dependent as a tax exemption and will need coverage confirmation for filing a tax return.

71

14 Dept of HHS, Center for Medicare & Families, June 26, 2013; SUBJECT Guidance on Hardship Exemption Criteria and Special Enrollment Periods.

California Affordable Care Act Child Support Workgroup Report - 5. Tax Penalty – Individual Mandate

Operations Discussion – LCSA

The Workgroup identified this intersection as having a significant impact on the day-to-day operations of the LCSA. It is anticipated that parents will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements.

In addition, it is anticipated that there will be an increase in requests by CPs for assistance in verifying dependent coverage by the NCP. This could lead to increased requests for medical support order enforcement and requests for review and modification of the MSO.

Recommendation(s)

Operations & Policy














72 California Affordable Care Act Child Support Workgroup Report - 5. Tax Penalty – Individual Mandate

For the purposes of this gap analysis, section 1513 and 4980H(a) from the Matrix were combined.

IRS Proposed Rule clarifies: In 2014*, if an employer meets the 50 full-time employee threshold, the employer generally will be liable for an Employer Shared Responsibility payment only if it does not offer health coverage to 95% of its full-time employees and at least one full time equivalent (FTE) receives a premium tax credit through an Exchange or the coverage offered was not affordable to the employee or meet minimum value requirements.

*Note; at the time of final writing of this report, on July 2, 2013, the U.S. administration announced it will not require employers to provide health insurance for their workers until 2015. While the implementation of the employer requirement is extended 1 year, the requirements have not changed.

Intersections

DiscussionThe employer mandate established by the Affordable Care Act imposes an excise tax on large employers who fail to offer affordable coverage to their full-time employees. An individual may be exempt from the individual mandate if he or she does not have access to affordable minimum essential coverage.

Under the law, an employer plan is considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.5% of the employee’s household income for the taxable year. In addition, the proposed rule requires an employer to offer minimum essential coverage to employee’s dependent children—up to age 26—to avoid the penalty in IRC §4980H(a). More specifically, for the purpose of the individual mandate, individuals and their dependents are exempt from paying a penalty if the individual and/or their dependents do not have access to affordable minimum essential coverage. In this context the definition of affordable is defined as no more than 8% of the household income.

Gap Analysis - 6. Employer RequirementsSection 1513 Shared Responsibility for Employers – Large & Small: d(2)(A) Applicable large employer means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.

Section 4980H (a) Large employer subject to penalty if it fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.

»


Establishment

1. Employer mandates are based on employer size.

2. Large employers must offer dependent coverage. There is not an affordability test for the cost of dependent coverage.

3. Small employers are not subject to shared responsibility regulations.

1. Size of employer does not impact medical support regulations.

2. Impact on number of employers that will no longer meet the definition of available and reasonable is unknown at this time

Enforcement 1. Employers face tax penalties for non-compliance.

1. Employer NMSN requirements do not change—must enroll if coverage is available, reasonable, and accessible requirements are met.


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 6. Employer Requirements - Employer Mandate73

This test is applied separately to the parent and the dependent, which means there could be cases of a parent having access to affordable minimum essential coverage (i.e., self-only coverage) but their dependents being exempt due to unaffordability and the higher cost of family/dependent coverage.

The 9.5% affordability definition comes into play in the context of an employees’ eligibility for tax credits and cost sharing subsidies through the health insurance Exchange. In this context, an employee and/or their dependents are not eligible for tax credits or cost sharing subsidies through the Exchange if they have access to affordable coverage (defined as no more than 9.5% of household income for self-only coverage). The cost of family or dependent coverage is not factored into the equation whereas the individual mandate uses the required contribution for family/dependent coverage when determining affordability for dependents.

Large employers will not face tax penalties for not offering coverage to spouses, who will be able to seek a federal premium tax credit to purchase health insurance in an Exchange if other minimum essential coverage is not available

When the ACA goes into effect January 2014, employers will still be required to honor NMSNs and enroll an employee’s dependent if state law requirements of available, reasonable, and accessible are met.

The impact on the number of employers, large or small, that no longer meet the definition of available and reasonable is unknown at this time. However, the following assumptions can be made:

» With the change in definition of full-time to 30 hours, the potential pool of employees included within the large employer responsibility mandates will increase.

» The number of large employers who offer affordable dependent coverage may decrease due to the fact that the ACA does not require dependent offerings to meet the affordable thresholds.

» While small employers will not have to pay a penalty if they do not provide coverage, the ACA requires states to create Exchanges offering group health plans to small companies. States will have the option of creating these as separate Exchanges or combining the individual and small-business markets into one Exchange. Small employers may receive tax credits to encourage offering employee coverage that is more affordable. Small California employers will be able to access the small-business market through Covered California™.



Recommendation(s)



74California Affordable Care Act Child Support Workgroup Report - 6. Employer Requirements - Employer Mandate


The Workgroup has identified this intersection may have an impact on the day-to-day operations of the LCSA. It is anticipated that employers will be contacting the LCSA to ask about their responsibilities in relationship to the ACA mandates and MSO requirements and to ask for additional supportive services.

In general, CA employers are cooperative about meeting their NMSN enrollment responsibilities. With the implementation of the ACA employers will have two different legal requirements and standards to apply regarding the affordability of insurance offered versus the reasonable cost of the insurance offered. Employers will need to be reminded of their continued MSO responsibilities under current California code.

In addition, parents may confuse the employer mandate to offer coverage to an employee’s dependent up to the age of 26 and their medical support responsibilities until the age of emancipation. Workgroup members shared anecdotal stories that their agencies have already been receiving calls from case participants asking if the NCP has to provide healthcare coverage for their children until the age of 26.

Recommendation(s)

Operations & Policy














75California Affordable Care Act Child Support Workgroup Report - 6. Employer Requirements - Employer Mandate

IRS Proposed Rule clarifies: Starting in 2015 (for coverage provided in 2014), employers will be required to file annual reports with the IRS identifying each full-time employee and describing the coverage they offer to full-time employees and their dependents. Employers must also provide a statement to each full-time employee with information about the coverage available to the employee.

When a lower-income person purchases individual coverage through an Exchange and claims a premium tax credit, the IRS will use the reported information to determine whether the person is eligible for affordable minimum-value coverage from his or her employer. If the person has employer coverage, the person will not qualify for the premium tax credit. If the person is a full-time employee and does not have employer coverage, the employer might owe the excise tax.

The IRS will notify employers when their employees claim the premium tax credit and will give employers an opportunity to respond.

Reporting Employer Provided Health Coverage in Form W-2

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.

The amount reported does not affect tax liability, as the value of the employer excludable contribution to health coverage continues to be excludible from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their healthcare benefits so they can be more informed consumers.

Intersections

Gap Analysis - 7. Employer ReportingSection 1514 Employer Reporting Requirements »



Enforcement N/A N/A

Case Maintenance

1. Employer will report to IRS on employee W-2 coverage source and cost to employer.

2. IRS will notify employers when employees claim premium tax credits.

1. Employer is required to complete and submit Part A&B of the NMSN to issuing child support agency.

Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 7. Employer Reporting – Employer Requirements76

DiscussionThe chart below reviews the reporting requirements for Box 12, Code DD

Form W-2 Reporting of Employer-Sponsored Health Coverage

Coverage Type

Form W-2, Box 12, Code DD

Report Do Not Report Optional

Major Medical X

Dental or vision plan not integrated into another medical or health plan

X

Dental or vision plan that gives the choice of declining or electing and paying an additional premium

X

Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts

X

Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits

X

Health Reimbursement Arrangement (HRA) contributions X

Health Savings Arrangement (HSA) contributions (employer or employee)

X

Archer Medical Savings Account (Archer MSA) contributions (employer or employee)

X

Hospital indemnity or specified illness (insured or self-funded), paid on after-tax basis

X

Hospital indemnity or specified illness (insured or self-funded), paid through salary reduction (pre-tax) or by employer

X

Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage

Required if employer charges a COBRA premium

Optional if employer does not charge a COBRA premium

On-site medical clinics providing applicable employer-sponsored healthcare coverage



Wellness programs providing applicable employer-sponsored healthcare coverage



Multi-employer plans X

Domestic partner coverage included in gross income X

Governmental plans providing coverage primarily for members of the military and their families

X

Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government

X

Self-funded plans not subject to Federal COBRA X

Accident or disability income X

Long-term care X

Liability insurance X

77 California Affordable Care Act Child Support Workgroup Report - 7. Employer Reporting – Employer Requirements

Form W-2 Reporting of Employer-Sponsored Health Coverage

Coverage Type

Form W-2, Box 12, Code DD

Report Do Not Report Optional

Supplemental liability insurance X

Workers’ compensation X

Automobile medical payment insurance X

Credit-only insurance X

Excess reimbursement to highly compensated individual, included in gross income

X

Payment/reimbursement of health insurance premiums for 2% shareholder-employee, included in gross income

X

Other Situations Report Do Not Report Optional

Employers required to file fewer than 250 Forms W-2 for the preceding calendar year (determined without application of any entity aggregation rules for related employers)

X

Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year.

X

Forms W-2 provided by third-party sick-pay provider to employees with other employers

X

The chart was created at the suggestion of and in collaboration with the IRS’ Information Reporting Program Advisory Committee (IRPAC). IRPAC’s members are representatives of industries responsible for providing information returns, such as Form W-2, to the IRS. IRPAC works with IRS to improve the information reporting process.



