Qualified Medical Child Support Orders: An Employer Guide. National Legal and Research Group (NLRG)

Transcription

1 Qualified Medical Child Support Orders: An Employer Guide National Legal and Research Group (NLRG)

2 Table of contents Introduction...3 Qualified Medical Child Support Order What is it?...3 What is a medical child support order?...4 What makes a medical child support order qualified?...4 QMCSO Coverage, Participation and Payments...5 National Medical Support Notice...6 APPENDIX Glossary of abbreviations...8 Sample QMCSO Procedures for Group Health Plan...9 Record of Completed QMCSO Procedures...11 Sample Letter Acknowledging Receipt of an Order...13 Checklist for Assessing Validity of QMCSO...14 Sample Letter Accepting a QMCSO as Valid...16 Sample Letter Rejecting a QMCSO as Invalid...17 Notice to Participant that Coverage is Being Adjusted to Comply with a QMCSO...18 Notice that QMCSO Cannot be Honored Because of Participant Ineligibility...19 National Medical Child Support Notice (Part A)...20 National Medical Child Support Notice (Part B)...21 RELATED EMPLOYER GUIDE AND TOOLS ERISA Reporting ERISA Disclosure Cafeteria Plans 2 National Legal and Research Group (NLRG)

3 Introduction A 1993 amendment to the Employee Retirement Income Security Act (ERISA) requires employer-sponsored group health plans to extend health care coverage to the children of a parent/employee who is divorced, separated, or never married when ordered to do so by state authorities. This compliance assistance guide explains these ERISA provisions and describes how to obligate a plan to cover a child. Generally, a state court or agency may require an ERISA-covered health plan to provide health benefits coverage to children by issuing a medical child support order. The group health plan must determine whether the medical child support order is qualified. Such an order is referred to as a Qualified Medical Child Support Order (QMCSO). In addition, a state child support enforcement agency may obtain group health coverage for a child by issuing a National Medical Support Notice that the group health plan determines to be qualified. Group health plan sponsors and administrators will find this information useful in understanding the rights and obligations of those involved in child support proceedings and those responsible for administering group health plans. Qualified Medical Child Support Order (QMCSO) What is it? A QMCSO is a medical child support order that: Creates or recognizes the right of an alternate recipient to receive benefits for which a participant or beneficiary is eligible under a group health plan or assigns to an alternate recipient the right of a participant or beneficiary to receive benefits under a group health plan; and Is recognized by the group health plan as qualified because it includes information and meets other requirements of the QMCSO provisions. In addition, a properly completed National Medical Support Notice (NMSN) must be treated as a QMCSO. The group health plan must determine whether the medical child support order is qualified.. What plans are subject to QMCSOs? The QMCSO provisions apply to group health plans subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA). For this purpose a group health plan generally is a plan that: Is sponsored by an employer or employee organization (or both) and provides medical care to employees, former employees or their families. Medical care means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of a disease; for the purpose of affecting any structure or function of the body; transportation primarily for or essential to such care or services; or for insurance covering such care or services. ERISA does not apply to plans maintained by: federal, state or local governments; churches; and employers solely for purposes of complying with applicable workers compensation or disability laws. However, provisions of the Child Support Performance and Incentive Act (CSPIA) of 1998 require church plans to comply with QMCSOs and National Medical Support Notices, and state and local government plans to comply with National Medical Support Notices. Qualified Medical Child Support Orders: An Employer Guide 3

