Child Support Enforcement Program; Medical Support, 54965-54974 [06-7964]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES
• Administration for Children and Families
• Children and Families Administration

[Federal Register Volume 71, Number 182 (Wednesday, September 20, 2006)]
[Proposed Rules]
[Pages 54965-54974]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7964]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Parts 302, 303, 304, 305, and 308

RIN 0970-AC22


Child Support Enforcement Program; Medical Support

AGENCY: Administration for Children and Families, Department of Health 
and Human Services (HHS).

ACTION: Notice of Proposed Rulemaking (NPRM).

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SUMMARY: These proposed regulations would revise Federal requirements 
for establishing and enforcing medical support obligations in child 
support enforcement program cases receiving services under title IV-D 
of the Social Security Act (the Act). The proposed changes would: 
require that all support orders in the IV-D program address medical 
support; redefine reasonable-cost health insurance; require health 
insurance to be accessible, as defined by the State; and make 
conforming changes to the Federal substantial-compliance audit and 
State self-assessment requirements.

DATES: Consideration will be given to comments received by November 20, 
2006.

ADDRESSES: Send comments to the Office of Child Support Enforcement, 
Administration for Children and Families, 370 L'Enfant Promenade, SW., 
4th Floor, Washington, DC 20447, Attention: Director, Division of 
Policy, Mail Stop: OCSE/DP. Comments will be available for public 
inspection Monday through Friday, 8:30 a.m. to 5 p.m. on the 4th floor 
of the Department's offices at the above address. A copy of this 
regulation may be downloaded from https://www.regulations.gov. In 
addition, you may transmit written comments electronically via the 
Internet: https://www.regulations.acf.hhs.gov.

FOR FURTHER INFORMATION CONTACT: Thomas G. Miller, OCSE Division of 
Policy, 202-401-5730, e-mail: tgmiller@acf.hhs.gov. Deaf and hearing 
impaired individuals may call the Federal Dual Party Relay Service at 
1-800-877-8339 between 8 a.m. and 7 p.m. eastern time.

SUPPLEMENTARY INFORMATION:

Statutory Authority

    This notice of proposed rulemaking is published under the authority 
granted to the Secretary of Health and Human Services (the Secretary) 
by section 1102 of the Social Security Act, 42 U.S.C. 1302. Section 
1102 of the Act authorizes the Secretary to publish regulations, not 
inconsistent with the Act, that may be necessary for the efficient 
administration of the title IV-D program.
    This proposed rule is also published in accordance with section 
452(f) of the Act, as amended by section 7307 of the Deficit Reduction 
Act of 2005 (DRA of 2005), which directs the Secretary to issue 
regulations which require that State agencies administering IV-D 
programs ``enforce medical support included as part of a child support 
order whenever health care coverage is available to the noncustodial 
parent at reasonable cost.'' Section 7307 of the DRA of 2005 also added 
two additional sentences to section 452(f) of the Act: ``A State agency 
administering the program under this part [title IV-D] may enforce 
medical support against a custodial parent if health care coverage is 
available to the custodial parent at a reasonable cost, notwithstanding 
any other provision of this part [title IV-D].'' And: ``For purposes of 
this part, the term `medical support' may include health care coverage, 
such as coverage under a health insurance plan (including payment of 
costs of premiums, co-payments, and deductibles) and payment for 
medical expenses incurred on behalf of a child.''
    This proposed regulation is also published in accordance with 
section 466(a)(19) of the Act, as amended by section 7307 of the DRA of 
2005, which requires States to have in effect laws requiring the use of 
procedures under which all child support orders enforced pursuant to 
title IV-D of the Act ``shall include a provision for medical support 
for the child to be provided by either or both parents.''

Background

    In 2001, the Census Bureau estimated that 9.2 million of the 
nation's children under the age of 19 (12.1 percent) were without 
health insurance (Children With Health Insurance: 2001, Current 
Population Reports, U.S. Census Bureau, August 2003). Of all children, 
52.4 million were covered through private health insurance. Ninety-
three percent of the 52.4 million children were covered through an 
employer-sponsored plan (ESI) and 19.5 million had coverage through a 
government program. Children With Health Insurance: 2001, reports that 
the rate of uninsured children in 2001 was lower than reported in 1997, 
when Congress established the State Children's Health Insurance Program 
(SCHIP).
    A more recent Census Bureau report, Health Insurance Coverage in 
the United States: 2002 (Current Population Reports, U.S. Census 
Bureau, September 2003), found that the proportion of children who 
remained uninsured did not change from 2001 to 2002, despite an 
increase in the number and percentage of uninsured in the general 
population to 43.6 million people (15.2 percent) in 2002. It appears 
children were largely protected as a result of increased government-
sponsored health insurance coverage through Medicaid, SCHIP and 
military health care (Health Insurance Coverage: 2002). While public 
coverage increased, the percentage of people covered by employment-
sponsored health insurance (ESI) dropped in 2002, from 62.6 percent to 
61.3 percent, driving an overall increase of 2.4 million U.S. residents 
who were uninsured during the entire year of 2002. Only for children 
did expanded public coverage offset the decrease in ESI.
    The income disparity as to who does or does not receive ESI is 
widely documented. Children With Health Insurance: 2001 estimates that 
85 percent of children in families with incomes of at least 250 percent 
of the poverty level have ESI, compared with 51.3 percent of children 
in families with incomes between 133 and 200 percent of poverty level. 
In 2002 the coverage rate for households with incomes of $25,000 to 
$50,000 decreased 1.5 percentage points from 2001 rates (Health 
Insurance Coverage: 2002).
    For children who live apart from one or both of their parents, 
securing private health care coverage or defraying the cost of public 
benefits has proven even more complex and burdensome. From its creation 
in 1975 Part D of title IV of the Act, the Child Support Enforcement 
Program (IV-D program), has been responsible for locating noncustodial 
parents; establishing paternity; establishing, modifying and enforcing 
child support orders; and collecting and distributing child support 
owed by the noncustodial parent. The initial focus of this Federal/
State/local partnership was to secure reimbursement for Federal welfare 
expenditures from the noncustodial parents of these children.
    The Child Support Enforcement Amendments of 1984 added a new 
section to the Act, requiring State IV-D agencies to petition for 
health care coverage in all IV-D cases in which