Access to data is the foundation that supports successful efforts in the Child Support program to locate case participants, establish and enforce child support orders, and to collect child support payments. Supported by strong legislative mandates, the program has access to income, assets, and employment information from a variety of sources including: Federal Tax Information, New Hire Reporting, State Wage, Social Security, and Financial Institutions. The more current the information is when received by a state Child Support Program, it is more likely the information will lead to a successful action taken by the agency.

For example: employers must report newly hired employees shortly after the date of hire to a designated state agency. OCSE and states match new hire reports against child support records to locate parents who owe child support. The new hire reporting process helps child support agencies issue income withholding orders quickly.

State child support programs currently receive Federal Tax Information (FTI). FTI is point in time information, collected annually from tax returns and provides information regarding income and location information for a previous tax year. While this information does support program efforts, because the information received can be outdated and stale by the time it reaches the program, it is more often used as a “lead source” that a child support caseworker uses to find more current information. In addition, the use and access to FTI comes with very strict confidentiality and safeguarding requirements that must be closely monitored and maintained by states in order to have access to it.

On the surface, receiving W-2 information from the IRS regarding the cost of coverage under an employer-sponsored group health plan for an employee would appear to be data that the Child Support Program would want access to. The Workgroup would urge federal and state agencies to proceed with caution and study before pursuing this kind of data through a legislative initiative.

As shown in the reporting requirements chart above, the total cost of coverage information reported on an employee’s W-2 is a combination of cost factors that would need to be sorted out in order for state programs to use the information for child support purposes. The Workgroup feels that the program already has access to other data sources that provide information that is more current and easier to obtain.

Recommendation(s)





The Workgroup has identified this intersection as having minimal impact on the day-to-day operations of the LCSA. Employer reporting requirements should be included as part of the basic LCSA training on the ACA to be developed.

Recommendation(s)

Operations & Policy

1. CSDA-led development of ACA training and intersections with Child Suppot Program














California was one of the first states to adopt HHS Medicaid Expansion requirements. Medi-Cal currently covers 7.6 million low-income Californians (children, parents and pregnant women, seniors and disabled). More than four out of five enrollees are children, youth, or women, and Latinos comprise over half of the caseload.

Made up of mostly childless adults, more than one million low-income Californians will be newly eligible for Medi-Cal under program expansion that goes into effect January 2014. The federal government will pay 100% of the cost of this expansion from 2014 to 2016, gradually reducing the federal share to 90% of the cost by 2020.

The California Healthy Families program, which set eligibility up to 250% of FPP, preceded the ACA Medicaid expansion requirements. In 2013, broken into three phases, the California Department of Health Care Services began transitioning Healthy Family participants to Medi-Cal. Once completed, no later than September 2013, Medi-Cal enrollment is projected to rise in 2013 with an approximate shift of 853,000 children from the Healthy Families Program to Medi-Cal.

As an additional point of interest, CMS Proposed Rule: Sec 15. Medical Support Payments, which proposed to allow an applicant to enroll in Medicaid prior to establishing paternity and obtaining medical support at application, but that enforcement of actual measures to cooperate would happen following enrollment in coverage.

Intersections

Gap Analysis - 8. Medicaid Expansion OverviewTITLE II—ROLE OF PUBLIC PROGRAMSSubtitle A—Improved Access to MedicaidSec. 2001. (a) Coverage for Individuals With Income at or Below 133 Percent of the Poverty Line – (VIII) Creates a new mandatory Medicaid eligibility category for all such “newly-eligible” individuals with income at or below 133 percent of the Federal Poverty Level (FPL) beginning January 1, 2014. Also, as of January 1, 2014, the mandatory Medicaid income eligibility level for children ages six to 19 changes from 100 percent FPL to 133 percent FPL. States have the option to provide Medicaid coverage to all non-individuals above 133 percent of FPL through a State plan amendment.

Eligible individuals include: all non-elderly, non-pregnant individuals who are not entitled to Medicare (e.g., childless adults and certain parents).

»



Enforcement N/A N/A

Case Maintenance

1. Expands coverage for incomes at or below 133% of poverty.

1. No significant impact to CA caseload as Medi-Cal eligibility is already at 250% of poverty.

2. No significant change to a number of good cause and non-cooperation actions, as CA program does not accept medical-only referrals.

Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 8. Medicaid Expansion Overview – Medicaid Expansion81

DiscussionFederal regulations allow states the option to accept medical only referrals. Due to technical limitations, the California Child Support Program currently does not accept Medical Only referrals. Because of this, the Workgroup does not anticipate a significant increase to LCSA child support caseloads once Medicaid expansion is completed. There may be a slight increase to TANF child support cases as a result of increased statewide outreach for all Human Services programs.

The Workgroup did note that as states determine if they will implement Medicaid expansion there may be an increase in TANF and Medical Only Interstate cases transmitted by other state child support programs to the California program.

The Workgroup is interested in obtaining eligibility information for single adults enrolling in Medi-Cal that may also have child support cases.Data sharing is discussed in Gap Analysis – 11. Enrollment Simplification.



Recommendation(s)



3. Efforts should be directed to OCSE and other state Child Support Programs offering comments to encourage examination of each state’s policy regarding the acceptance of Medical Only Cases from their state Medicaid agency. In those states that do accept medical only-referrals and are also expanding Medicaid, the Child Support Program can anticipate a significant increase in referrals with a proportionate increase in good cause and non-cooperation actions.

Operations - LCSADiscussion

This Medicaid expansion intersection aligns with the ongoing need of LCSAs to prepare their staff for ACA implementation and to increase collaboration and networking efforts with DCSS and the Department of Health Care Services.

Recommendation(s)

Operations & Policy




82 California Affordable Care Act Child Support Workgroup Report - 8. Medicaid Expansion Overview – Medicaid Expansion











83 California Affordable Care Act Child Support Workgroup Report - 8. Medicaid Expansion Overview – Medicaid Expansion

Beginning in January 2014, the Medicaid income eligibility standard will be aligned with the ACA affordability standard by requiring the use of MAGI to determine Medicaid eligibility. Under 435.1200, Medicaid agencies will be tasked with the responsibility for coordinated eligibility and enrollment processing with other insurance affordability programs. Aligning income standards for Medicaid, Exchanges and employers allows for simplified application processes for individuals accessing services and standardization amongst programs.

Intersections

DiscussionIn the CA Child Support program, the income standard when establishing or modifying an MSO is determined from a party to the case is gross income.

CA Family Code 4058 e defines gross income as: (a) The annual gross income of each parent means income from whatever source derived, except as specified in subdivision (c) and includes, but is not limited to, the following: (1) Income such as commissions, salaries, royalties, wages, bonuses, rents, dividends, pensions, interest, trust income, annuities, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, social security benefits, and spousal support actually received from a person not a party to the proceeding to establish a child support order under this article. (2) Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business. (3) In the discretion of the court, employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts. (b) The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children. (c) Annual gross income does not include any income derived from child support payments actually received, and income derived from any public assistance program, eligibility for which is based on a determination of need. Child support received by a party for children from another relationship shall not be included as part of that party’s gross or net income.

Gap Analysis - 9. MAGIINCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED ADJUSTED GROSS INCOME (MAGI) Sec. 2002(a) Income eligibility for nonelderly determined using modified gross income. Beginning 1/1/2014, States are required to use modified gross income to determine Medicaid eligibility, the same measure used in the State Exchanges. (b) Income disregards and (c) asset tests would no longer apply in Medicaid, except for long-term services and support.

»


Establishment 1. MAGI is now income standard used across programs

1. Gross income is the income standard for MSO

Enforcement N/A N/A


Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 9. MAGI – Medicaid Expansion84

MAGI is defined under Section 36B of the Internal Revenue Code (IRC). Subject to a few exceptions, eligibility will be based on adjusted gross income as reported for federal income tax purposes. Previously, state Medicaid programs were allowed flexibility to apply various income deductions and disregard those that were not uniformly applied across states. There still remain some questions about how states will ultimately apply the new rules15.

For the purposes of comparing the high level differences between MAGI and gross income, MAGI does not allow depreciation, exclusion of business expenses, losses from investments or business, and does not exclude exemptions for tax purposes from income.

The two most significant differences from the child support perspective:

» The inclusion of all individuals in the household for MAGI purposes, which include new spouses and siblings that may be residing in the household

» The NCP does not get credit for child support payments made under the MAGI. For California guideline calculations, gross income is reduced by child support payments made to other cases.

» A parallel discussion can be found in in Gap Analysis – 2. Coverage Source, and 3. 5% v. 8%, comparing the child support definition of reasonable as 5% of gross income and the ACA definition of affordable at 8% of household income (MAGI). The recommendations and discussions are the same and repeated below.


With the implementation of the ACA, having different standards for exemptions for obtaining coverage may lead to confusion and uncertainty for parents with child support cases, employers, LCSAs, and court authorities. The Workgroup reviewed the pros and cons of recommending the alignment of the child support definition of reasonable with the ACA definition of affordable. Specific income scenarios were examined comparing different income standards.

Found in Appendix C1 and C2 and supplemented with Appendix C3, the Workgroup examined scenarios based on income and premium costs to determine when an individual may be exempt from obtaining healthcare coverage for a dependent under the ACA but ordered to enroll a dependent under a medical support order.

Premium costs were taken directly from the Covered California™ website. (Reference Appendix C3) The calculator defaults to the silver plan.

The scenarios covered five income groups ranging from TANF recipient to a high wage earner with an annual income of $75,000. (Reference Appendix C1)

As shown in Appendix C1, it was to be expected that at certain income levels under the ACA affordability test, the individual would not be exempt from obtaining healthcare coverage but the individual’s dependent would be exempt from obtaining healthcare coverage. Yet in the same scenario, under the child support reasonableness test, an MSO order would be established and the individual would be ordered to enroll their dependent in ESI.