4 What is a medical child support order? A medical child support order is a judgment, decree, or order (including an approval of a property settlement) that: Is made pursuant to state domestic relations law (including a community property law) or certain other state laws relating to medical child support; and Provides for child support or health benefit coverage for a child of a participant under a group health plan and relates to benefits under the plan. Tip: A medical child support order does not have to be issued by a state court. Any judgment, decree or order that is issued by a court of competent jurisdiction or an administrative agency authorized to issue child support orders under state law (such as a state child support enforcement agency) and that provides for medical support of a child is a medical child support order. What makes a medical child support order qualified? A medical child support order must contain the following information in order to be qualified: The name and last known mailing address of the participant and each alternate recipient, except that the order may substitute the name and mailing address of a state or local official for the mailing address of any alternate recipient; A reasonable description of the type of health coverage to be provided to each alternate recipient (or the manner in which such coverage is to be determined) ; and The period to which the order applies. Tip: An order may not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan, except to the extent necessary to meet the requirements of certain state laws. At the same time that the QMCSO provisions were added to ERISA, Congress also added section 1908 to the Social Security Act. Section 1908 says that states cannot receive federal Medicaid funds unless they have in place specific state laws relating to medical child support. states must have laws that: Require health insurers to enroll a child under his or her parent s health insurance even if the child was born out of wedlock, does not reside with the insured parent or in the insurer s service area, or is not claimed as a dependent on the parent s federal income tax return; Require a health insurer to enroll a child pursuant to court or administrative order without regard to the plan s open season restrictions; Require employers and insurers to comply with court or administrative orders requiring the parent to provide health coverage for a child; and Require insurers to permit a custodial parent to file claims on behalf of his or her child under the noncustodial parent s health insurance and to make benefit payments to the custodial parent or health care provider. If a QMCSO refers to these state laws or requires a plan to comply with the substantive requirements contained in the state laws, the plan must comply with them. For instance, a QMCSO may require a plan to enroll a child before the plan s next open enrollment period. Who determines whether a medical child support order is qualified? The administrator of the group health plan is required to determine whether an order is qualified. The administrator is required to make this determination within a reasonable period of time, pursuant to reasonable written procedures that have been adopted by the plan. The administrator must first notify the participant and the alternate recipient of the receipt when the plan receives a medical child support order and must give them copies of the plan s procedures for determining whether it is qualified, and then the administrator must notify those parties of its determination whether or not the order is qualified. Any child of a participant in a group health plan who is recognized under a medical child support order as having a right to enrollment under the plan with respect to such participant is an alternate recipient. See the Appendix for a Checklist for Assessing the Validity of a QMCSO. Plan administrators must determine whether a medical child support order is qualified within a reasonable period of time after receiving the order. What is a reasonable period will depend on the circumstances. For example, an order that is clear and complete when submitted should require less time to review than one that is incomplete or unclear. The National Medical Support Notice provisions contain separate, specific time limits on the processing of the Notice by employers and plan administrators. Tip: If an employee named in a QMCSO is not enrolled in the plan, and if the employee is eligible to participate in the plan, the child must be covered. If, as a condition for covering his dependents, the employee must be enrolled, the plan must enroll both. Furthermore, if the employee has not yet satisfied the required waiting period for the plan, the administrator should have procedures in place so that the child will begin receiving benefits upon the employee s satisfaction of the waiting period. 4 National Legal and Research Group (NLRG)

5 A plan administrator generally is not required to determine whether the issuing court or agency had jurisdiction to issue an order, whether state law is correctly applied in an order, whether service was properly made on the parties, or whether an individual identified in an order as an alternate recipient is in fact a child of the participant. A plan administrator generally is not required to determine whether the issuing court or agency had jurisdiction to issue an order, whether state law is correctly applied in an order, whether service was properly made on the parties, or whether an individual identified in an order as an alternate recipient is in fact a child of the participant. Effect of QMCSO determination on a plan The plan administrator must act in accordance with the provisions of the QMCSO as if it were part of the plan. In particular, any payment for benefits in reimbursement for expenses paid by an alternate recipient or an alternate recipient s custodial parent or legal guardian must be made to the alternate recipient or custodial parent or legal guardian. QMCSO coverage, participation and payments Reasonable coverage The order need only provide a coverage description that enables the plan administrator to determine which of the available options and levels of coverage should be provided to the child. For instance, if an order requires that a child be provided any coverage available under the plan, the plan administrator would determine what coverage is available under the plan (e.g., major medical, hospitalization, dental) and provide that coverage to the alternate recipient. However, if the plan offers more than one type of coverage (e.g., an HMO and a fee-for-service option), the order should make clear which should be provided or how the choice is to be made. If the order is unclear, the plan s procedures may direct the administrator to contact the submitting party, or may provide other selection methods, similar to those established for the processing of National Medical Support Notices. Lacking such procedures, the administrator may have to reject the order. A medical child support order is not qualified if it requires a plan to provide a type or form of benefit that is not otherwise available under the plan. Requiring a plan that provides benefits solely through a limited-area HMO to provide benefits to alternate recipients outside of the HMO s service area (i.e., on a fee-for-service or any other basis), would be requiring the plan to provide a form of benefit that the plan does not ordinarily provide. On the other hand, if the child is able to come into the HMO s service area for medical care, the plan would be required to provide benefits to the alternate recipient. It is the view of the Department that following a determination that an order is qualified, the alternate recipient (and the participant, if necessary) must be enrolled as of the earliest possible date following such determination. For example, if an insured plan only adds new participants or beneficiaries as of the first day of each month, such plan would be required to provide coverage to the alternate recipient as of the first day of the first month following the determination that the order is qualified. The state laws described in section 1908 of the Social Security Act (SSA) require that when a child is enrolled in a plan pursuant to a court or administrative order, that enrollment be made without regard to open season restrictions. Participation An alternate recipient under a QMCSO is treated as a beneficiary under the plan. Accordingly, in the view of the Department, an alternate recipient is also treated as a dependent of the participant under the plan. (However, if a QMCSO specifies that an alternate recipient is to receive a particular level of coverage, or option, that is available under the plan, but the participant is not enrolled in the particular coverage or has not selected the particular option, the plan may be required to change the participant s enrollment to the extent necessary to provide the specified coverage to the alternate recipient.) The plan should pay benefits to the alternate recipient, the custodial parent, or the provider of health services to the child notwithstanding plan terms that may require benefit payments be made to the participant. In some instances, payment will be required to be made to the state child support enforcement or Medicaid agency. A plan may disenroll an alternate recipient at the same time and under the same conditions as it can disenroll other dependents of participants under the plan. For instance, if the plan terminates coverage when a participant terminates employment, and neither the participant nor the alternate recipient elects COBRA continuation coverage, the plan may discontinue coverage for the alternate recipient. Similarly, if the plan ceases to provide coverage for dependents who are over the age of 26, the coverage of an alternate recipient who is over the age of 26 may be terminated (assuming that continuation coverage is not elected). A child covered by a group health plan pursuant to a QMCSO is a beneficiary under the plan. The Internal Revenue Service (which has jurisdiction over such questions) has informed the Department that a child covered pursuant to a QMCSO is therefore a qualified beneficiary with the right to elect continuation coverage under COBRA, if the plan is subject to COBRA and if the child loses coverage as a result of a qualifying event. Payments The medical child support order will ordinarily establish the obligations of the parties for the child s support. In most cases, the obligor under a medical child support order will be the non-custodial parent who is a participant in a group health plan and is responsible for the payment of any costs associated with the provision of coverage. Qualified Medical Child Support Orders: An Employer Guide 5