[[Page 54966]]

such coverage is available at reasonable cost. The Secretary of HHS 
defined ``reasonable cost'' by regulation at 45 CFR 303.31: The cost of 
health care coverage is reasonable if it is available through the child 
support noncustodial parent's employment.
    Federal regulations require that the State child support guidelines 
must, at a minimum, ``provide for the child(ren)'s health care needs, 
through health insurance coverage or other means.'' (45 CFR 
302.56(c)(3)). The mechanism for accomplishing this mandate is 
determined by each State. Generally, guidelines use one or a 
combination of the following methods: One parent is ordered to provide 
health insurance and the cost is deducted from his/her income before 
the support obligation is calculated or the cost of health insurance is 
added to the basic award and prorated between the parents. Where there 
is no ESI or there are significant uninsured or extraordinary medical 
expenses, States generally add an amount to the support award and 
apportion it between the parents or consider such expenses a basis to 
deviate from the guideline amount.
    The Federal statute and regulations fostered cooperation between 
State IV-D and Medicaid agencies. Under 42 CFR 433.151, Medicaid State 
plans must provide for entering into cooperative agreements for 
enforcement of rights to and collection of third party benefits with, 
among other agencies, IV-D agencies. Child support program regulations 
required State child support agencies to notify Medicaid agencies when 
private family health coverage was obtained or discontinued for a 
Medicaid-eligible person, and authorized Federal financial 
participation for the cost of these services (45 CFR 304.20).
    Seeking to remove legal impediments to securing private health care 
coverage from noncustodial parents of child support-eligible children, 
the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) amended the 
Employee Retirement Income Security Act of 1974 (ERISA), creating the 
Qualified Medical Child Support Order (QMCSO). Every employer group 
health plan must honor a properly prepared QMCSO that requires a plan 
participant to provide coverage for a dependent child (29 U.S.C. 
1169(a)). OBRA '93 required States as a condition of Medicaid funding 
to enact laws prohibiting employers and insurers from denying 
enrollment of a child under a parent's health coverage plan due to 
various factors such as: The child's birth out-of-wedlock, failure to 
claim the child as a dependent on the parent's Federal income tax 
return, or the child's residence outside the insurer's service area or 
with someone other than the employee.
    Medical child support was strengthened in the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA). This legislation mandated that all child support orders 
contain provisions for medical support. [The Child Support Performance 
and Incentive Act of 1998 (CSPIA) discussed below, later moved this 
requirement from section 466(a)(19) to section 452(f) of the Act. The 
DRA of 2005 moved the requirement back to section 466(a)(19) as noted 
under Statutory Authority.]
    States also were required to provide a simple administrative 
process for enrolling a child in a new health plan using a notice of 
coverage. Section 609(a) of ERISA was amended to expand the definition 
of ``medical child support orders'' to permit certain administrative 
orders to be considered QMCSOs, rather than just court orders.
    Recognizing that States' efforts to secure and enforce medical 
support orders against child support obligors had met with limited 
success and that significant problems remained, Congress enacted CSPIA. 
This law included even stronger provisions to improve medical support 
enforcement in the IV-D program. Further, the CSPIA directed the 
Secretaries of HHS and the Department of Labor (DOL) to establish a 
Medical Child Support Working Group (Working Group). The Working Group 
included thirty members representing: HHS and DOL, State child support 
directors, State Medicaid directors, employers (including payroll 
professionals), sponsors and administrators of group health plans 
defined by section 607(1) of ERISA, organizations representing children 
potentially eligible for medical support, SCHIP programs, and 
organizations representing child support professionals. The Working 
Group was asked to identify impediments to the effective enforcement of 
medical support by State IV-D agencies and make recommendations to the 
Secretaries to eliminate them.
    A final report, 21 Million Children's Health: Our Shared 
Responsibility, offered 76 recommendations broken into five categories: 
Federal Statute/Legislation; Federal Regulation/Guidance; Best 
Practice; Technical Assistance and Education; and Research and 
Demonstration. This proposed rule responds to several of the Working 
Group's key recommendations. The Secretaries of HHS and DOL jointly 
transmitted 21 Million Children to the Congress on August 16, 2000.
    CSPIA also directed HHS and DOL to develop and promulgate a 
National Medical Support Notice (NMSN), to be issued by State IV-D 
agencies as a means of enforcing health care coverage provisions 
contained in child support orders. HHS and DOL issued the final rule on 
the NMSN jointly on December 27, 2000 (amending 29 CFR part 2590 and 45 
CFR part 303) (65 FR 82154). All States have now implemented the NMSN. 
Under ERISA, an appropriately completed NMSN is deemed to be a QMCSO 
for the child, and the employer is required to comply with the Notice 
in a timely manner.
    After review of 21 Million Children and promulgation of the NMSN, 
OCSE consulted with a wide range of program stakeholders in 2001 and 
2002, including State and local workers and administrators, national 
organizations, advocates and other parties interested in medical 
support enforcement. These consultations explored the feasibility and 
impact of the Working Group's recommendations, establishing which 
recommendations had wide support. Those included in the consultations 
were the National Governors Association (NGA), the National Conference 
of State Legislators (NCSL), the American Public Human Services 
Association (APHSA), the National Child Support Enforcement Association 
(NCSEA), the National Council of Child Support Directors (NCCSD), the 
Eastern Regional Interstate Child Support Association (ERICSA), and the 
Western Interstate Child Support Council (WICSEC).
    Resolutions passed by NCSEA, NCCSD, and ERICSA urged OCSE to expand 
the definition of reasonable cost under 45 CFR 303.31 to include both 
parents and to decouple it from ESI. These organizations joined in the 
Working Group's conclusion that the definition ``deeming employment-
related coverage to be per se reasonable'' in cost is an artifact of 
earlier decades when employment-related insurance was both widely 
available and more heavily subsidized by the employer. Therefore, there 
is broad support for eliminating the employer-tied definition of 
reasonable cost.
    Additionally, the HHS study Health Care Coverage Among Child 
Support-Eligible Children, published in 2002 after the Working Group's 
Report, suggests that untapped employer-sponsored insurance through 
custodial mothers and their spouses might reduce the share of children 
without private health insurance more significantly than similar 
insurance through noncustodial

[[Page 54967]]

parents, for a variety of reasons, including availability, 
accessibility, cost and preference. ``Half of child support-eligible 
children living with their mothers are currently covered by [employer-
sponsored] insurance. The sources of this coverage are as follows: the 
resident mother (26 percent), the noncustodial father (13 percent), a 
step-father (7 percent), and another adult in the child's household (4 
percent),'' (HHS, December 2002). Another 6.7 percent appear to have 
access to employer-sponsored insurance (ESI) but are not covered. 
(Custodial fathers are more likely to either provide ESI or have access 
to it). Therefore, it appears that custodial mothers are the most 
important source of ESI for child support-eligible children living with 
their mothers, and provide more than one-quarter of those children with 
ESI. Indeed, the Working Group's decision matrix to determine 
appropriate health insurance coverage, presented in 21 Million 
Children, contains a preference for using the custodial parent's (or 
step-parent's) health insurance.