85

13 Health Advocate Newsletter. Modified Adjusted Gross Income (MAGI): A Primer. April 2013.

California Affordable Care Act Child Support Workgroup Report - 9. MAGI – Medicaid Expansion

At this time the Workgroup is recommending not to align the current definition of reasonable from 5% of gross income found in California Family Code, 3751.(a) (1) with the ACA definition of affordable as 8% of household income for the following reasons:

» OCSE has cautioned states not to make major changes to their state Medical Support regulations until ACA implementation begins and historical data can be gathered. Once the Exchange opens, child support will have real-time data regarding premiums for both the Exchange and employers, as well as stratification of coverage across coverage sources.

» The definition of reasonable for child support purposes is already codified in California Family Code and meets the current federal requirements. Without knowing what the future plans will be for the Medical Support program at the federal level, undertaking a change this significant would be premature on the part of the California Child Support program.

» Legislation would have to be prepared and passed

» Support for the change would need to be sought from the AB1058 commissioners, family law judges, and other child support stakeholders

» LCSA and family court procedures would have to be changed

» LCSA staff, AB1058 commissioners, and family judges would need to be trained

» System changes would have to be developed

» Guideline calculators would have to be updated

» State and local websites would have to be updated

» State, local, and judicial forms, documents, and notices would have to be amended

» Outreach and FAQ would have to be developed for parents and employers

» Based on the scenarios provided above, keeping the current definition of reasonable would likely result in an increased number of dependents in the IV-D caseload being covered with private healthcare coverage.

» In accordance with California statute, with few exceptions, new spouse income should not be included in any type of child support determination.

» Obtaining the MAGI amount for MSO determination would extend the length of time it takes to establish an MSO.

» When establishing or modifying a child support obligation and MSO, two different sets of income would need to be requested, explained, and obtained, adding a layer of complexity and increasing the possibility of different jurisdictions applying different rules.

(Parallel discussions can be found in Gap Analysis – 1. Tax Exemption; 3. 5% v. 8%; and 9. Premium Tax Credits)

Recommendation(s)



86 California Affordable Care Act Child Support Workgroup Report - 9. MAGI – Medicaid Expansion


The recommendation at this time is to continue the use of gross income as the income standard for child support obligation and medical support determinations.

The Workgroup does recommend that the issue continue to be studied as the ACA is implemented.

Recommendation(s)

1. Establish a collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA and develop a work plan to:

Operations & Policy

» Determine the feasibility and impact of changing the child support income standard to MAGI.

» Closely monitor federal workgroups, rules, and guidance on the issue






N/A

Discussion - LCSA

The Workgroup identified this intersection may have an impact on the day-to-day operations of the LCSA. It is anticipated that parents and employers will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements and to seek clarification of the different definitions of reasonable and affordable between child support and the ACA.

Recommendation(s)

Operations & Policy















13 Health Advocate Newsletter. Modified Adjusted Gross Income (MAGI): A Primer. April 2013.


CHIP reauthorization allowed CA Department of Health Care Service to begin implementation to move Healthy Family participants to Medi-Cal as described in Gap Analysis – 8. Medicaid Expansion. By September 2013, 853,000 California children will shift from the Healthy Families program onto Medi-Cal.

Intersections

DiscussionUnder CHIP regulations children with private coverage were not eligible for CHIP. The Workgroup believes that by moving these children from Healthy Families to Medi-Cal this barrier will be removed and allow better cooperation and collaboration.

The Department of Health Care Services (DHCS) All County Welfare Directors Letter (ACWDL) number 12-30 dated October 31, 2012, and Assembly Bills 1494 (Chapter 28, Statutes of 2012) and 1468 (Chapter 438, Statutes of 2012) provide for the transition of children from the current State Children’s Health Insurance Program (S-CHIP) known as Healthy Families Program (HFP) to the Medi-Cal program effective January 1, 2013.

» Existing HFP children will be transitioned to Medi-Cal in a phased approach beginning January 1, 2013 and ending no sooner than September 2013

» The new Medi-Cal aid codes will not be referable to the Child Support program

» These cases will have no impact on reporting (1257)

» The LCSAs do not need to take any action on these cases unless they are advised by the CP that the dependent is on Medi-Cal, at which time they would update CCSAS to reflect the new insurance policy

Gap Analysis - 10. CHIP ReauthorizationADDITIONAL FEDERAL FINANCIAL PARTICIPATION FOR CHIP.Section 2101(a) provides funding for CHIP through September 30, 2015 (an additional two years compared to current law), continues the authority for the program through 2019, and requires states to maintain eligibility standards for children in Medicaid and CHIP through 2019.

CHIP-eligible children who cannot enroll in the program due to federal allotment caps must be screened to determine if they are eligible for Medicaid and if not would be eligible for tax credits in a plan in the state Exchange.

»



Enforcement N/A N/A

Case Maintenance 1. Shifted children from Healthy Families program to Medi-Cal

1. Will allow for increased collaboration between programs

Other N/A N/A

California Affordable Care Act Child Support Workgroup Report - 10. CHIP Reauthorization – Medicaid Expansion89


The Workgroup has determined no short-term legislative change for this intersection is required prior to the January 2014 ACA implementation date.

Recommendation(s)



OperationsDiscussion - LCSA

The Workgroup identified this intersection as having minimal impact on LCSA staff. To provide a broader base of knowledge for LCSA staff, CHIP reauthorization and Healthy Families transition will be included in an ACA training package under development.

Recommendation(s)

Operations & Policy














90 California Affordable Care Act Child Support Workgroup Report - 10. CHIP Reauthorization – Medicaid Expansion

CMS Proposed Rule clarifies: §155.345 Proposes enhanced coordination and communication between the Exchange and state Medicaid/CHIP agencies. Proposes a phased-in approach for the use of combined eligibility notices, with a January 1, 2015 deadline for Exchanges to implement the use of a combined eligibility notice. Proposes that the agreement the Exchange enters into with agencies administering insurance affordability programs addresses the responsibilities of each agency, as of January 1, 2015, in order to provide for a combined eligibility notice (to the extent feasible) promptly and without undue delay to an applicant and the members of his or her household. Proposes that prior to January 1, 2015, the Exchange include coordinated content into the notice of eligibility determination provided to the individual when state Medicaid/CHIP agencies transfer an individual’s account to the Exchange, or that the Exchange issues a combined eligibility notice when the Exchange is the last agency to make an eligibility determination, except for an eligibility determination for Medicaid on a non-MAGI basis.

Intersections

DiscussionWhile the Child Support Program was not specifically cited in the ACA as one of the mandated agencies under the enhanced coordination and communication requirements, HHS over the last several years has worked to create opportunities to improve information sharing, system integration, and program coordination among Center for Medicare and Medicaid Services (CMS), Administration for Children and Families (ACF) and the Food and Nutrition Services (FNS), with the goal of expanding access and improving outcomes.

In addition, having access to Medi-Cal eligibility data will assist child support-related case tracking and maintenance of effort. This data will also assist child support in locating newly eligible single adults party to a child support case.

Gap Analysis - 11. Enrollment SimplificationSubtitle C – Medicaid and CHIP Enrollment SimplificationSec. 2201. Enrollment Simplification and coordination with State Health Insurance Exchanges: Allows individuals to apply for and enroll in Medicaid, CHIP, or the Exchange through a State-run website. Requires State Medicaid and CHIP programs and the Exchange to coordinate enrollment procedures to provide seamless enrollment for all programs.

»

California Affordable Care Act Child Support Workgroup Report - 11. Enrollment Simplification – Medicaid Expansion



Enforcement N/A N/A

Case Maintenance

1. Access to child support data for outreach efforts for Medicaid expansion

1. Access to Medi-Cal data for newly eligible single adults with child support cases for location purposes

2. Updating case records regarding Medi-Cal eligibility status

Other N/A N/A

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OCSE has issued guidance encouraging state IV-D programs to reach out to Medicaid and Exchanges to increase collaboration to better serve program participants.

» AT-10-10 SUBJECT: State Child Support Enforcement Program Flexibility to Improve Interoperability with Medicaid and CHIP

» PIQ - 12-02 SUBJECT: Partnering with other programs, including outreach, referral, and case management activities

» Grant #HHS-2012-ACF-OCSE-FQ-0551 State Systems Interoperability and Integration Projects: The original grant announcement stated: “The Affordable Care Act is spurring States to create new eligibility and enrollment systems for Medicaid and Health Insurance Exchanges.” The grant was released by HHS/ACF through the Office of Support Enforcement – OCSE – giving clear indication that the Child Support Program is seen as a partner in the successful implementation of the ACA. The grants were awarded to seven states, including California. The grants are meant to “…allow states to explore and plan for improved interoperability and integration in eligibility and enrollment, case management, and other related functions….” California’s grant application called out the Department of Child Support Services as one of the grant stakeholders.

» Covered California Outreach and Education Grant Program: Covered California recently awarded $37M in grants to 48 organizations. “The grants will be used to conduct outreach and education programs on how, starting in 2014, Californians can access affordable healthcare coverage under the federal Patient Protection and Affordable Care Act.” Two of the grantee organizations included their local Child Support programs as partners in the outreach grants and activities, in recognition of the unique populations in the IV-D caseloads.

In October 2013, The California Department of Health Care Services will begin sending information regarding enrollment and changes to eligibility to Covered California™. DCSS has reported that there have been discussions regarding the sharing of caseload information between child support and Medi-Cal. The initial assessment confirmed that at this time DCSS can only share case participation data in regards to medical coverage information. This data exchange is already occurring.