6 If federal or state withholding limitations prevent withholding from the participant s paycheck the additional contribution required to provide coverage to the child under the terms of the plan, the employer should notify the custodial parent, and the child support enforcement agency, if the agency is involved. Unless the employer is able to withhold the necessary contribution from the participant s paycheck, the plan is not required to extend coverage to the child. However, the custodial parent or the state child support enforcement agency may be able to modify the amount of cash support to be provided, in order to enable the employer to withhold the required contribution to the plan. The participant may also voluntarily consent to the withholding of an amount otherwise in excess of applicable withholding limitations. National Medical Support Notice The National Medical Support Notice (Notice) is a standardized medical child support order that is to be used by state child support enforcement agencies to enforce medical child support obligations. The Department of Labor (DOL) and the Department of Health and Human Services (HHS) adopted regulations on December 27, 2000, implementing the National Medical Support Notice (Notice) provisions of the Child Support Performance and Incentive Act of 1998 (CSPIA). (These regulations appear at 29 CFR and 45 CFR ) CSPIA also requires plans sponsored by churches and state and local governments to provide benefits in accordance with the requirements of an appropriately completed Notice, although the Department of Labor has no interpretive or enforcement authority over those requirements. For questions with respect to these plans, contact your state child support enforcement agency. Pursuant to the changes made by CSPIA to the child support enforcement program and the regulations issued by the Department of Health and Human Services, the Notice is the exclusive document to be used by a child support enforcement agency to enforce the provision of health care coverage to children of non-custodial parents who are required to provide health care coverage through any employment-related group health plan pursuant to a child support order and for whom the employer is known to the agency. A Sample of the National Medical Support Notice (Part A and Part B) can be found in the Appendix. Appropriately completed notice An appropriately completed Notice is a notice that includes the following information: The name of an issuing state child support enforcement agency; The name and mailing address of the employee, enrolled or eligible for enrollment, who is obligated by a state court or administrative order to provide medical support for each named child; The name and mailing address of each child covered by the Notice. The name and address of a state or local official may be substituted for the address of the child. A notice may be appropriately completed even if some items of information in the Notice are not included as long as the Notice includes the information listed above. In addition, if any of the necessary information described above has been omitted but is reasonably available to the plan administrator, the Notice should not fail to be appropriately completed solely because of such omission. National support notice satisfying a QMCSO An appropriately completed Notice satisfies the informational requirements of the QMCSO provisions by: Providing the name and last known mailing address (if any) of the participant and the name and mailing address of each child covered by the order; Having the child support enforcement agency identify either the specific type of coverage or all available group health coverage; Instructing the plan administrator that if a Notice does not designate either specific type(s) of coverage or all available coverage, it should assume that all are designated, and further instructing the plan administrator that if a group health plan has multiple options and the participant is not enrolled, the agency will make a selection after the Notice is qualified and, if the agency does not respond within 20 business days, the child will be enrolled under the plan s default option if there is one; and Specifying that the period of coverage may end for the named child only when similarly situated dependents are no longer eligible for coverage under the terms of the plan, or upon the occurrence of events specified in the Notice. A Notice also requires the plan to provide to a named child only those benefits that the plan provides to any dependent of a participant who is enrolled in the plan, and any other benefits that are necessary to meet the requirements of the state laws relating to medical child support orders. Employer and plan administrator obligations Ordinarily, an employer may expect to receive a Notice when a child support enforcement agency initially enforces an employee s medical support obligation, or when an employee with a previously established medical support obligation is newly hired. The Notice comprises Part A, Notice to Withhold for Health Care Coverage (which includes an Employer Response), and Part B, Medical Support Notice to Plan Administrator (which includes a Plan Administrator Response). If the employee named in the Notice is not an employee of the employer, if the employer does not maintain or 6 National Legal and Research Group (NLRG)