Provisions of the Regulation

    We propose amending parts 302, 303, 304, 305, and 308, as discussed 
below.

Part 302

Section 302.56--Guidelines for Setting Child Support Awards

    Currently, under Sec.  302.56(c)(3), the State guidelines for 
setting and modifying child support awards must provide for the 
child(ren)'s health care needs, through health insurance coverage or 
other means. We propose to amend Sec.  302.56(c)(3) to require that 
guidelines ``address how the parents will provide for the child(ren)'s 
health care needs through health insurance coverage and/or through cash 
medical support in accordance with Sec.  303.31(b) of this chapter.''
    The recommendations of the Working Group grew from a fundamental 
understanding that parents share primary responsibility for their 
children's needs. The proposed regulation clarifies that the resources 
of both parents must be considered. The Working Group found that ``* * 
* only 27 States'' child support guidelines direct the decision maker 
to consider both parents as potential sources of health care coverage'' 
(21 Million Children).
    The proposed language is purposely broad, ensuring that child 
support guidelines consider not only health insurance coverage that may 
be available from either, or both parents, but also how the parents 
will meet the child's health care needs when no insurance is available, 
when the cost of insurance is beyond the reasonable means of the 
parents, or where the cost is extraordinary or unreimbursed by 
insurance. It is possible that both health insurance coverage and cash 
medical support would be included in a support order. For example, 
where a custodial parent has access to maintain health insurance 
coverage for the parties' child, the noncustodial parent may be 
required to pay a share of the premium's cost. And each parent may be 
ordered to pay a fixed sum or a percentage of the cost of allergy 
shots, or orthodontic treatment or psychological counseling, not 
covered by insurance.
    This regulation does not mandate that State guidelines label the 
payment of medical costs as a stand-alone item. States are free to 
incorporate health costs within an existing methodology, such as those 
described below, so long as the insurance and resources of both parents 
are considered. The sole limitation is that considerations of 
accessibility and affordability must be addressed in accordance with 
Sec.  303.31(b), as proposed.
    Currently, the health insurance premium to cover the child is 
generally either deducted from the income of the parent providing 
coverage or treated as an ``add on'' to the basic support obligation, 
which may be further apportioned. Uninsured and extraordinary medical 
expenses are usually either an ``add on'' or treated as a factor 
allowing deviation from the guideline amount.
    The Working Group acknowledged the variation in approach. The 
elected methodology clearly affects the amount of the support 
obligation. These are policy choices left to each State. Each State 
should ensure that its child support guidelines address with 
specificity how the cash child support award would then ``* * * 
increase or decrease in order to account for health care premiums, and 
child support orders should clearly specify how such amounts are to be 
allocated between the parents'' (21 Million Children).

Part 303

    As discussed below, we propose one change to case closure 
regulations at Sec.  303.11, to address the circumstances under which a 
child-only Medicaid case receiving IV-D services may be closed.
    The other proposed amendments to part 303 incorporate major 
recommendations of the Working Group. They shift the focus of providing 
health insurance from the non-custodial parent with an employer-related 
or other group plan, to either parent, to the extent that insurance 
coverage is accessible and available at reasonable cost. The amendments 
also broaden medical child support by specifically addressing cash 
medical support.

Section 303.11--Case Closure Criteria

    Section 303.11(b)(11) states that in order to be eligible for 
closure, a case must meet the following criterion: ``In a non-IV-A case 
receiving services under section 302.33(a)(1)(i) or (iii), the IV-D 
agency documents the circumstances of the recipient of services's 
noncooperation and an action by the recipient of services is essential 
for the next step in providing IV-D services.''
    Currently Sec.  303.11(b)(11) allows case closure for 
noncooperation only for IV-D applicants (Sec.  302.33(a)(1)(i)) or 
former IV-A, IV-E foster care or Medicaid families (Sec.  
302.33(a)(1)(iii)). States have complained about lack of cooperation by 
custodial parents of children in child-only Medicaid cases and the 
inability to either ensure cooperation or close the case.
    If, in a child-only Medicaid case, the IV-D agency documents that 
the custodial parent has not cooperated and an action by the custodial 
parent is essential for the next step in providing IV-D services, we 
believe it would be appropriate, after meeting notice and waiting 
period requirements under Sec.  303.11(c), for the IV-D agency to close 
the case under Sec.  303.11(b)(11). We propose to authorize a State IV-
D agency to close such cases for noncooperation by adding references in 
Sec.  303.11(b)(11) to child-only Medicaid cases receiving services 
under Sec.  302.33(a)(1)(ii), which requires IV-D agencies to provide 
services to non-IV-A Medicaid recipients. We do this by expanding the 
reference in this section to include the whole of Sec.  302.33(a)(1). 
However, we continue to encourage State Medicaid agencies to refer 
cases to IV-D agencies when it is appropriate, and to develop criteria 
and procedures, in conjunction with State IV-D agencies, for 
appropriate referrals.
    The proposed regulation would authorize States to close these cases 
using the Secretary's rulemaking authority under section 1102 of the 
Act to ensure efficient administration of his functions under section 
452 of the Act. The Secretary is responsible under section 452(a)(1) 
for setting standards determined to be necessary to assure IV-D 
programs will be effective. Allowing States to close cases when the 
custodial parent is not cooperating with the IV-D agency will allow 
States to focus on cases in which the custodial parent is cooperating 
with the State in

[[Page 54968]]

its efforts to secure support for his/her children.