Currently DCSS/LCSA receives a nightly eligibility file that automatically updates CCSAS if a status is changed for a TANF participant. LCSAs have access to MEDS for online look up and also receive automated updates on all medical referrals.

Having an automated interface with MEDS of all Medi-Cal recipients will further ensure that case data is up-to-date for federal reporting requirements. In addition, having access to all Medi-Cal recipients could be used as a tool to locate NCPs who may be newly eligible under Medicaid expansion.

92 California Affordable Care Act Child Support Workgroup Report - 11. Enrollment Simplification – Medicaid Expansion

Recommendation(s)



3. The Workgroup recommends that efforts be directed to DCSS and the California Department of Health Care Services offering comment and recommendations regarding the importance of collaboration for both programs including:

» Sharing of child support case participants for outreach efforts by Medi-Cal

» Sharing of full Medi-Cal eligibility files for child support related case tracking and maintenance efforts


The Workgroup has identified that statewide child support performance may be positively influenced if data collected or reported by Medi-Cal and Exchanges is shared with the Child Support Program.

In addition, the Workgroup identified that case data maintained by child support may be of assistance to Medicaid, IRS, and Exchanges to support the goals of the ACA.

Collaboration between programs should be encouraged and barriers to data sharing and systems interoperability must continue to be identified and broken down.

Recommendation(s)

Operations & Policy

1. CSDA-led development of ACA training and intersections with Child Support program













» Maintain access to Medi-Cal eligibility data and seek to expand data sharing agreements

93 California Affordable Care Act Child Support Workgroup Report - 11. Enrollment Simplification – Medicaid Expansion

In 2010, California was the first state in the nation to enact legislation to implement the provisions of the federal Affordable Care Act by creating a healthcare marketplace—Covered California™.

Covered California™ is charged with creating a new insurance marketplace in which individuals and small businesses can get access to health insurance. With coverage starting in 2014, Covered California will help individuals compare and choose a health plan that works best for their health needs and budget. Financial help will be available from the federal government to help lower costs for people who qualify on a sliding scale. Small businesses will be able to purchase competitively priced health plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

On May 23, 2013 Covered California™ announced 13 diverse health insurance plans that will offer affordable, quality healthcare coverage to millions of Californians in 2014. The plans reflect a mix of large non-profit and commercial plan leaders, along with well-known Medi-Cal and regional plans.

Covered California™ will offer child-only qualified health plans. Premium tax credits and cost-sharing subsidies are available for eligible individuals who purchase child-only plans.

Gap Analysis - 12. Health Insurance Exchange OverviewAFFORDABLE CHOICES OF HEALTH BENEFIT PLANS.SEC. 1311. (b) (1) American Health Benefit Exchanges: Establishes that each State shall, not later than January 1, 2014, establish an American Health Benefit Exchange that:

(A) facilitates the purchase of qualified health plans;(B) provides for the establishment of a Small Business Health Options Program (SHOP Exchange)(2) MERGER OF INDIVIDUAL AND SHOP EXCHANGES: A State may elect to provide only one Exchange in the State for providing both Exchange and SHOP Exchange services to both qualified individuals and qualified small employers, but only if the Exchange has adequate resources to assist such individuals and employers.

Subtitle D–Available Coverage Choices for All AmericansPART I–Establishment of Qualified Health PlansSec. 1301. (a) Qualified health plan defined: Requires qualified health plans to be certified by Exchanges, provide the essential health benefits package, and be offered by licensed insurers that offer at least one qualified health plan at the silver and gold levels.

SEC. 1302. ESSENTIAL HEALTH BENEFITS REQUIREMENTS.Defines the Essential Benefit package as coverage that: (1) provides for the essential health benefits defined below; (2) limits cost-sharing as required below; and (3) provides either the bronze, silver, gold, or platinum level of coverage.

SEC. 1302. (f) Child-only Plans: If a qualified health plan is offered through the Exchange in any level of coverage specified under subsection (d), the issuer shall also offer that plan through the Exchange in that level as a plan in which the only enrollees are individuals who, as of the be-ginning of a plan year, have not attained the age of 21, and such plan shall be treated as a qualified health plan.

»

California Affordable Care Act Child Support Workgroup Report - 12. Health Insurance Exchange Overview94

Diane Stanton, Special Consultant for External Affairs, Covered California provided the following information regarding undocumented workers with dependents:

Only tax filers, or dependents of tax filers, who are U.S. citizens, nationals, or lawfully present immigrants may be eligible to enroll in a Qualified Health Plan (QHP) and receive premium tax credits through Covered California™. However, although the undocumented parents will not be eligible to receive subsidized coverage for themselves, they can apply for subsidized coverage through Covered California™ child-only QHPs for their citizen child(ren) as long as they file their taxes with IRS.

However, married couples are required to file a joint tax return to be eligible to receive subsidies, and in the case of undocumented parents, at least one parent must be a “resident alien” under the IRS rules to be able to file a joint tax return. For an undocumented parent to be considered a “resident alien,” he or she must meet the IRS “substantial presence test.” To meet the substantial presence test, an individual must have been physically present in the U.S. on at least:

1. 31 days during the current tax year, and

2. 183 days during the three-year period that includes the current tax year and the tax years immediately before

To satisfy the 183 days requirement, the individual must count:

» All of the days he or she was present in the current year,

» One-third of the days he or she was present in the first year before the current year, and

» One-sixth of the days he or she was present in the second year before the current year.

The following example illustrates the application of the substantial presence test:

John and Linda are married, undocumented aliens who live in California. They have two daughters, Mary and Jane, who were born in California. John was physically present in the United States on 120 days in each of the years 2010, 2011, and 2012. The following days will be counted to deter-mine if John meets the substantial presence test for 2012 tax year: the full 120 days of presence in 2012, 40 days in 2011 (1/3 of 120), and 20 days in 2010 (1/6 of 120). Because the total for the three-year period is 180 days, John is not considered a resident under the substantial presence test for 2012. The same test applies to John’s wife, Linda, and if she does not meet the test either, they will both be considered nonresident aliens and will not be allowed to file a joint return (they must file separate returns as nonresident aliens for 2012), and therefore, they will not be qualified to enroll Mary and Jane in a child-only QHP through Covered CaliforniaTM either.

Assuming that John and Linda are qualified taxpayers and are eligible to file a joint tax return and enroll their daughters in a child-only QHP through Covered CaliforniaTM, federal law creates specific rules for calculation of credits and subsidies for mixed-immigration status families (see 26 CFR § 1.36B-3(l)). For example, a tax filer family of four with two unauthorized or undocumented family members will have its income-eligibility based on the established income threshold for a family of two, and the family’s total reported household income will then be adjusted (reduced) by a fixed amount (calculated according to a specified formula) to account for the excluded undocumented household members.

By 2017, an estimated 2.3 million Californians will be newly enrolled in a health plan through Covered California™.

Covered California will open the marketplace October 2013 to begin enrolling eligible Californians in healthcare coverage that will begin January 2014. Additional information on Covered CaliforniaTM

may be found at www.CoveredCA.com.

95 California Affordable Care Act Child Support Workgroup Report - 12. Health Insurance Exchange Overview

Intersections

DiscussionWith Covered California™ in the final preparations to begin open enrollment in October 2013, the California Child Support Program has ready access to information and resources to study the impact of the ACA on the program in order to make informed decisions about the future of providing medical support services to the child support caseload. Collaborative relationships with Covered California™ and state/local child support programs are firmly established and discussions of shared initiatives have begun.

Workgroup discussions and recommendations with Gap Analysis – 2. Coverage Source support this section and are supplemented and/or repeated below as needed.


Qualified Health Plans that will be offered through Covered California™ clearly meet the definition of “other entity.” CP or NCP with medical support orders can access Covered California™ to purchase private health plan that best fits their financial and individual needs from a wide selection of coverage options including child-only plans.

The Workgroup has determined that no changes to the definition of “available” pursuant to California family code need to be addressed at this time, as:

» The definition is not limited to employer-offered insurance only.

» QHP offered through the CA health insurance Exchange (Covered CaliforniaTM) can be considered a viable “other entity.”

» MSO-generic language for “other entity” does not need to be changed or clarified to include specifically QHPs offered through the CA health insurance Exchange.

Recommendation(s)




Establishment

1. Establishes Exchanges to facilitate the purchase of QHP

2. Must offer at least one child-only plan

3. Required minimum benefits align with child support

1. Private coverage available through ESI or other entity

2. Child-only plans may encourage ordered parents to seek coverage when ESI is not available

3. Required minimum benefits align with ACA

4. Courts and LCSAs may access Covered California site to obtain premium costs when establishing orders

Enforcement N/A N/A


Other N/A N/A



CA Family code 3751(a)(2): In any case in which an amount is set for current support, the court shall require that health insurance coverage for a supported child shall be maintained by either or both parents if that insurance is available at no cost or at a reasonable cost to the parent.

California Family code allows for the establishment of an MSO for one or both parties to the case. Current practice within the California Child Support Program during the establishment of an MSO is to generally order both parents to provide and maintain coverage for the children if it is available at no or reasonable cost. If known, the cost of the premium is included in the guidelines calculation when determining the Child Support obligation.

Federal regulations allow states the option not to enforce CP medical support orders. California has taken this option and does not enforce against the CP. In situations when both parents are ordered to provide coverage, if the CP has the child enrolled in public healthcare it is standard practice for the courts and the LCSAs to consider the CP as compliant with their MSO. It is also the current practice for courts to not order CPs to enroll their child in public healthcare even if it appears they meet the eligibility requirements.