7 contribute to a plan that provides dependent coverage, or if the named employee is among a class of employees (e.g. part-time or non-union) not eligible for enrollment in a plan that provides dependent coverage, the employer must check the appropriate box on the Employer Response and return it to the issuing agency within 20 business days after the date of the Notice (or sooner if reasonable). Otherwise, the employer must transfer Part B of the Notice to the group health plan (or plans) for which the child may be eligible for enrollment not later than 20 business days after the date of the Notice. For these purposes, the date of the Notice means the date that is indicated as such on the Notice. If the employer offers a number of different types of benefits (e.g., dental, prescription) through separate plans, and the issuing agency has not specified which or all are covered by the Notice, the employer should assume all plans are covered by the Notice, and send copies of Part B of the Notice to each plan administrator. The application of a waiting period (such as one requiring that a new employee must be employed for a certain amount of time or work a certain number of hours) before an employee may enroll in the group health plan does not affect the employer s obligation to transfer Part B to the plan administrator(s). When transferring Part B of the Notice, the employer retains Part A. An employer that transfers Part B of the Notice to a plan administrator(s) may later need to use the Employer Response after it has been notified of the qualification of the Notice and has determined that necessary employee contributions cannot be withheld from wages. Following notification of qualification, the employer must determine if necessary employee contributions may be withheld from the employee s wages without violating any applicable withholding limits. Part A of the Notice contains information for the employer regarding federal and state limitations on withholdings, any applicable withholding prioritization laws, and the duration of the withholding obligation. If withholding limits would prevent the employer from withholding the employee contributions necessary for coverage, the employer must use the Employer Response on Part A to notify the issuing IV-D Agency of its inability to withhold the necessary amounts. If the amounts necessary for coverage may be withheld, then the employer must initiate such withholding and transmit the withheld amounts to the group health plan to pay for the child s coverage. A plan administrator who receives a National Medical Support Notice must review the Notice and determine whether it is appropriately completed. The administrator must complete the Plan Administrator Response (included with Part B of the Notice), indicating whether the Notice is a QMCSO, and return it to the state agency that issued the Notice within 40 business days after the date of the Notice. If the plan administrator determines that the Notice is appropriately completed, the administrator is required to treat the Notice as a QMCSO. The plan administrator must in that case inform the state agency that issued the Notice when coverage under the plan of the child named in the Notice will begin and must provide the custodial parent of the child (or, in some cases, a named state official) with information about the child s coverage under the plan, such as the plan s summary plan description, any forms or documents necessary to make claims under the plan, etc. If the participant is not enrolled and there is more than one option available under the plan for coverage of the child, the plan administrator must also use the Plan Administrator Response to notify the agency of that fact, and inform the agency of the available options for coverage. If the agency does not then respond within 20 business days and the plan has a default option, the plan administrator may enroll the child in the default option. The Department of Labor has issued a regulation, 29 CFR , that provides guidance on how administrators of group health plans must deal with Notices they receive. General information A plan administrator may not find a medical child support order, including a Notice, to be not qualified solely because the participant is subject to a waiting period (such as one requiring a certain number of months or hours worked). Being subject to a waiting period may, however, affect the procedures necessary for enrollment of the named child. Assuming a Notice otherwise meets the requirements to be a QMCSO: For short waiting periods (90 days or less remaining at the time of the plan administrator s receipt of Part B), the plan administrator qualifies the Notice, and waits until the expiration of the necessary time to enroll the child and notify the employer of the need, if any, to withhold from the employee s wages to provide such coverage. For long waiting periods (greater than 90 days remaining at the time of the plan administrator s receipt of Part B, or the period is measured by other means, such as hours worked), the plan administrator should inform the employer of the waiting period, and wait for notification from the employer of the employee s satisfaction of the waiting period. As to payment for coverage, the Notice provides that the employee named in the Notice is liable for any employee contributions required under the plan for enrollment of the children. However, if federal or state withholding limitations prevent the withholding of the required employee contributions from the employee s paycheck, the plan is not required to provide coverage to the child. The employer is required to notify the state agency if such withholding limitations prevent the withholding of the required employee contributions. Qualified Medical Child Support Orders: An Employer Guide 7