Section 303.31--Securing and Enforcing Medical Support Obligations

Section 303.31(a)
    We have added a new paragraph (a)(1) to define cash medical support 
as ``an amount ordered to be paid toward the cost of health insurance 
provided by a public entity or by another parent through employment or 
otherwise, or for other medical costs not covered by insurance.'' This 
would include the cost of: (1) Premiums when health insurance is 
provided by another parent or through Medicaid or SCHIP; (2) medical 
care such as orthodontia not covered by available health insurance; or 
(3) medical costs when no reasonable or accessible insurance is 
available. A health insurance premium or cash medical support 
obligation is current support for purposes of distribution and 
allocation between cash child support and cash medical support, as 
discussed later in this preamble.
    Currently, Sec.  303.31(a)(2) specifies that health insurance 
includes fee for service, health maintenance organization, preferred 
provider organization, and other types of coverage under which medical 
services could be provided to dependent children of noncustodial 
parents. We propose to amend Sec.  303.31(a)(2) by deleting reference 
to the noncustodial parent and referring instead to either parent to 
clarify that either parent could be ordered to provide health care 
coverage.
    Under current Sec.  303.31(a)(1), health insurance is considered 
reasonable in cost if it is available through an employment-related or 
other group health insurance, regardless of service delivery mechanism. 
We proposed to renumber this provision as Sec.  303.31(a)(3) and to 
revise it as follows: ``Cash medical support or private health 
insurance is considered reasonable in cost if the cost to the obligated 
parent does not exceed five percent of his or her gross income or, at 
State option, a reasonable alternative income-based numeric standard 
defined in State child support guidelines adopted in accordance with 
Sec.  302.56(c).'' We are using the Secretary's rulemaking authority 
under section 1102 of the Act to update an obsolete regulatory 
requirement to recognize the evolution of the health care system over 
the past decade, particularly with respect to availability of health 
insurance through the workplace. Use of 1102 authority to update this 
definition would eliminate the requirement for IV-D programs to 
consider health insurance available through employment to be reasonable 
in cost, and contribute to the State's and Secretary's responsibilities 
to operate effective programs.
    A major focus of the Working Group's recommendations was redefining 
``reasonable cost'' in existing regulations. Research completed after 
21 Million Children supported the Working Group's recommendation that 
it was appropriate to remove from the regulation the conclusion that 
health insurance through the noncustodial parent's employer is de facto 
available at reasonable cost. During its consultation process on the 
Working Group's recommendations, OCSE has been urged to change the 
existing regulation to provide a definition of reasonable cost that 
considers the parent's ability to pay.
    The proposed rule changes in this Notice adopt the Working Group's 
conclusion that a new measure is required to ascertain whether private 
health insurance is ``reasonable in cost.'' For many, the cost of 
obtaining such coverage, even when offered by an employer, is beyond 
their reasonable means.
    The trend over the last 20 years is significantly increased 
employee costs for ESI coverage. At the time the existing regulation 
was enacted, a majority of employers offered dependent health care 
coverage to their employees at little or no cost. A 1997 General 
Accounting Office report estimated that ``* * * in 1980, 51 percent of 
employers who offered dependent coverage fully subsidized the cost, but 
in 1993, only 21 percent of employers did so.'' The recent Census 
Bureau report, Health Insurance Coverage in the United States: 2002, 
reports that 30.8 percent of workers employed for firms with fewer than 
25 employees are covered by their own ESI, compared with 68.7 percent 
of covered workers in firms with 1000 or more employees. Even within 
the few years since 21 Million Children was published, the cost to 
employees has risen to more than 50 percent of the average child 
support received (U.S. Census Bureau, Child Support for Custodial 
Mothers and Fathers 1997).
    State child support enforcement officials have been concerned that 
the cost of health insurance would dramatically and disproportionately 
reduce the cash child support award, leaving the custodial parent with 
insufficient funds to meet the child's daily living expenses, and/or so 
impoverish the noncustodial parent as to remove his or her incentive to 
work.
    After considerable debate, the Working Group recommended that 
private health insurance coverage be deemed reasonable if the cost does 
not exceed five percent of the gross income of the parent who provides 
the coverage (21 Million Children). During the consultation process, 
OCSE was made aware that States, professional organizations and 
advocacy groups were engaged in considerable discussion over this 
recommendation and varied in their position. The main division was 
whether each State should be able to set the threshold for 
reasonableness under its own guidelines--as some already do--or whether 
the Working Group's five percent of gross income standard should be 
adopted.
    Recently, two States have considered how best to handle medical 
support enforcement. A New Jersey grant project endorsed a standard of 
reasonableness measured against five percent of the net income of the 
person ordered to provide coverage. However, no coverage would be 
required from ``parents whose net income is at or below 200 percent of 
the Federal poverty level,'' unless the coverage is available at no 
cost to the parent. See A Feasibility Study for Review and Adjustment 
for Medical Support and SCHIP Collaboration (Feasibility Study). New 
Jersey's report is available at https://www.acf.hhs.gov/programs/cse/
pol/dcl/dcl-03-10.htm.
    Minnesota's Medical Child Support Workgroup recommended that no 
contribution for medical support be required from parents with incomes 
below 150 percent of poverty. For those with net incomes between 150 
and 275 percent of the Federal poverty level, five percent of adjusted 
gross income is ordered toward the cost of medical support. Minnesota's 
December 2002 Report is available at (www.dhs.state.mn.us/ecs/
ChildSupport/Reports). The limitations on ordering a low-income parent 
to provide health insurance offered in both studies mirror, in concept, 
best practice recommendations in 21 Million Children: Unless insurance 
is available from an employer without an employee contribution, 
enrollment should not be ordered against either a parent with income at 
or below 133 percent of the Federal poverty level or one whose child is 
covered by Medicaid due to the enrolling parent's income.
    Proposed Sec.  303.31(a)(3) is similar to the Working Group's five 
percent of gross income recommendation and clarifies that ``reasonable 
cost'' considerations apply where a tribunal is ordering health 
insurance coverage and/or cash medical support. However, this rule 
allows States the option of

[[Page 54969]]

adopting, as part of their child support guidelines under Sec.  302.56, 
an alternate standard, that is reasonable, income-based and numeric. We 
appreciate that there are competing interests in establishing a 
reasonable cost standard and particularly welcome comments on this 
issue.
    In addition, the proposed definition recognizes the possibility 
that one parent may have access to health insurance but the other 
parent may be ordered to bear a portion or all of the cost of the 
insurance. Therefore, the proposed regulation refers to the cost of 
private health insurance that does not exceed five percent of the 
obligated parent's gross income.
Section 303.31(b)
    Currently, under Sec.  303.31(b), the introductory text specifies 
that medical support enforcement services will be provided if rights to 
medical support have been assigned to the State as a condition of 
receiving Medicaid. We propose to amend the introductory text of Sec.  
303.31(b) by deleting the reference to assignment of medical support 
rights to the State since the IV-D agency must provide medical support 
enforcement services to all IV-D recipients.