For the NCP, to remain compliant with their MSO, they must provide and maintain insurance coverage for the dependent if it is available at no or reasonable cost, even if the dependent is enrolled in public healthcare. It is the current practice for the courts and LCSAs to consider the NCP compliant with their MSO if healthcare coverage through their employer is not available, reasonable, or accessible. At this time NCPs are not required to pursue healthcare coverage for their dependent from “other entities.” California Family code for health insurance, by definition, includes “other entity.” Until the ACA, an instance of “other entity” as an available insurance source in California was rarely an option.

California code for health insurance, by definition, includes “other entity.” Until the ACA, an instance of “other entity” as an available insurance source in California was rarely an option.

As of January 2014, if the NCP who is ordered to obtain healthcare for the dependent fails to cover the child, or if insurance is not available or reasonable through ESI or an Exchange, the CP may be penalized under the ACA for failing to maintain minimum essential coverage if the CP claims the dependent for tax purposes. The CP would be exempt from a tax penalty if they have covered the dependent though public, ESI, or an Exchange.

Recommendation(s) The practice of ordering both parents to provide healthcare coverage adds a layer of complexity for the California Child Support Program when establishing and enforcing MSOs. For the CP, after the implementation of the ACA in January 2014, the financial and personal responsibility for the CP to ensure that the dependent has healthcare coverage will increase dramatically. California trial courts have the flexibility to change standard operating procedures when making a determination if either or both parents should be ordered to maintain health insurance coverage for their dependent. LCSAs have always worked closely with the AB 1058 commissioners and family law judges to develop standardized filings and recommendations for the establishment or modification of MSOs. To encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA, the Workgroup makes the following recommendations.

As discussed in Gap Analysis – 1. Tax Exemption, currently in California, the CP is generally not


a party to the child support action until after entry of an order/judgment. In California, the Child Support agency prepares and serves a Proposed Judgment that becomes the Judgment by default if no Answer is filed. Given that the CP is not a party to the action, the agency cannot enter an order that the CP provide medical insurance coverage. However existing state law requires that one or both parents be ordered to provide coverage. The only option is to order the NCP to provide the coverage. Further complicating the judgment of default situation is the fact that only the court, not the local child support agency, can allocate the dependency exemption.

1. Establish a collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA and develop a work plan to:

Operations & Policy» Identify best practices and develop guidelines regarding:



» Consideration should be given to ordering the NCP to provide coverage in cases of where the NCP has stable employment with employer sponsored insurance that meets the test of reasonable, and the NCP has the financial resources to support the coverage

» If child is eligible and enrolled in Medi-Cal, determine if California Family code and/or current practice can be modified to:

» Existing Orders: Consider both parties as compliant with the MSO regardless of NCP financial ability to obtain private healthcare for dependent. Continue sending a NMSN if a new employer is located (current practice).

» New or Modified Orders: Determine if the practice to order both parents to obtain healthcare coverage if the dependent is enrolled in Medi-Cal remains the preferred practice.


» Research and examine scenarios when ESI is not available to the ordered parent but the other parent does have the financial resources to obtain healthcare coverage for the dependent through an Exchange.

» Make no change to current code or current practice until federal intent regarding medical support responsibilities is determined.

» Establish consistent response when insurance is not available or reasonable through ESI. Should a child support agency actively encourage the ordered party to go to the Exchange and obtain a QHP that will meet the definition of reasonable?

» Track and review the impact of the chosen solution.


» Identify and develop FAQs and scenarios for use by AB1058 commissioners and family law judges regarding the issue





» Review and update judicial and/or LCSA MSO related documents as needed

Discussion - LCSA

The Workgroup identified this intersection may have an impact on the day-to-day operations of the LCSA. It is anticipated that parents will be contacting the LCSAs regarding their responsibilities in relationship to the ACA mandates and MSO requirements and to ask for additional supportive services.

Part of the LCSA training will include information regarding the definition of “qualifying events” to enroll through the Exchange outside of open enrollment periods. For the child support caseload, change of employment, loss of current employer coverage, and establishment of a medical support order are considered qualifying events.

Recommendation(s)

Operations & Policy















Premium tax credits are available to individuals and families with incomes between 100% of the federal poverty level ($23,550 for a family of four) and 400% of the federal poverty level ($94,200 for a family of four) that purchase coverage in the health insurance Exchange in their state. Premium tax credits are also available to lawfully residing immigrants with incomes below 100% of the poverty line who are not eligible for Medicaid because of their immigration status.

To receive the credits, individuals must be U. S. citizens or lawfully present in the United States. They can’t receive premium tax credits if they are eligible for other “minimum essential coverage,” which includes most other types of health insurance such as Medicare or Medicaid, or employer- sponsored coverage that is considered adequate and affordable.

While tax credits can help lower monthly premium payments, cost-sharing subsidies protect lower-income individuals with health insurance from high out-of-pocket costs at the time of service. Individuals may be eligible for subsidies if their income is less than about $27,936 for a single person and less than approximately $57,636 for a family of four in 2012. Individuals who qualify for cost-sharing subsidies will pay less for healthcare expenses, including costs incurred when receiving medical care. These government financial assistance programs are offered on a sliding scale, based on annual household income.

Intersections

DiscussionThe following details regarding tax credits for child only plans was provided by Diane Stanton, Special Consultant for External Affairs, Covered CaliforniaTM.

The affordability test is based on “self-only” coverage for the employee only. Therefore, if an employer gives its employees the option of enrolling in a family plan to cover the employees’ dependents (spouse and children) but the employer only contributes toward the employee-only coverage (but not toward the dependents’ coverage), and the employee’s self-only coverage is affordable (employee’s share of premiums for self-only coverage, not the family plan, is not more than 9.5% of his annual household income) and provides minimum value, the dependents will NOT be eligible to receive tax subsidies through Covered California™ because they are deemed to be eligible

Gap Analysis - 13. Tax CreditsSubtitle E – Affordable Coverage Choices for All Americans Part I – Premium Tax Credits and Cost-Sharing Reductions Sec. 1401(a) Sec 36(b): Refundable tax credit providing premium assistance for coverage under a qualified health plan. Amends the Internal Revenue Code to provide tax cred-its to assist with the cost of health insurance premiums.

»

California Affordable Care Act Child Support Workgroup Report - 13. Tax Credits – Health Insurance Exchanges



Enforcement

1. Individual may qualify for a premium tax credit or subsidy through Exchange

1. Individual could receive a tax credit and not be in compliance with MSO

2. Ordered parent may be required to enroll dependent through Exchange but not be eligible for a tax credit


Other N/A N/A

100

for (or to have access to) employer-sponsored minimum essential coverage through the employee. That is the case even if the cost of premiums the employee has to pay for family coverage exceeds 9.5% of the employee’s household income.

However, if the employer does not provide such option at all (does not offer any family plans to its employees), then the employees’ dependents are deemed ineligible for employer-sponsored minimum essential coverage and can get subsidized coverage through Covered California™.

In a case of child-only coverage for an employee’s child(ren), the subsidy will be calculated the same way as it is calculated for an individual (the adjusted monthly premium for the applicable child-only benchmark plan minus the product of taxpayer’s household income and the applicable percentage based on the FPL) (see 26 CFR § 1.36B-3(g)). For additional children, adjusted monthly premium will be calculated either by adding up each individual rate of each child or by determining group rates for two or more children.

The maximum out-of-pocket (OOP) for an individual policy is $6,250 for self-only coverage or $12,500 for family coverage in 2013. It’s unknown at this time whether the maximum OOP expenses would be the same for a child-only policy. Premiums for health insurance policies offered at Covered California™ are currently unavailable but the cost of coverage can be estimated by visiting cost-estimate calculator at coveredca.com



Recommendation(s)




As discussed in Gap Analysis – 1. Tax Exemption, currently, AB1058 commissioners and family law judges determine the allocation of the dependency exemption as a part of the child support order determination. The MSO currently has no relevance to the allocation of the tax exemption.

With the implementation of the ACA, the allocation of the tax exemption may disadvantage one or both of the party’s ability to comply with the ACA.

Only individuals who may claim a dependent for federal tax purposes are eligible to receive a premium tax credit. This may place an ordered parent in a child support case at a financial disadvantage if they attempt to comply with a medical support order when obtaining coverage through a health insurance Exchange.

Gap Analysis – 1. Tax Exemption provides additional detailed discussion and recommendations regarding the designation of the dependency exemption. The following recommendations should be included in the collaborative workgroup with California Family Court.

101 California Affordable Care Act Child Support Workgroup Report - 13. Tax Credits – Health Insurance Exchanges

Recommendation(s)

1. Establish collaborative workgroup with AB1058 commissioners and family law judges to encourage consistent application and standardization when MSOs are established or modified after the implementation of the ACA and develop a work plan to:

Operations & Policy

» Determine the feasibility and impact that prospective or modified child support orders should have a specific finding of the dependency exemption to one of the parties to the order.

» Develop guidelines on the allocation of the dependent exemption when establishing or modifying

» MSOs

» Stipulations

» Default judgments

» Encourage the allocation of the dependency exemption be given to the party ordered to provide health insurance coverage for the child

» If both parties are ordered to provide coverage the following factors should be considered:

» CP should be allocated the tax exemption in most cases to allow greater control and flexibility for the CP as health insurance coverage can be fluid.

» Consideration should be given to ordering the NCP to provide coverage in cases where the NCP has stable employment with employer sponsored insurance that meets the test of reasonable, and the NCP has the financial resources to support the coverage.

» Determine the feasibility and impact of aligning the definition of “reasonable” with the ACA definition of “affordable.”