8 APPENDIX Glossary of abbreviations AD&D: Accidental Death and Dismemberment ADEA: Age Discrimination in Employment Act CCPA: Consumer Credit Protection Act CHIPRA: Children s Health Insurance Program Reauthorization Act COBRA: Consolidated Omnibus Budget Reconciliation Act of 1985 CSPIA: Child Support Performance and Incentive Act of 1998 DCSA: Dependent Care Spending Account DMO: Dental Maintenance Organization DOL: Department of Labor EBSA: Employee Benefit Security Administration (formerly PWBA) EFAST: ERISA Filing Acceptance System EIN: Employer Identification Number EOB: Explanation of Benefits ERISA: Employee Retirement Income Security Act of 1974 FMLA: Family and Medical Leave Act of 1993 FSAs: Flexible Spending Accounts GINA: Genetic Information Nondiscrimination Act HCE: Highly-Compensated Employee HCI: Highly-Compensation Individual HCSA: Health Care Spending Account HDHP: High Deductible Health Plan HHS: Department of Health and Human Services HIPAA: Health Insurance Portability and Privacy Act of 1996 HMO: Health Maintenance Organization HRA: Health Reimbursement Arrangement HSA: Health Savings Account IRS: Internal Revenue Service LTD: Long Term Disability NMHPA: Newborns and Mothers Health Protection Act NMSN: National Medical Support Notice (Notice) MHPAEA: Mental Health Parity and Addiction Equity Act MSP: Medicare Secondary Payer OBRA 93: Omnibus Budget Reconciliation Act of 1993 OMB: Office of Management and Budget PHI: Private Health Information PPACA: Patient Protection and Affordable Care Act PPO: Preferred Provider Organization PWBA: Pension and Welfare Benefits Administration QMCSO: Qualified Medical Child Support Order SAR: Summary Annual Report SMM: Summary Material Modifications SPD: Summary Plan Description SSA: Social Security Administration STD: Short Term Disability USERRA: Uniformed Services Employment and Reemployment Rights Act VEBA: Voluntary Employee s Beneficiary Association WHCRA: Women s Health and Cancer Rights Act of National Legal and Research Group (NLRG)

9 Sample QMCSO Procedures for Group Health Plans Introduction This manual sets forth the procedures to be followed by XYZ Company medical plans in dealing with Qualified Medical Child Support Orders (QMCSOs). A provision of OBRA 93, requires plan sponsors to develop administrative procedures for handling QMCSOs. What is a QMCSO? A QMCSO is a court order typically issued as part of a divorce that requires health plan coverage for an alternate recipient, the child of a participant. A judgment, decree, or order that can be a QMCSO also may be issued through an administrative process established under state law which has the force and effect of law in that state. federal law requires a group health plan to pay benefits in accordance with such an order, if it is qualified. In general, an alternate recipient under a QMCSO is to be treated like any other child of a Plan participant. These orders are usually drafted by lawyers for the divorcing couple. Generally, no standard format is required, other than that the orders contain certain information specified by law. Therefore, the orders you receive may differ significantly in terminology, format and sophistication. An important exception is that a special subcategory of QMCSO, called a National Medical Support Notice (NMSN), will be prepared in a standard format. In some cases, orders will be based on state laws enacted in response to Section 1908 of the Social Security Act. OBRA 93 gave states generally until early in 1994 to enact certain child support laws, or face the loss of federal Medicaid funds. These laws are intended to be designed to help state governments obtain private-sector coverage for children who would otherwise be eligible for state Medicaid coverage. In many cases, that both the state and the non-employee parent are given the authority to obtain a court order to force coverage under the plan, even if the employee is not interested in obtaining plan coverage for the child. What are the plan s rights and responsibilities relating to QMCSOs? All actions related to QMCSOs must be made in conformance with standard plan procedures and must be performed on a timely basis. The Plan must determine whether an order is in fact qualified under the QMCSO rules. That determination will be simple if a properly-completed NMSN is received. Under the terms of the law, plans are not required to provide coverage in accordance with child support or other court orders which are not qualified in accordance with Section 609 of ERISA. The plan administrator has the ultimate authority to determine whether or not the order meets all of the requirements of Section 609. This allows the Plan to be sure that it will be able to comply with the terms of the order before it must begin paying benefits. If the order does not meet all of the qualification requirements, the plan need not provide any benefits whatsoever in accordance with the order, unless the deficiencies are later corrected by the parties. The procedures detailed in this manual are designed to assist you in determining whether or not a particular order is a QMCSO, and in carrying out the responsibilities you have relating to QMCSOs. What are the procedures for handling QMCSOs? The procedures for handling child support orders are as follows: 1. Upon receipt of an order, the plan administrator must: Promptly send written notice of the receipt of the order to the participant and all alternate recipients named in the order. Review the order to determine if it meets the legal requirements of a QMCSO. 2. Within a reasonable time of the receipt of the order, the plan administrator must notify the participant and alternate recipients that either: The order is a valid QMCSO; or The order is not a valid QMCSO (including an explanation of what provisions are defective or missing). 3. Any disputes raised by the parties are to be referred to the Plan s legal counsel. 4. If an order is found to be invalid, the parties may cure the deficiencies with a subsequent order. If an amended order is submitted, the process is re-initiated for the new order. Qualified Medical Child Support Orders: An Employer Guide 9