Sections 303.31(b)(1)-(4)--Addressing Medical Support in Child Support 
Orders

    To incorporate the concepts of including medical support (health 
insurance and/or cash medical support) in every order, we propose to 
revise Sec.  303.31(b)(1)-(4).
    Under existing Sec.  303.31(b)(1), the IV-D agency is required to 
petition for medical support in a new or modified child support order 
if the noncustodial parent has health insurance available at reasonable 
cost, unless the custodial parent and child(ren) have satisfactory 
health insurance other than Medicaid. From consultations with our 
individual State partners, and as discussed later in this preamble, we 
believe there is a national consensus that simply ignoring the 
availability of health care through the custodial parent's employment 
is not in the best interest of children.
    A second concern with the current rule is that it may require the 
noncustodial parent to pay for health insurance coverage that is not 
accessible to the child, due to distance or to plan restrictions that 
make it virtually worthless for the child. A Working Group 
Recommendation proposes a modification to Federal regulation: The 
decision-maker establishing or modifying a child support order must 
determine whether either the custodial or noncustodial parent is able 
to obtain appropriate health insurance coverage. If appropriate 
coverage is available, it is to be ordered. Appropriateness is based on 
three factors. The first, affordability or reasonable cost, has been 
discussed above and is included in these regulations.
    The second component of ``appropriateness'' is accessibility. 
Health insurance has little or no value if the child does not have 
geographic access to the services provided by the coverage. Part of the 
Working Group's new paradigm for setting medical child support orders 
is that coverage should not be ordered where the services and providers 
are unavailable to the child in practical terms. The Working Group 
recommends that enrollment of a child in private health care coverage 
is not required unless the coverage is found to be: available for at 
least one year based on the work history of the parent providing 
coverage and with the child living within the geographic area covered 
by the plan or within 30 minutes or 30 miles of primary care services. 
The Working Group further suggests that States be permitted to enact an 
alternate standard.
    OCSE agrees that health insurance should not be mandated when the 
covered child cannot use it. However, we found no consensus among our 
partners on how to define accessibility and concluded that this is not 
an area in which the Federal government should be prescriptive. Thus, 
the provisions contained in this proposed rule make it a State 
responsibility to define under what circumstances health insurance is 
``accessible.''
    States are free to incorporate a definition that addresses only 
geographic access to services or also to address the continuity problem 
recognized by the Working Group. There is no public consensus on 
whether and how to measure the value of private health insurance to a 
child when it is frequently disrupted. For example, New Jersey's 
proposed medical support guidelines do consider the stability of 
coverage based on whether it is likely to be in place for at least one 
year (Feasibility Study). Again, we concluded that this judgment is 
best left to the individual States.
    The third component of ``availability'' that the Working Group 
recommends is whether the health insurance plan is comprehensive. We 
concluded that this third measure should not be explicitly addressed in 
Federal requirements, beyond the existing requirement in Sec.  
303.32(c)(8), relating to the NMSN, under which IV-D agencies must 
choose among insurance plans if more than one is available and the 
child is not yet enrolled as ordered.
    The Working Group also concluded that parents have the primary 
responsibility to meet their children's needs, including health care 
coverage. When one or both parents can provide ``accessible and 
affordable health care,'' that coverage should not be replaced by the 
expenditure of public funds from either Medicaid or SCHIP (21 Million 
Children). Given the importance of medical support to the well being of 
children, we propose that each newly-established or modified order must 
directly address medical support, whether or not private health 
insurance is currently available. To petition for such relief is 
ineffective without a corresponding, comprehensive mechanism for 
determining how courts or administrative hearing bodies will allocate 
this responsibility between the parents, under some circumstances 
subsidized by public benefits.
    Rather than looking exclusively to the noncustodial parent, private 
insurance available to both the custodial and noncustodial parent 
should be considered. And while section 452(f) of the Act only requires 
states to enforce medical support orders when the obligor is the 
noncustodial parent, section 466(a)(19) of the Act requires that States 
have in effect laws requiring the use of procedures under which all 
child support orders enforced under title IV-D of the Act ``shall 
include a provision for medical support for a child to be provided by 
either or both parents.'' States will be required to submit an amended 
State plan page providing assurances that laws and procedures require 
inclusion of medical support provisions in new and modified orders. 
Given both demographics and relative ease of use, the Working Group 
concludes that, quite opposite to the current rule, there should be a 
preference for coverage available to the custodial parent with 
financial contribution by the noncustodial parent. Not only does this 
expand the pool of available private health coverage but it also 
provides coverage that is generally more accessible to the custodian 
than that provided by the noncustodial parent.
    Under proposed paragraph (b)(1), the State must petition the court 
or administrative authority to include private health insurance 
coverage in the support order if it is accessible to the child and 
available at reasonable cost to the obligated parent. If private health 
insurance is not available, then under proposed paragraph (b)(2), the 
IV-D agency must petition to include a provision for cash medical 
support in

[[Page 54970]]