» Research and examine barriers that may arise when a CP is not a party to the child support action until after entry of an order/judgment

» Any consideration of a change in existing policy and practices should evaluate the impact on the calculation of guideline child support and ability to comply with related court orders

» Track and review impact of any temporary solutions






» Guidelines calculator should be examined to determine what level of effort is needed to program dependency exemption as a mandatory field

Discussion - LCSA

The Workgroup identified this intersection may have an impact on the day-to-day operations of the LCSA. It is anticipated that parents, particularly NCPs, may be contacting the LCSA to seek information regarding obtaining a tax exemption in order to obtain a tax credit when enrolling a dependent through an Exchange.


Recommendation(s)

Operations & Policy















Covered California™ will provide the access for individual family members to apply for health insurance affordability programs with each family member having a unique Client Identification Number (CIN). This practice will allow each family member to maintain continuity of coverage because the system can accommodate moving between public and private coverage options ac-cording to changes in status or qualifying events (pregnancy, recently unemployed, turned 65, etc.). Additionally, this capability will accommodate unique family dynamics such as one family member with employer sponsored coverage, another on a Covered California™ qualified plan with a premium subsidy, and a child receiving Medi-Cal.

Intersections

DiscussionAccess to Exchange data may assist LCSAs in meeting not only medical child support requirements but also may add in location efforts. The child support program provides services to individuals from all income levels. Unlike most social service programs, eligibility is not based on income. Officials from DCSS and California’s health benefit Exchange have started discussions about outreach initiatives to CPs and NCPs regarding the benefits of the health insurance Exchange.



Gap Analysis - 14. Exchange, Streamlining EnrollmentSec. 1413. Streamlining of procedures for enrollment through an Exchange and State Medicaid, CHIP, and health subsidy programs: Requires the Secretary to establish a system for the residents of each State to apply for enrollment in, receive a determination of eligibility for participation in, and continue participation in applicable state health subsidy programs. The system will ensure that if any individual applying to an Exchange is found to be eligible for Medicaid or a state Children’s Health Insurance Program (CHIP), the individual is enrolled for assistance under such plan or program.

»

California Affordable Care Act Child Support Workgroup Report - 14. Exchange; Streamlining Enrollment



Enforcement N/A N/A

Case Maintenance 1. Access to child support data for outreach efforts

1. Access to Exchange data of participants for location efforts

Other N/A N/A

104

Recommendation(s)



3. The Workgroup supports ongoing collaboration and shared initiatives between DCSS and the California health benefit Exchange and recommends including LCSA participation in collaboration meetings. LCSAs are interested in reviewing the types of data maintained by Covered California™ and the possibility of establishing an automated exchange of data:

» Sharing of child support case participants for outreach efforts by California Health Benefit Exchange

» Sharing of Covered California™ participants’ data files for child support-related case tracking of medical support compliance and NCP and CP location efforts


The Workgroup has identified that statewide child support performance may be positively influenced if data collected from the Exchanges is shared with DCSS and the LCSAs. In addition, the Workgroup identified that case data maintained by child support may be of assistance to the health benefit Exchanges to support the goals of the ACA.

Collaboration between programs should be encouraged and barriers to data sharing and systems interoperability should continue to be identified and resolved.

Recommendation(s)

Operations & Policy

1. CSDA-led development of ACA training and intersections with the Child Support Program











105 California Affordable Care Act Child Support Workgroup Report - 14. Exchange; Streamlining Enrollment



» Analyze Covered California™ participant data for possible related child support activities. Determine possibility of automated interface

106 California Affordable Care Act Child Support Workgroup Report - 14. Exchange; Streamlining Enrollment

Appendix C - Others

107

5% of reasonable compared to 8% of Household Income Scenarios (Prepared by Kathy Sokolik, Director Santa Cruz/San Benito Region, June 2013)

The ACA defines “affordable” as 8% of household’s income

From employer's perspective, they can use 9.5% of box #1 on the employee's W2, to estimate "affordable", in absence of household income info

Under current CA law, health insurance coverage shall be rebuttably presumed to be reasonable in cost if the cost to the responsible parent providing medical support does not exceed 5% of his or her gross income. In applying the 5% for the cost of health insurance, the cost is the difference between self-only and family coverage.

First group of scenarios: Determined the medical premiums using the Covered CaliforniaTM website. It defaults to the Silver plan. Using the incomes below calculations based on NCP (1 adult); 1 adult and one minor (under age 21); and minor-only. The 1st chart below shows the monthly premium cost based on the income levels and household size. The premium reflects the actual premium -- the subsidy was from the premium so the cost reflects the parent’s out-of-pocket expense. The “Difference” row reflects the $$ difference between self-only and adding a child. All of these scenarios assume the parent paying for insurance is claiming the dependent -- thus eligible for the subsidy.

Five income levels represented: TANF = $0 income Low = $16,640/year; $1387/month; 40 hours, min wage ($8.00/hr)Medium = $30,000/year; $2500/month; 40 hours, $14.42/hourHigh = $48,000/year; $4,000/month; 40 hours, $23.08/hourV High = $75,000/year; $6250/month; 40 hours, $36.06/hour

108 California Affordable Care Act Child Support Workgroup Report – Appendix C1

Income $16,640.00 $30,000.00 $48,000.00 $75,000.00

1 adult $51.00 $209.00 $241.00 $241.00

1 adult, 1 minor Medi-Cal-eligible $150.00 $380.00 $387.00

DIFFERENCE Medi--Cal-eligible $59.00 $139.00 $146.00

1 minor only $51.00 $146.00 $146.00 $146.00

ACA “affordable”

*Cover self?**Cover fam-

ily?IV-D

“reasonable”Add child?

Child only?

8% 5%

TANF $0.00 No No $0.00 No No

$16,640.00 $110.93 Yes No** $69.33 No** Yes***

$30,000.00 $200.00 Yes Yes $125.00 Yes No****

$48,000.00 $320.00 Yes No* $200.00 Yes Yes

$75,000.00 $500.00 Yes Yes $312.00 Yes Yes

* The one adult + one minor premium cost would be $380, which is greater than the $320 “affordability” test under the ACA.

** One adult + one child at this income level would make the family eligible for Medi-Cal -- if the child resided with the parent.

*** Under IRS rules, the NCP would be obligated to provide coverage for self. Assuming the child is not in the NCP’s household by Medi-Cal definition; NCP would not be eligible for Medi-Cal option. So in effect, NCP would purchase for self @ $51.00 and a child-only plan for $51.00, for a total of $102.00 -- which would deem it affordable and reasonable.

**** Suppose the NCP says “I’m not going to cover myself - I’m taking the penalty instead.” Can we order the NCP to provide child-only? The difference between self-only coverage and self + one minor is $59.00 - well below the 5% marginal difference amount. The child-only, however, is $146 -- which is above the 5% marginal difference.


The next group of scenarios go back to employer-provided insurance. Assumptions: $200 for self-only coverage; adding a minor is an additional $100. The same questions: Is it affordable and/or reasonable under the ACA and CS rules? Assumed the employer offered a child-only plan -cost in line with the child-only plan offered through HBEX.

Federal Poverty Level

Add $4020 for each person above 8

ACA “affordable”

*Cover self?**Cover family?

IV-D “reasonable”

Add child?Child only?

8% 5%

TANF $0.00 No No $0.00 No No

$16,640.00 $110.93 Yes No $69.33 No** Yes

$30,000.00 $200.00 Yes Yes $125.00 Yes No

$48,000.00 $320.00 Yes Yes $200.00 Yes Yes

$75,000.00 $500.00 Yes Yes $312.00 Yes Yes

Household Size Poverty Guideline 138% 400%

1 $11,490 $15,856 $45,960

2 $15,510 $21,404 $62,040

3 $19,530 $26,951 $78,120

4 $23,550 $32,499 $94,200

5 $27,570 $38,047 $110,280

6 $31,590 $43,594 $126,360

7 $35,610 $49,142 $142,440

8 $39,630 $54,689 $158,520


Current medical support and child support guideline laws in California require the following:

» Provides that the court issue orders requiring one or both parents to provide medical insurance for the minor child (California Family Code section 3751(a)(2))

» Provides an income-based definition of “reasonable cost” for such medical insurance that the difference between the cost of self-only coverage and family coverage does not exceed 5% of the parent’s gross income (California Family Code section 3751(a)(2))

» Provides that the child’s uninsured health care expenses be allocated between the parents (California Family Code sections 4062(a)(2) and 4063)

» Provides that the cost of the child’s medical insurance shall be deducted from the income of parent paying the premium for purposes of determining guideline child support. (California Family Code section 4059(d)) An alternative used by some states is to allocate the cost of the child’s premium between the parents and not allow it as a deduction from income (add-on or additional support method)

» In addition, the cost of medical insurance for the parent or other children/dependents the parent is legally obligated to support shall be deducted from the income of the parent paying those premiums for purposes of determining guideline child support (California Family Code section 4059(d))

» California case law grants the courts broad authority to allocate the federal and state dependency exemption to the noncustodial parent in a child support proceeding and to order the custodial parent to execute the IRS form 8332 release (Monterey County v. Cornejo (1991) 53 Cal.3d 1271). In order for the IRS to recognize the reallocation of the dependency exemption, the non-custodial parent must attach the release form to his/her tax return. The allocation of the dependency exemption to the NCP does not impact the custodial parent’s ability to file as head of household (see IRC section 2 ); claim the Earned Income Tax Credit (see IRC section 32) or the Child Care Tax Credit (see IRC section21) as these items have independent qualifying rules.