10 What are the procedures for handling NMSNs? Strict deadlines apply after you receive an NMSN. Within 20 days you must respond to the agency that sent the notice if coverage is not available to dependents under the health plan, or if other facts make coverage impossible. When coverage for dependent children is available, the employer will have 20 days in which to forward Part B of the NMSN to the plan administrator of the health plan. (The plan administrator for this purpose is the one designated under ERISA (not the thirdparty administrator or insurer), and it is often the employer.) Within 40 days after the date of the NMSN, the plan administrator must add the dependent child named in the notice to the employee s coverage under the health plan. If the plan administrator is a third-party, it must notify you regarding the amount to withhold from the worker s pay. The plan administrator must process the NMSN within this 40-day period. Administrative guidelines The Checklist provides you with a list of those provisions the statute says must be present for the order to be considered a QMCSO. In addition, there are several pieces of information that you as Plan sponsor will need to effectively administer the QMCSO and enroll the alternate recipient under the Plan. This information includes: A record of any individual who is designated as the alternate recipient s representative (e.g., the child s custodial parent or legal guardian). Copies of all correspondence relating to the alternate recipient should be provided to the participant, the alternate recipient and any designated representative. A completed election form and evidence of insurability (if applicable). Employee authorization for payroll withholding of applicable premium. If benefits under the Plan are provided on a pretax basis, the QMCSO may qualify as an acceptable change-in-status event in accordance with your Section 125 program. (Your Section 125 plan document should be reviewed to determine if the definition of change-in-status is written broadly enough to encompass this event.) States are attempting to take children eligible for Medicaid benefits, and place them instead under a plan sponsored by a parent s employer. In these situations, a QMCSO may provide that someone other than the employee will be making premium payments for the alternate recipient s coverage. If the order designates someone other than the employee to provide payment, you should designate how and when payments are to be made. You might require payments to be made to coincide with each payroll period. Alternatively, you might use the payment procedures already in place for qualified beneficiaries under the COBRA health care continuation rules. Authorization of an individual (who may not be the employee/parent) to receive benefit reimbursements for the child s claimed expenses. The QMCSO rules state that to the extent medical expenses are paid by either the alternate recipient or the alternate recipient s custodial parent or legal guardian, the Plan must reimburse that person (not the employee). Alternate recipient as beneficiary In general, the alternate recipient must be treated like any other beneficiary under the Plan. Unless the individual QMCSO is more restrictive, the alternate recipient should be given the same coverage as the participant, and treated as any other child of the participant. Any late entrant, waiting periods or medical underwriting rules should be applied to the alternate recipient in the same way as such rules would be applied to other children of the participant. The alternate recipient should be given COBRA rights upon the happening of a qualifying event (such as the loss of dependent child status due to age or student status). Alternate recipient as participant Note that with respect to ERISA reporting and disclosure rules, the alternate recipient is to be treated like a participant of the Plan. Therefore: The alternate recipient should be counted as a participant for purposes of the annual report (Form 5500). The alternate recipient should be sent copies of all applicable ERISA-required disclosures, including Summary Plan Description, Summary of Material Modifications, and Summary Annual Report. Special consideration Child already eligible In some circumstances, the parties may present the Plan with a purported QMCSO even though the child is currently enrolled as an eligible dependent under the terms of the Plan. The Plan Administrator may not simply ignore a QMCSO in this situation. The recommended course of action is to follow all QMCSO procedures, but also to inform the parties of the child s status as a current beneficiary under the Plan. (See the alternative language provided in the sample letters accepting or rejecting an order.) 10 National Legal and Research Group (NLRG)

11 Record of Completed QMCSO Procedures Initial Response to Receipt of Order Employee s name Social Security number Alternate recipient(s): Name Date of Birth Address Social Security Number Date order received Date acknowledgment letter sent Assessment of Order (attach completed checklist) Date Checklist completed Completed by Is legal counsel s review necessary? Date of legal counsel review Reviewed by: Determination: Valid QMCSO Not valid QMCSO (reasons to be noted on checklist) Response to Parties Date letter sent accepting or rejecting QMCSO Any response received from parties? Date received Date referred to legal counsel Notes on further action Qualified Medical Child Support Orders: An Employer Guide 11

12 Steps Taken Pursuant to QMCSO Is employee currently enrolled in the Plan? Date enrollment form issued to employee Is alternate recipient(s) currently listed as a dependent on the Plan? Date alternate recipient enrolled in Plan Person to whom it is expected that benefit reimbursements are to be mailed (as designated by the QMCSO): Name: Address: (NOTE: Reimbursements must be made to the individual providing proof of payment for the incurred expenses. Information identifying the individual to receive payment should be provided to the claims administrator.) Relationship to alternate recipient: Employee parent Other parent Legal guardian Other: Date alternate recipient added to mailing list for recipient of all SPDs, SARs, etc.. Person to whom copies of all notices are to be mailed: Name: Address: 12 National Legal and Research Group (NLRG)