all new and modified orders, to continue until accessible insurance 
becomes available at reasonable cost. As defined by proposed paragraph 
(a)(1), cash medical support includes not only payments to cover a 
child's uninsured medical expenses but also may include an amount to be 
paid toward the cost of health insurance provided through a government 
program, such as Medicaid or SCHIP, or privately by the other parent. 
For example, if a custodial parent of a child enrolled in SCHIP is 
required to pay a co-payment or premium for SCHIP, the cash medical 
support obligation of the noncustodial parent could be used to pay or 
reimburse the custodial parent for any co-payment or premium owed to 
SCHIP.
    We are proposing paragraphs (b)(1) and (2) using the Secretary's 
rulemaking authority under section 1102 of the Act to increase the 
effectiveness of State IV-D programs and therefore allow for more 
efficient administration of the Secretary's responsibilities under 
section 452 of the Act. Incorporating the concept of accessibility of 
health care as well as providing for a cash medical support obligation 
in the absence of health insurance coverage will ensure an increase in 
the availability of health insurance coverage for children, and, if 
that is not possible, provide for cash medical support to contribute to 
the child(ren)'s medical needs.
    As it is possible for an order to include both an order to pay 
health insurance and cash medical support, this regulation specifically 
authorizes States to address both health insurance coverage and cash 
medical support. For example, pursuant to Sec.  303.31(b)(1), where the 
custodial parent had health insurance coverage available through his/
her employer, the decision-maker could first determine that the 
insurance was both accessible to the child (as defined by the State) 
and that the obligated parent's cost was less than five percent his/her 
gross income (or another income-based numeric standard enacted by the 
State). The obligated parent could be the custodial parent, the 
noncustodial parent, or both parents, depending on the circumstances in 
the particular case, the State's guidelines, and how responsibilities 
are shared between the parties. If so, the child support order could 
require the custodial parent to enroll the child in the health 
insurance plan.
    The support order could specify which parent is responsible for the 
cost of obtaining the coverage or allocate responsibility for costs 
between the parents. For example, should the custodial parent have 
access to health insurance, and the cost of the insurance does not 
exceed five percent of the noncustodial parent's gross income, the 
custodial parent could enroll the child(ren) and the State could order 
the noncustodial parent to pay cash medical support towards the cost of 
the employee's share of health insurance coverage by the custodial 
parent. It would be up to the State to determine how the premium is 
paid, directly by the noncustodial parent to the plan administrator or 
as reimbursement to the custodial parent should he or she have premiums 
withheld from his or her income.
    The order should also address allocation of the cost of any 
uncovered expense--co-payments, deductibles, unreimbursed or 
extraordinary expenses. The same scenario applies where the 
noncustodial parent has accessible coverage, available at reasonable 
cost.
    However, private insurance may be found to be unavailable where: 
neither parent has access to employer-sponsored or group coverage; the 
cost of enrollment exceeds five percent of the obligated parent's gross 
income (or other standard elected by the State); or the noncustodial 
parent's insurance is not accessible to the child. In such a case, a 
new or modified support order must contain a provision for cash medical 
support in lieu of health insurance, consistent with the state's 
guidelines. The amount of cash medical support must be reasonable as 
defined under paragraph (a)(3). The amount paid could be used to 
contribute to the cost of a government health insurance program and/or 
to cover a child's medical needs not covered by health insurance.
    If no private health insurance is available, the cash medical 
support provision would continue until insurance becomes available and 
the order is modified accordingly. State law, guidelines, and 
procedures would determine the mechanism to modify the support order 
when private insurance becomes available (for example, using 
administrative adjustment, automatic modifications, or review and 
modification by the issuing tribunal).
    We appreciate that there are competing interests in how States will 
accommodate these changes to establishing medical support. Will changes 
to State child support guidelines be required? How will cash medical 
support be designated? How will orders be modified once private health 
insurance becomes available? We particularly welcome comments on these 
issues.
    Under current Sec.  303.31(b)(2), the IV-D agency is required to 
petition for inclusion of medical support in a new or modified support 
order whether or not health insurance is available to the noncustodial 
parent at the time the order is entered or the children can be 
immediately added to the health care coverage. We propose to delete 
this section because under the Omnibus Budget Reconciliation Act of 
1993 (OBRA '93), an employer receiving a QMCSO, including a NMSN, is 
required to immediately enroll the child in the health plan, without 
regard to open enrollment periods. Therefore, because of the OBRA '93 
requirement, children can be immediately added to the health care 
coverage and paragraph (b)(2) is no longer accurate.
    Currently, under Sec.  303.31(b)(3), the IV-D agency is required to 
establish written criteria to identify cases without a medical support 
order when there is high potential for obtaining medical support based 
upon evidence that health insurance may be available to the 
noncustodial parent at a reasonable cost. We propose to revise this 
section, changing ``cases'' to ``orders'', deleting the reference to 
the noncustodial parent, since either parent could provide health care 
coverage, and adding a cross-reference to Sec.  303.8(d). Section 
303.8(d) requires that the ``need to provide for the child's health 
care needs in the order, through health insurance or other means, must 
be an adequate basis under State law to initiate an adjustment of an 
order, regardless of whether an adjustment in the amount of child 
support is necessary.'' States are free to define their own criteria so 
long as, at a minimum, the State meets the requirement in Sec.  
303.8(d) and includes as criteria: evidence, such as from New Hire 
reporting or another database or reporting process that health 
insurance is now available to the obligated parent; and other facts, as 
defined by the State, and Federal review and adjustment requirements in 
Sec.  303.8(d), that are sufficient to warrant modification of the 
order to include medical support.
    Currently, under Sec.  303.31(b)(4), the IV-D agency is required to 
petition the court or administrative authority to modify a support 
order to include medical support in the form of health insurance 
coverage when cases meet the modification criteria established by the 
State for inclusion of medical support. We propose in Sec.  
303.31(b)(4) to petition for medical support and to require the IV-D 
agency to petition the court or administrative authority to modify 
support orders to include medical support in accordance with the 
proposed regulation when cases meet the modification criteria for 
inclusion of medical support discussed above.

[[Page 54971]]

Sections 303.31(b)(5)-(b)(9), and (c)--Securing and Enforcing Medical 
Support Obligations

    We propose deleting current Sec. Sec.  303.31(b)(5), (7) and (9) 
that require the IV-D agency: to provide the custodial parent with 
``information pertaining to the health insurance policy'' obtained 
under a support order; to enforce health insurance coverage ordered but 
not obtained; and to request that employers and health insurers inform 
the agency of lapses in coverage. Under OBRA '93, the plan 
administrator is required to provide information and forms regarding 
the child's coverage directly to the custodial parent. This requirement 
is included on the NMSN. Therefore, the requirement in paragraph (b)(5) 
for the IV-D agency to do so is no longer necessary. Since states are 
required to use the NMSN to enforce all orders for health insurance 
coverage under Sec.  302.32, the separate requirement to do so under 
paragraph (b)(7) is unnecessary. The employer's responsibility to 
notify the IV-D agency when an employee-obligor's health insurance has 
lapsed under paragraph (b)(9) is contained in Sec.  303.32(c)(6) and on 
the NMSN itself.
    In accordance with the deletions of these sections, the remaining 
paragraphs have been renumbered. Existing paragraph (b)(6) becomes 
proposed (b)(5) and existing paragraph (b)(8) becomes proposed (b)(6).
    Paragraph 303.31(c) continues to require that medical support 
services shall be provided to individuals eligible for services under 
Sec.  302.33.

Section 303.32--National Medical Support Notice

    Currently, under Sec.  303.32(c)(4), employers must withhold any 
employee share of premiums and send any amount withheld directly to the 
insurance plan. States are required to allocate amounts available for 
income withholding across multiple orders under Sec.  303.100(a)(5), 
recognizing that there may be insufficient funds to meet all of the 
orders/notices for withholding. Similar situations will occur where the 
employee's income is insufficient to meet the mandates to withhold both 
payments for health insurance premiums required by the NMSN and cash 
child support under an income withholding order.
    Both the Working Group and our individual state partners with whom 
we discussed these issues raised concern that the cost of health 
insurance might adversely impact funds available for cash child 
support, particularly where the obligor is under a support order for 
more than one family. This proposed regulation incorporates an 
allocation priority presented in 21 Million Children. Using our 
rulemaking authority under section 1102 of the Act, the proposed 
regulation places current cash child and spousal support first in 
priority, followed by health insurance and cash medical support, then 
arrearages, and finally other child support obligations. However, it 
affords the State decision-maker the opportunity to require a different 
allocation when the best interest of the child so dictates. Some 
existing State laws may need to be amended to meet this proposed 
requirement.
    We propose to revise existing paragraph 303.32(c)(4) requiring the 
employer to withhold employee contributions for health coverage for the 
children and forward them to the plan. Proposed paragraph (c)(4) would 
require employers to:

    ``(i) Withhold any obligation of the employee for employee 
contributions necessary for coverage of the child(ren), and send any 
amount withheld directly to the plan; or (ii) Where there are 
insufficient funds available to meet the employee's contribution 
necessary for coverage of the child(ren) and also to comply with any 
withholding orders received by the employer under Sec.  303.100 of 
this part, up to the limits imposed under section 303(b) of the 
Consumer Credit Protection Act (15 U.S.C. 1673(b)), the employer 
shall allocate the funds available in accordance with Sec.  
303.100(a)(5) and the following priority, unless a court or 
administrative order directs otherwise:
    (A) Current child and spousal support;
    (B) Health insurance premiums or current cash medical support;
    (C) Arrearages; and
    (D) Other child support obligations.''

    This proposed hierarchy places health insurance premiums or current 
cash medical support before payment of arrearages because premiums and 
cash medical support are considered current support for distribution 
purposes.
    Finally, under current Sec.  303.32(d), the effective date for 
implementing the use of the NMSN is specified. We are deleting this 
paragraph as unnecessary because all States are using the NMSN. The 
remainder of Sec.  303.32 is unchanged. Using the Secretary's authority 
to regulate under section 1102 of the Act to specify the appropriate 
allocation of available funds for health insurance premiums, current 
child support and current cash medical support will ensure consistency 
across State programs and therefore contribute to the effective 
operation of IV-D programs. This allocation formula responds, along 
with the National Medical Support Notice, to the Secretary's 
responsibility under section 452(f) of the Act to issue regulations 
governing the enforcement of medical support when included as part of a 
child support order.

Part 304

Section 304.20--Availability and Rate of Federal Financial 
Participation (FFP)

    Currently, under Sec.  304.20(b)(11), FFP is available for services 
and activities under approved IV-D State plans, including required 
medical support activities as specified in Sec. Sec.  303.30 and 
303.31. To include reference to the NMSN requirements in Sec.  303.32, 
we propose to revise Sec.  304.20(b)(11), to read as follows: 
``Required medical support activities as specified in Sec. Sec.  
303.30, 303.31, and 303.32 of this chapter.''

Part 305

Section 305.63--Standards for Determining Substantial Compliance With 
IV-D Requirements

    Currently, under Sec.  305.63(c)(5), for the purposes of optional 
Federal audits to determine substantial compliance with State plan 
requirements, the State must provide certain specified required medical 
support services in at least 75 percent of the cases reviewed. We 
propose to add the requirements under Sec.  302.32, the National 
Medical Support Notice (NMSN), to the program services subject to the 
substantial compliance audit because of the importance of ensuring that 
States meet Federal requirements for use of the NMSN.
    We are using our rulemaking authority under section 1102 of the Act 
to include reference to the National Medical Support Notice 
requirements under Sec.  302.32 in both the Federal audit authority 
under Sec.  305.63 and the State self-assessment requirements in Sec.  
308.2 below. The Secretary may conduct audits, in accordance with 
section 452(a)(C) of the Act, when appropriate, to determine the 
effectiveness of State programs. These Federal audits and State self-
assessments combine to ensure that States operate efficient and 
effective IV-D programs.

Part 308

Section 308.2--Required Program Compliance Criteria

    Currently under Sec.  308.2(e), for purposes of the State's annual 
self-assessment review and report, the State must evaluate whether it 
has provided certain specified required medical support services in at 
least 75 percent of the cases reviewed. We are adding reference to use 
of the NMSN as required in Sec.  303.32 to the self-assessment process 
because we failed to

[[Page 54972]]

do so when the NMSN was finalized. States should determine as part of 
their annual self-assessments whether Federal requirements with respect 
to use of the NMSN are being met.
    We proposed to revise Sec.  308.2(e) by deleting current Sec.  
308.2(e)(2), (5), (6), and (7) since these required program compliance 
criteria refer to requirements in Sec.  303.31 that have been deleted 
in the proposed regulation and to make the self-assessment requirements 
consistent with other changes to the medical support enforcement 
requirements made by this regulation. Proposed Sec.  308.2(e)(1) would 
require a determination of whether the State is meeting its obligation 
to include medical support that is reasonable and accessible, in 
accordance with Sec.  303.31(b) in at least 75 percent of new or 
modified support orders.
    Under proposed Sec.  308.2(e)(2), States are required to assess 
their own performance according to their criteria: ``If reasonable and 
accessible health insurance was available and required in the order, 
but not obtained, determine whether the National Medical Support Notice 
was used to enforce the order in accordance with the requirements in 
Sec.  303.32 of this chapter.'' Current Sec.  308.2(e)(4) requires 
States to report whether the State Medicaid agency was informed ``* * * 
that coverage had been obtained when health insurance was obtained,'' 
has been renumbered as proposed Sec.  308.2(e)(3) and the cross-
referenced section has been amended to cite Sec.  303.31(b)(5), to 
comport with the changes elsewhere in these proposed regulations.
    We propose to add a new Sec.  308.2(e)(4) for States to assess 
their own performance with the use of the NMSN: ``Determine whether the 
State transferred notice of the health care provision, using the 
National Medical Support Notice required under Sec.  302.32 of this 
chapter, to a new employer when a noncustodial parent was ordered to 
provide health insurance coverage and changed employment and the new 
employer provides health care coverage.''