» To evaluate the impact of various medical support policy alternatives on the amount of child support, guideline child support calculations were completed using various policy scenarios. These scenarios include application of current child support law, impact of CP providing coverage and maintaining dependency exemption, NCP providing coverage and receiving the dependency exemption and treating the cost of coverage as “additional support” rather than a deduction from income.

ACA Child Support Guideline Scenarios(Prepared by Michael Wright, Administrative Officer of the Courts, June 2013)


CP

TANF Low Medium High V High

LOW

1 229 152 118 69 (1.00)

2 229 152 128 127 58

3 275 197 171 118 44

4 229 152 128 83 13

MEDIUM

1 435 318 275 212 124

2 439 342 311 297 209

3 477 387 357 296 210

4 439 342 311 254 166

HIGH

1 660 563 531 457 342

2 684 587 555 542 426

3 703 614 583 522 411

4 684 587 555 499 387

V HIGH

1 969 872 829 720 577

2 993 896 865 807 659

3 1014 925 894 793 643

4 993 896 865 772 620

NC

P


Assumptions:

» 1 child

» 20% timeshare to NCP

» $200 health insurance cost per month for self

» $100 health insurance cost per month to add child

» Assumes CP will be paying $200 self health insurance (unless exempt) for scenarios under ACA

Five income levels represented:

TANF = $0 income

Low = $16,640/year; $1387/month; 40 hours, min wage ($8.00/hr)

Medium = $30,000/year; $2500/month; 40 hours, $14.42/hour

High = $48,000/year; $4,000/month; 40 hours, $23.08/hour

V High = $75,000/year; $6250/month; 40 hours, $36.06/hour

Key to Grid

Row #1 calculation is current guideline approach

» CP has the dependency exemption

» NCP pays the cost to cover child’s insurance cost (except where exempt under the current 5% “reasonable cost” rule)

» Cost of health insurance is deducted from income (for NCP, CP & child premium cost unless exempt under the 5% rule)

Row #2 calculation is ACA scenario (Add-on approach)

» Assumes CP has the dependency exemption & obligation to provide coverage

» C P & NCP actual cost of coverage is deducted from income (no deduction if “self” exempt)

» Child’s coverage cost is not deducted from income but treated as an add-on shared 50/50

» If child is exempt no add-on entered but calculation will show basic CS

Row #3 calculation is ACA scenario (NCP has dependency exemption and provides MC coverage)

» Assumes NCP has dependency exemption & obligation to provide coverage

» CP & NCP actual cost of coverage is deducted from income (no deduction if self is exempt)

ACA Child Support Guideline Grid Employer-Provided Insurance


CP


LOW

1 229 152 118 69 (1.00)

2 229 152 128 127 58

3 275 197 171 118 44

4 229 152 128 83 13

MEDIUM

1 435 318 275 212 124

2 439 342 311 297 209

3 477 387 357 296 210

4 439 342 311 254 166

HIGH

1 660 563 531 457 342

2 684 587 555 542 426

3 703 614 583 522 411

4 684 587 555 499 387

V HIGH

1 969 872 829 720 577

2 993 896 865 807 659

3 1014 925 894 793 643

4 993 896 865 772 620

NC

P

Row #4 calculation is ACA scenario (CP has dependency exemption and provides MC coverage)

» Assumes CP has dependency exemption and provides MC coverage

» CP & NCP actual cost of coverage is deducted from income (no deductions if self is exempt)

» This scenario and Row #2 scenario will equal the same support amount at CP income levels of TANF, Low and Medium as CP is exempt from providing MC coverage


ACA Child Support Guideline Grid Health Benefit Exchange Assumptions:

» 1 child

» 20% timeshare to NCP

» NCP will pay HBEX net rate for self (monthly premium silver plan minus any subsidy)

» MC health insurance cost will be at HBEX net rate (monthly premium silver plan minus any subsidy)

» CP will pay HBEX net rate for self health insurance(monthly premium silver plan minus any subsidy) (unless exempt)

» For analysis of “affordable coverage” and premium cost See (x-reference to Kathy’s grid)

Five income levels represented:

TANF = $0 income

Low = $16,640/year; $1387/month; 40 hours, min wage ($8.00/hr)

Medium = $30,000/year; $2500/month; 40 hours, $14.42/hour

High = $48,000/year; $4,000/month; 40 hours, $23.08/hour

V High = $75,000/year; $6250/month; 40 hours, $36.06/hour

Key to Grid

Row #1 calculation is ACA scenario (CP has dependency exemption and provides MC coverage)

» Assumes CP has dependency exemption and provides MC coverage

» CP & NCP actual cost of coverage is deducted from income (no deductions if self is exempt)

Row #2 calculation is ACA scenario (Add-on approach)

» Assumes CP has the dependency exemption & obligation to provide coverage

» CP & NCP actual cost of coverage is deducted from income (no deduction if “self” exempt)

» Child’s coverage cost is not deducted from income but treated as an add-on shared 50/50

» If child is exempt (TANF or MediCal) no add-on entered but calculation will show basic CS

Row #3 calculation is ACA scenario (NCP has dependency exemption and provides MC coverage)

» Assumes NCP has dependency exemption & obligation to provide coverage

» CP & NCP actual cost of coverage is deducted from income (no deduction if self is exempt)


CP


LOW

1 210 124 100 56 (11)

2 210 137 140 138 141

3 222/203 148/133 111 67 3

MEDIUM

1 451 357 323 263 175

2 437 340 339 319 234

3 455/469 360/374 344 285 199

HIGH

1 641 547 513 453 346

2 674 577 576 566 447

3 664/697 572/606 539 480 375

V HIGH

1 948 855 820 733 583

2 983 886 885 828 681

3 974/1009 879/914 884 784 635

NC

P

Scenario/Row #1:

» Columns “TANF” and “Low” do not include any cost for minor’s health insurance coverage being paid by either parent as minor would qualify for MediCal coverage. Amounts in parentheses indicate CP pays NCP

Scenario/Row #2:

» Columns “TANF” and “Low” do not include any additional support (add-on approach) to reimburse the custodial parent for cost of health insurance coverage as the minor child would qualify for MediCal coverage and CP would have no out-of-pocket expense for the premium

Scenario/Row #3:

» When two numbers appear in one cell, minor child is covered by MediCal. First number is with NCP providing health insurance for the minor child; second number is without NCP providing health insurance as one of the alternatives discussed was to look at policy where the local child support agency does not enforce if the minor child is covered by governmental health plan.


Findings:

1. If the NCP is given both the dependency exemption and the obligation to provide coverage for the minor child, the result is generally an increase in NCP’s disposable income that results in a both a higher basic child support award and higher NCP net income after the support obligation. For example,

Scenario #1 Both parents $2500 gross income with CP keeping dependency exemption and providing minor’s coverage =

Scenario #2 Same as #1 but NCP allocated dependency exemption & coverage costs

While this approach provides benefits to both CP and NCP, other factors such as NCP employment stability should be factored in.

2. Add on/additional support approach (Row 2) generally results in a higher CS order. Pros are that this actually compensates CP for her actual cost of coverage. Con is it results in a higher order at the same NCP income level and may impact collectability particularly at the lower NCP income levels.

NCP net pre-support income

$1729

NCP post support net income

$1454

CS Order

$275

NCP net pre-support income

$1953

NCP post support net income

$1609

CS Order

$344


One adult, one child; Annual income $16,640


Adult only; Annual income $16,640


Child only; Annual income $16,640


One adult only, one child; Annual income $30,000


Glossary of Terms

Term Acronym Definition

Action Transmittal AT Document sent out as needed, which instructs state Child Support Program on the actions they must take to comply with new and amended federal laws. Has basis in federal law and regulation.

Administration for Children and Families ACF The Federal Agency in the Department of Health and Human Services (DHHS) that administers the

Child Support Program nationally and houses the Office of Child Support Enforcement (OCSE).

Administrative Law Judge ALJA person designated by the Director to conduct child support state hearings, and who shall have been admitted to practice law in California, and shall possess such other qualifications as prescribed by the California State Personnel Board.

The Department of Health and Human Services HHS The United States Department of Health and Human Services is the part of the federal government

that’s responsible for administrating programs that deal with health and welfare.

California Child Support Automation System CCSAS

The California automated single statewide system for the Child Support Program. It consists of two components: the Child Support Enforcement (CSE) system and the State Disbursement Unit (SDU)

CSE provides the central database for child support cases and the associated functionality to support enforcement activities in all LCSAs. SDU provides a centralized processing of child support collections and disbursements, including non IV-D payments that are paid by wage withholding.

The California Code of Regulations CCR

The California Code of Regulations contains the text of the regulations that have been formally adopted by state agencies, reviewed and approved by the Office of Administrative Law, and filed with the Secretary of State.

California Department of Child Support Services DCSS

The department created within the California Health and Human Services Agency to administer all services and perform all functions necessary to locate parents; establish paternity; establish, enforce, and modify support orders; and collect and distribute support in California.

California Health and Human Services Agency CHHS

The California Health and Human Services Agency administers state and federal programs for health care, social services, public assistance, job training and rehabilitation. Responsibility for administering the major programs, which provide direct services to millions of Californians, is divided among the Health and Human Services Agency’s 15 boards and departments.

Case

A non-custodial parent, whether mother, father, or alleged father, a custodial party, and a dependent child or children.

The custodial party may be one of the child’s parents, or other relative or caretaker including a foster parent. If both parents are absent and liable or potentially liable for the support of the child(ren), each parent is considered a separate case.

The Centers for Medicare and Medicaid Services CMS The Centers for Medicare & Medicaid Services is an agency within the US Department of Health &

Human Services responsible for administration of several key federal healthcare programs.