13 Sample Letter Acknowledging Receipt of an Order (date) (Participant) (address) (Alternate Recipient or Designate Named in QMCSO) (address) Dear (Participant) and (Alternate Recipient or Designate) : This is to advise you that on (date), we received a child support order relating to the coverage of (Alternate Recipient) under the (Plan/s) as a child (children) of (Participant). We are in the process of reviewing this order to determine if it is a Qualified Medical Child Support Order (QMCSO), as defined in Section 609 of the Employee Retirement Income Security Act of 1974 (ERISA). Our review process will include an inquiry as to the (Participant) s eligibility for medical benefits under the (Plan/s), as well as a review of the terms of the order to determine if it complies with the provisions of the plan(s) and applicable federal law. We will notify you in writing of our preliminary determination, and if we find that this order is not a QMCSO, we will advise you as to what corrective steps are necessary. Within 60 days from the date you receive that notice, you (or your attorney) will have the right to submit written comments regarding our determination. After considering any comments received, we will make a final determination as to the qualified status of the order. If no comments are received during that 60-day period, the decision will become final. Please keep us advised as to your current mailing address while these procedures are pending. In addition, please advise us if there is any individual who should be receiving copies of correspondence relating to any benefits that may be available to (Alternate Recipient). Your cooperation is appreciated. Sincerely, (Name) Plan Administrator (Name of Plan/s) cc: (Participant s Attorney, if any) (Alternate Recipient s Attorney, if any) Qualified Medical Child Support Orders: An Employer Guide 13

14 Checklist for Assessing the Validity of a QMCSO Section 609(a) of ERISA requires medical benefit plans to honor the terms of a Qualified Medical Child Support Order (QMCSO). The plan administrator makes the determination as to whether a particular child support order is qualified. This checklist will help determine whether a particular order meets the requirements of a QMCSO in accordance with Section 609(a) of ERISA. This checklist sets out those items that must be present for a child support or other court order to be a QMCSO. The plan administrator should complete this checklist as soon as possible after receiving such an order. If all items are present, the parties shall be notified that the order is QMCSO. If one or more items are not present, the parties shall be notified that the order is not a valid QMCSO. Complete a separate checklist for each plan governed by the terms of the order. The term you or your in this checklist refers to the plan administrator. 1. Is the Document a Child Support Order? The order must be a judgment, order or decree (including approval of a divorce settlement agreement) related to child support, alimony, or the division of marital property, issued pursuant to state law (including certain state Medicaid laws.) Agreements made by the parties but not formally approved by a court are not acceptable. The order may also be a judgment, decree, or order issue through an administrative process established under state law and has the force and effect of law under applicable state law. The Order may also be a properly completed National Medical Support Notice. If the Order is a National Medical Support Notice, the instructions specified thereon should be followed in evaluating whether the order qualifies and for providing an appropriate response to the agency. A Note on Revised Orders: If an order was initially found to be nonqualified, and the deficiencies are later corrected by the parties, the order may be resubmitted to the Plan. In this instance, the corrected order must be approved again by the court or administrative agency in order for it to be qualified. 2. If the Document is a National Medical Support Notice, Does it include the following? A National Medical Support Notice will automatically qualify as a QMCSO if all of the specified information is filled out. This is because Notices are prepared according to a provided form defined by the regulations. In general, this form must include: The applicable state law provisions that require the employer to withhold any employee contributions necessary under the Plan for the child s coverage The duration of the required withholding, Limits under the Consumer Credit Protection Act, state law priority rules regarding amounts to be withheld for cash support versus health plan contributions, and The name of the state agency contact regarding the Notice. 3. Does the Order include all necessary Names and Addresses? The order must include the names and last known mailing addresses of the participant and each alternate recipient. (In some cases, there will be several alternate recipients.) An order may designate a guardian or other representative of an alternate recipient (for example, the ex-spouse or other adult who cares for the minor child). However, the order may substitute the name and mailing address of a state or political subdivision for the mailing address of an alternative recipient. Although the law requires the order to state the parties addresses, you may have access to this information through other records. In practice, if a party s address is the only missing item from this checklist, and you have access to this information, you should not disqualify an order. 14 National Legal and Research Group (NLRG)