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995, Public Law 104-13, all 
Departments are required to submit to the Office of Management and 
Budget (OMB) for review and approval any reporting or recordkeeping 
requirements inherent in a proposed or final rule. Interested parties 
may comment to OMB on these reporting requirements as described below. 
This NPRM contains changes to reporting requirements in Part 308, which 
the Department has submitted to OMB for its review.
    Section 308.1(e) contains a requirement that a State report the 
results of annual self-assessment reviews to the appropriate OCSE 
Regional Office and to the Commissioner of OCSE. The information 
submitted must be sufficient to measure State compliance with Federal 
requirements for expedited procedures and to determine whether the 
program is in compliance with title IV-D requirements and case 
processing timeframes. The results of the report will be disseminated 
via ``best practices'' to other States and also be used to determine 
whether technical assistance is needed. The State plan preprint page 
for this requirement (page 2.15, State Self-assessment and Report) was 
approved by OMB on January 18, 2001, under OMB Number 0970-0223.
    The revisions to section 308.2(e), which address securing and 
enforcing medical support, will slightly reduce the paperwork burden on 
States, by eliminating three information collection and reporting 
requirements because, under these proposed regulations, medical support 
will be included in all new and modified support orders, but the 
reduced paperwork burden would be negligible.
    Respondents: State child support enforcement agencies in the 50 
States, the District of Columbia, Guam, Puerto Rico, and the Virgin 
Islands.
    This information collection requirement will impose the estimated 
total annual burden on the agencies described in the table below:

----------------------------------------------------------------------------------------------------------------
                                                                               Average  burden
         Information  collection              Number of       Responses per      hours  per       Total annual
                                             respondents       respondent         response        burden hours
----------------------------------------------------------------------------------------------------------------
Section 308.1...........................                54                 1             3,866           208,764
----------------------------------------------------------------------------------------------------------------

    The Administration for Children and Families (ACF) will consider 
comments by the public on the proposed information collection in order 
to evaluate the accuracy of ACF's estimate of the burden of the 
proposed collection of information. Comments by the public on this 
proposed collection of information will be considered in the following 
areas:
     Evaluating the accuracy of the ACF estimate of the burden 
of the proposed collection[s] of information, including the validity of 
the methodology and assumptions used;
     Enhancing the quality, usefulness, and clarity of the 
information to be collected; and
     Minimizing the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technology, e.g., 
permitting electronic submission of responses.
    OMB is required to make a decision concerning the collection of 
information contained in these proposed regulations between 30 and 60 
days after publication of this document in the Federal Register. 
Therefore, a comment is best assured of having its full effect if OMB 
receives it within 30 days of publication. This does not affect the 
deadline for the public to comment to the Department on the proposed 
regulations. Written comments to OMB for the proposed information 
collection should be sent directly to the following: Office of 
Management and Budget, Paperwork Reduction Project, 725 17th Street, 
NW., Washington, DC 20503, Attn: Desk Officer for the Administration 
for Children and Families.

Regulatory Flexibility Analysis

    The Secretary certifies, under 5 U.S.C. 605(b), and enacted by the 
Regulatory Flexibility Act (Pub. L. 96-354), that these proposed 
regulations will not result in a significant impact on a substantial 
number of small entities. The primary impact is on State governments. 
State governments are not considered small entities under the Act.

Regulatory Impact Analysis

    Executive Order 12866 requires that regulations be reviewed to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. These proposed rules provide solutions to 
problems in securing private health care coverage for children who live 
apart from one or both of their parents and the Department has 
determined that they are consistent with the priorities and principles 
set forth in the Executive Order.

[[Page 54973]]

    These proposed regulations implement section 7307 of the Deficit 
Reduction Act of 2005, the Administration's proposal to require States 
to consider medical support available to either parent in establishing 
a medical support obligation, and to enforce medical support at their 
option when the obligated parent is the custodial parent. They also 
address certain recommendations of the Medical Child Support Working 
Group, which included public deliberation, and additional input from 
state and local IV-D administrators and other child support enforcement 
stakeholders.
    There are no costs associated with these proposed rules. They do 
not introduce new requirements for including medical support in child 
support orders, a long-standing program requirement, but rather broaden 
States options for addressing the availability and accessibility of 
health care coverage. For example, by focusing on health insurance 
coverage available to either parent, these rules recognize that 
untapped employer-sponsored insurance through custodial mothers and 
their spouses might reduce the share of children without private health 
insurance. As discussed earlier in the preamble, an HHS study Health 
Care Coverage Among Child Support-Eligible Children, 2002, found that 
half of child support-eligible children living with their mother are 
currently covered by employer-sponsored insurance.
    These regulations are significant under section 3(f) of the 
Executive Order because they raise novel policy issues and therefore 
have been reviewed by the Office of Management and Budget.

Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act requires that a 
covered agency prepare a budgetary impact statement before promulgating 
a rule that includes any Federal mandate that may result in the 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. The 
Department has determined that these proposed regulations would not 
impose a mandate that will result in the expenditure by State, local, 
and tribal governments, in the aggregate, or by the private sector, of 
more than $100 million in any one year.

Congressional Review

    These proposed regulations are not a major rule as defined in 5 
U.S.C., chapter 8.

Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal agencies to determine whether a proposed 
policy or regulation may affect family well-being. These proposed 
regulations will have a positive impact on family well-being as defined 
in the legislation, by providing greater access to health care 
coverage.

Executive Order 13132

    Executive Order 13132 on Federalism applies to policies that have 
federalism implications, defined as ``regulations, legislative comments 
or proposed legislation, and other policy statements or actions that 
have substantial direct effects on the States, or on the distributions 
of power and responsibilities among the various levels of government''. 
These proposed regulations do not have federalism implications for 
State or local governments as defined in the Executive Order.

List of Subjects

45 CFR Part 302

    Child support, Grant programs/social programs, Reporting and 
recordkeeping requirements.

45 CFR Parts 303 and 304

    Child support, Grant programs/social programs, Reporting and 
recordkeeping requirements.

45 CFR Part 305

    Child support, Grant programs/social programs, Accounting.

45 CFR Part 308

    Auditing, Child support, Grant programs/social programs, Reporting 
and recordkeeping requirements.

(Catalog of Federal Domestic Assistance Programs No. 93.563, Child 
Support Enforcement Program)

    Dated: February 16, 2006.
Wade F. Horn,
Assistant Secretary for Children and Families.
    Approved: June 20, 2006.
Michael O. Leavitt,
Secretary, Department of Health and Human Services.
    For the reasons discussed above, title 45 CFR chapter III is 
amended as follows:

PART 302--STATE PLAN REQUIREMENTS

    1. The authority citation for part 302 continues to read as 
follows:

    Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 
1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), 1396(k).

    2. Amend Sec.  302.56 by revising paragraph (c)(3) to read as 
follows:


Sec.  302.56  Guidelines for setting child support awards.

* * * * *
    (c) * * *
    (3) Address how the parents will provide for the child(ren)'s 
health care needs through health insurance coverage and/or through cash 
medical support in accordance with Sec.  303.31(b) of this chapter.
* * * * *

PART 303--STANDARDS FOR PROGRAM OPERATIONS

    1. The authority citation for part 303 continues to read as 
follows:

    Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 
1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396k.


Sec.  303.11  [Amended]

    2. In Sec.  303.11, amend paragraph (b)(11) by removing ``(i) or 
(iii)'' after ``Sec.  302.33(a)(1).''
    3. Revise Sec.  303.31 to read as follows:


Sec.