Child Support CS

Amounts required to be paid under a judgment, decree, or order, whether temporary, final, or subject to modification, for the support and maintenance of a child or children, which provides for any or all of the following: monetary support, health insurance coverage, arrearages, and may include interest on delinquent child support obligations.

Child Support Enforcement Agency CSEA

The agency in every state that administers the IV-D program in that state, including locating parents, establishing paternity, establishing, enforcing, and modifying child support orders, and collecting and distributing child support money.

Child Support Performance and Incentive Act of 1998

CSPIA

A revised incentive payment system that provides incentive payments to states based on a percentage of the state’s CSE collections and incorporates five performance measures related to establishment of paternity and child support orders, collections of current and past-due support payments, and cost-effectiveness.

Child Support Enforcement System CSE

The part of CCSAS that provides for the following functional responsibilities: member/participant data file of record and business rules for discrete identification of member and participants; business rules for selecting and aggregating data for purpose of payment allocation and distribution; disbursement instruction to SDU file of record; history of allocation and distribution file of record; and support order, order obligation, and standard account file of record.

Child Support Order

Any court or administrative order for the payment of a set or determinable amount of support of a child by a parent, or a court order requiring a parent to provide for health insurance coverage for a child, or a court order requiring a parent to make payment of arrearages. “Child support order” includes any court order for spousal support or for medical support to the extent these obligations are to be enforced by a single state agency for child support under Title IV-D of the Federal Social Security Act (commencing with section 651 to Title 42 of the United States Code).

130 California Affordable Care Act Child Support Workgroup Report – Glossary of Terms

Glossary of Terms (pg. 2)


Code of Federal Regulations CFR A codification of the general and permanent rules published in the Federal Register by the

Executive departments and agencies of the Federal Government.

Congressional Research Service CRS

The Congressional Research Service (CRS) is a branch of the Library of Congress that provides objective, nonpartisan research, analysis, and information to assist Congress in its legislative, oversight, and representative functions.

Dependent

A child who is under the care of someone else. Most children who are eligible to receive child support must be a dependent. The child ceases to be a dependent when they reach the “age of emancipation” as determined by State law, but depending on the State’s provisions, may remain eligible for child support for a period after they are emancipated.

Employer

This means all of the following: (a) A person for whom an individual performs services as an em-ployee, as defined in Section 706.011, Code of Civil Procedure. (b) The United States government and any public entity as defined in Section 811.2, Government Code. (c) Any person or entity paying the following types of earnings: (1) Wages, salary, bonus, money and benefits described in Sec-tions 704.110, 704.113 and 704.115 of the Code of Civil Procedure. (2) Payments due for services of independent contractors, interest, dividends, rents, royalties, residuals, patent rights, or mineral or other nature resource rights. (3) Payments or credits due or becoming due as a result of written or oral contracts for services or sales whether denominated as wages, salary, commission, bonus, or oth-erwise. (4) Payments due for workers’ compensation temporary disability benefits. (5) Payments due as a result of disability from benefits described in Section 704.130 of the Code of Civil Procedure. (6) Any other payments or credits due or becoming due, regardless of source.

Enforcement Actions taken to obtain payment of a child, family, medical, or spousal support obligation contained in a child support order.

Establishment The process of legally determining paternity and/or obtaining a court or administrative order to put a child support obligation in place.

Federal Poverty Level FPL

The set minimum amount of gross income that a family needs for food, clothing, transportation, shel-ter and other necessities. In the U. S., this level is determined by the Department of Health and Hu-man Services. FPL varies according to family size. The number is adjusted for inflation and reported annually in the form of poverty guidelines. Public assistance programs, such as Medicaid in the U.S., define eligibility income limits as some percentage of FPL.

Health Insurance Coverage

The provisions for the delivery of both of the following: a) healthcare services by a fee for service, health maintenance organization (HMO), preferred provider organization (PPO), or any other type of healthcare delivery system under which medical services could be provided to a dependent child of an obligor, B) vision care and dental care services whether the vision care or dental care coverage is included in health insurance coverage or is issued as a separate policy or plan.

Internal Revenue Service IRS The federal agency which collects personal income tax.

IV-D CaseA child support case where at least one of the parties, either custodial party (CP) or the non-custodial parent (NCP), has requested or received IV-D services from the State's IV-D agency. A IV-D case is composed of a custodial party, non-custodial parent or putative father, and dependent(s).

Locate

Information concerning the physical whereabouts of the custodial party, noncustodial parent, noncustodial parent's employers, or the noncustodial parent's sources of income or assets which is used for the purpose of establishing paternity and establishing, modifying, and/or enforcing a child support obligation.

Medi-Cal Program California's medical assistance program provided under the State Plan approved under Title XIX of the Social Security Act.

Medical Support The court-ordered requirement that one or both parents provide health, vision, and dental coverage, for a dependent child.


Glossary of Terms (pg. 3)


Modification A court ordered change or alteration of a child support order.

Modified Adjusted Gross Income MAGI

MAGI is equal to adjusted gross income (AGI) plus certain foreign earned income and tax exempt interest. AGI is equal to gross income minus certain exclusions (e.g., public assistance payments, contributions to retirement plans) minus some above-the-line deductions (e.g., trade and business deductions, losses from sale of property, and alimony payments).

Monthly Support Obligation The amount of money an obligor is required to pay each month for support.

National Medical Support Notice NMSN

Means the notice "National Medical Support Notice." Part A, "Notice to Withhold for Health Care Coverage", OMB 0970-0222, and Part B, "Medical Support Notice to Plan Administrator," OMB 1210-0113, directed to the obligor's employer pursuant to a medical support order requiring the obligor to provide health insurance coverage for the obligor's minor child(ren).

New Employee Registry NER A database maintained by the California Employment Development Department (EDD), which contains information regarding newly hired employees within the State.

New Hire Data NH Data on a new employee that employers must submit within 20 days of hire to the State Directory of New Hires (SDNH) in the State in which they do business.

Noncustodial Parent NCP The parent of the child(ren) who may be or is obligated to pay child support.

Non-IV-D Orders

A support order in which the custodial party is not receiving or has not received TANF/CalWORKS and is not receiving or has not received Title IV-D services from a child support enforcement agency. A non-IV-D order can be converted into a IV-D case when the appropriate application for IV-D services is made or when the custodial party begins receiving Title IV-A services for benefit of the child(ren) or the child(ren) is placed in foster care and Title IV-E payments are made on behalf of the child(ren).

Office of Child Support Enforcement OCSE

The federal agency responsible for the administration of the Child Support program nationally. Cre-ated by Title IV-D of the Social Security Act in 1975, OCSE is responsible for the development of child support policy; oversight; evaluation, and audits of State child support enforcement programs; and provides technical assistance and training to the State programs. OCSE operates the Federal Parent Locator Service, which includes the National Directory of New Hires (NDNH) and the Federal Case Registry (FCR). OCSE is part of the Administration for Children and Families (ACF), which is within the Department of Health and Human Services (DHHS).

Order A decision or judgment of a magistrate, judge, or properly empowered administrative officer.

Qualified Medical Support Order QMSO An order issued by a court or administrative agency of competent jurisdiction that provides

for health benefit coverage to a child.

Referral Request sent to an IV-D agency from a non IV-D agent or agency asking that a child support case be established.

State Directory of New Hires SDNH A database maintained by each state that contains information regarding employees who are newly

hired in the respective state.

Support

An amount owing for the maintenance of a person or persons. Support includes: child support, as defined in Section 110129; family support, as defined in Section 119037; medical support, as defined in Section 110431; and spousal support as defined in Section 110609. "Support" may also mean child care costs, uninsured healthcare costs, educational costs, or travel expenses for visitation pursuant to Section 4062 of the Family Code.

Temporary Assistance to Needy Families TANF

"Temporary Assistance to Needy Families" or TANF, also known as CalWORKS, means the program funded under Title IV-A of the Social Security Act that provides temporary public assistance to a needy family; was formerly known as the Aid to Families with Dependent Children program, which terminated October 1, 1996.

U.S. Code USC A compilation of federal laws.

Vacate To cancel, annul, or set aside, as in to set aside a judgment.

W2 Form A wage and tax statement that shows the names of the employer and employee, the wages that were paid to the employee, and the taxes that were withheld from the wages for the year.


ContactsChild Support Directors Association of California

The Child Support Directors Association of California (CSDA) was established in 2001 as a non-profit association to represent the local child support directors of California’s 58 counties. The Association strives to be of service to local child support agencies (LCSA) in their effort to provide children and families with the financial, medical, and emotional support required to be productive and healthy citizens in our society.

For further information regarding this report please contact

David G. Oppenheim, Executive Director, Child Support Directors Association 2150 River Plaza Dr., Suite 420 Sacramento, CA 95833 (916) 446-6700 Ext. 102 [email protected]

Kathy Sokolik, Director, LCSA Santa Cruz-San Benito Regional (831) 454-3632 [email protected]

HMS Contract Support

HMS is a publicly traded company (NASDAQ: HMSY) and is the strategic source for innovative cost containment solutions that benefit government and commercial healthcare programs.

For more information on HMS visit our website at HMS.com or please contact

Barbara Saunders, Vice President, Child Support Services, HMS (614) 565-8205 [email protected]

CSDA Consulting Contract Support

Arika Pierce – Division Vice President, Federal Government Relations, HMS

Whitney Warrick – Senior Manager, Federal Government Relations, HMS

Linda Simone – Senior Writer, HMS

Michael Covelli – Design Assistant, HMS

Sarah Norman – Marketing Writer, HMS

133 California Affordable Care Act Child Support Workgroup Report – Contacts