15 4. Does the Order provide a reasonable description of the coverage to be provided? The order must provide either: 1) a reasonable description of the type of coverage to be provided by the plan to each such alternate recipient child, or 2) the manner in which the type of coverage is to be determined. To the extent the plan identified provides only one benefit option, this requirement is met. An order would also satisfy this requirement by designating the alternate recipient child s coverage to be the same as the coverage elected each year by the participant/parent. Current law states that the order applies to each plan, which receives it. It is acceptable for an order to refer to an outdated or informal plan name. The letter you send to the parties regarding whether the order is a QMCSO should state that proper name of the Plan(s) covered by the order. 5. Does the Order identify the period to which it applies? The order does not need to include a specific ending date. For example, an acceptable order might indicate that it expires for each child as the reach age 18 or upon the employee s ineligibility for coverage (if earlier). The time period during which the order is effective might also be inferred from the contest of the order. The National Medical Support Notice clarifies that coverage under a QMCSO need not continue beyond the age for which coverage is available for dependents generally. 6. Is the Child eligible for coverage under the Plan? The QMCSO rules may not override other plan provisions generally applicable to dependent coverages. For example, a child may not qualify for coverage under the plan for a number of reasons, including: The employee is not eligible to participate in the Plan (due to reduction in hours, termination of employment, etc. The child does not meet the Plan s definition of dependent child because of age or student status. 7. Does the Order require the Plan to provide benefits not available under the Plan? The order may not require the Plan to provide any type or form of benefit, any option not otherwise provide under the Plan. For example, if the Plan provides only medical benefits, the order cannot require that the Plan provide dental or vision benefits. Similarly, the order cannot require a waiver of beneficiary cost sharing, nor coverage for specific medical conditions not covered by the Plan. 8. Does any required employee contribution exceed applicable state and federal withholding limits? A determination must be made as to whether any required employee contribution exceeds applicable state and federal limits. Where the cost of coverage exceeds the amount that can be withheld, it would appear that coverage need not be extended (unless contributions are made from another source-e.g, a state agency.) If the Order is a Nation Medical Support Notice, the limitation should be specified thereon. Otherwise, the Plan must ensure that it does not withhold amounts for coverage that exceed the maximum amount permitted under 303 (b) of the Consumer Credit Protection Act (CCPA). Under the CCPA, an employer cannot withhold more that (i) 50% of the employee s disposable weekly earnings where the employee is supporting a spouse or dependent child (other that the potential alternate recipient); or (ii) 60% of the employee s disposable weekly earnings where the employee is not supporting a spouse or other child. Similarly, applicable state law wage withholding limitation, which may even more restrictive than the CCPA, must be reviewed. Qualified Medical Child Support Orders: An Employer Guide 15

16 Sample Letter Accepting a QMCSO as Valid (date) (Participant) (address) (Alternate Recipient or Designate Named in QMCSO) (address) Dear Participant) and (Alternate Recipient or Designate) : This is to advise you that we have reviewed the court order received on a (Date), relating to the coverage of (Alternate Recipient/s) under the (Plan/s) as a child (children) of (Participant). We have determined this order to be a valid Qualified Medical Child Support Order (QMCSO) as defined in Section 609 of the Employee Retirement Income Security Act (ERISA). [Include one of the two alternative paragraphs below. The first paragraph is included if the child is not currently enrolled as a dependent under the Plan. The second paragraph is included if the child is a current dependent.] [Alternate 1:] Coverage for (Alternate Recipient/s) will not begin until after a completed application form has been filed with the Plan Administrator, and all other conditions for coverage have been met in accordance with the rules of the Plan. [Alternate 2:] Our records indicate that (Alternate Recipient/s) is already an eligible dependent (are already eligible dependents) of (Participant) under the terms of the (Plan/s), and there will be no interruption in coverage as a result of the court order. Coverage for (Alternate Recipient/s) will only continue as long as otherwise provided for under the terms of the (Plan/s). Please keep us informed of your current address. Also, please advise us as to whether copies of correspondence relating to (Alternate Recipient/s) s benefits should be forwarded to any designated representative. Sincerely, (Name) Plan Administrator (Name of Plan(s)) cc: (Participant s Attorney, if any) (Alternate Recipient s Attorney, if any) 16 National Legal and Research Group (NLRG)

17 Sample Letter Rejecting a QMCSO as Invalid (date) (Participant) (address) (Alternate Recipient or Designate Named in QMCSO) (address) Dear (Participant) and (Alternate Recipient or Designate) : This is to advise you that we have reviewed the court order received on (Date), relating to the coverage of (Alternate Recipient/s) under the (Plan/s) as a child (children) of (Participant). We have determined this order is not a valid Qualified Medical Child Support Order (QMCSO) as defined in Section 609 of the Employee Retirement Income Security Act (ERISA). This order does not satisfy the requirements for a Qualified Medical Child Support Order because of the following: << provide a listing of defective and/or missing provisions >> [Include one of the two alternative paragraphs below. The first paragraph is included if the child is not currently enrolled as a dependent under the Plan. The second paragraph is included if the child is a current dependent.] [Alternate 1:] Because the order does not meet the requirements of a QMCSO, (Alternate Recipient/s) will not be provided coverage under the Plan at this time. [Alternate 2:] Despite these defects, our records indicate that (Alternate Recipient/s) is already an eligible dependent (are already eligible dependents) of (Participant) under the terms of the (Plan/s), and there will be no interruption in coverage as a result of the court order. Coverage for (Alternate Recipient/s) will only continue as long as otherwise provided for under the terms of the (Plan/s). You have the right to submit written comments regarding this preliminary determination for a period of 60 days from the date of this letter. You should direct your comments to (Plan Administrator) at the following address, (address). If no comments are received within such period, this determination shall become final. If you do not intend to comment, please notify us of your intentions in writing. If comments are received during such period, the plan administrator will consider them and notify you of its final determination. Please keep us informed of your current address during this period. Sincerely, Plan Administrator (Name of Plan(s) cc: (Participant s Attorney, if any) (Alternate Recipient s Attorney, if any) Qualified Medical Child Support Orders: An Employer Guide 17