Child Support Enforcement Program; Medical Support, 42416-42442 [E8-15771]

Agencies

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

[Federal Register Volume 73, Number 140 (Monday, July 21, 2008)]
[Rules and Regulations]
[Pages 42416-42442]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15771]



[[Page 42415]]

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Part II





Department of Health and Human Services





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Administration for Children and Families



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



Child Support Enforcement Program; Medical Support; Final Regulation

Federal Register / Vol. 73, No. 140 / Monday, July 21, 2008 / Rules 
and Regulations

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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, Office of Child 
Support Enforcement (OCSE).

ACTION: Final regulation.

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SUMMARY: This regulation revises Federal requirements for establishing 
and enforcing medical support obligations in Child Support Enforcement 
(CSE) program cases receiving services under title IV-D of the Social 
Security Act (the Act). The changes: 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 interstate, 
substantial-compliance audit, and State self-assessment requirements.

DATES: Effective Date: This regulation is effective July 21, 2008.

FOR FURTHER INFORMATION CONTACT: Crystal Rodriguez, OCSE Division of 
Policy, 202-401-1381, e-mail: thomas.miller@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 final regulation 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 rule also is 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 regulation also is 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

    Recognizing that State Child Support Enforcement program efforts to 
secure and enforce medical support orders against child support 
obligors had met with limited success, Congress enacted the Child 
Support Performance and Incentive Act of 1998 (CSPIA). 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 30 members representing: Federal and State CSE programs, 
employers, payroll professionals, group health plans, and children's 
advocates. The Working Group identified impediments to the effective 
enforcement of medical support by State IV-D agencies and made 
recommendations to eliminate them.
    A final report, 21 Million Children's Health: Our Shared 
Responsibility, was jointly transmitted to Congress by the Secretaries 
of HHS and DOL on August 16, 2000. This final rule responds to several 
of the Working Group's key recommendations. After review of 21 Million 
Children, 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.
    Additionally, HHS's Health Care Coverage Among Child Support-
Eligible Children study, 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 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. 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. The 
Administration's legislative proposal requiring States to seek medical 
support from either parent, and to enforce, at their option, an order 
that a custodial parent provide medical support is addressed in this 
legislation and also meets the requirements in section 7307 of the 
Deficit Reduction Act of 2005 (Pub. L. 109-171).

Provisions of the Regulation and Changes Made in Response to Comments

    The Notice of Proposed Rule Making (NPRM) was published in the 
Federal Register on September 20, 2006. During the comment period, we 
received 36 letters generating 308 comments. On the whole, comments 
were positive and welcomed the proposed update of medical support 
regulations, particularly with respect to the definition of reasonable 
cost and the authority to close cases in which an individual in a 
Medicaid only, child-only case is not cooperating with the IV-D agency. 
We made a number of changes to the proposed regulations to accommodate 
practices already in place in States that are leaders in seeking 
medical support for children, for example by eliminating a proposed 
specific order of allocating wage withholdings between child support 
and medical support which employers would have been required to follow. 
To impose a requirement now, when States have moved forward without 
Federal guidance or mandate, would be unfair to those States and 
contrary to our commitment to State flexibility. On the other hand, we 
did not agree with comments to expand States' authority to close 
Medicaid-only, child-only cases to include authority to close any 
Medicaid-

[[Page 42417]]

only case, because the authority would be overbroad and inappropriate 
when assignment and cooperation with the IV-D agency is required in 
such cases.
    Changes made in response to comments are discussed in more detail 
under the Response to Comments section of this preamble.

Section 302.56--Guidelines for Setting Child Support Awards

    Under Sec.  302.56(c)(3), the State guidelines for setting and 
modifying child support awards must 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 which defines cash medical support, reasonable cost, and 
petitioning the court or administrative authority to include health 
insurance. In response to comments, we expanded the cross-reference to 
include all of Sec.  303.31, rather than just paragraph (b) which 
states that the State IV-D agency must petition the court or 
administrative authority to include health insurance when the order is 
entered or modified and establish written criteria to identify orders 
that do not address the health care needs of children.

Section 303.7--Provision of Services in Interstate IV-D Cases

    Section 303.32 mandates the use of the National Medical Support 
Notice (NMSN) to enforce the provision of health care coverage for 
children of noncustodial parents who are required to provide health 
care coverage through an employment-related group health plan pursuant 
to a child support order. We added ``Sec.  303.32'' to Sec.  
303.7(c)(7)(iii), which governs responding State responsibilities in 
processing and enforcing orders in interstate cases. This is a 
necessary technical correction identified during the review of comments 
on the proposed rule.

Section 303.11--Case Closure Criteria

    Under Sec.  303.11(b)(11) of this regulation, in order to be 
eligible for closure, a case must meet certain criteria. In response to 
comments received on the proposed regulation, the final regulation 
clarifies that case closure under paragraph (b)(11) is only authorized 
if the recipient of services is not required to cooperate with the IV-D 
agency as a condition of receiving Medicaid services.
    Section 303.11(b)(10) was revised in response to comments with 
language similar to that in paragraph (b)(11) to read as follows: ``In 
order to be eligible for closure, the case must meet at least one of 
the following criteria in a non-IV-A case receiving services under 
Sec.  302.33(a)(1)(i) or (iii), or under Sec.  302.33(a)(1)(ii) when 
cooperation with the IV-D agency is not required of the recipient of 
services, the IV-D agency is unable to contact the recipient of 
services within a 60 calendar day period despite an attempt of at least 
one letter sent by first class mail to the last known address.''

Section 303.31--Securing and Enforcing Medical Support Obligations

    Section 303.31(a)(1) defines ``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.'' A 
cash medical support collection would be considered current support 
only if the support was paid timely and in the specific amount required 
in the order to be paid periodically. Should that amount not be paid 
timely, the unpaid obligation becomes past-due just like any unpaid 
current child support obligation. In addition, if a family is receiving 
Medicaid and has assigned rights to cash medical support but is no 
longer receiving TANF, current cash child support would be paid to the 
family and assigned current cash medical support would be paid to the 
Medicaid agency.
    Under Sec.  303.31(a)(2), health insurance is defined to include 
fee for service, health maintenance organization, preferred provider 
organization, and other types of coverage which is available to either 
parent, under which medical services could be provided to dependent 
child(ren).
    Under Sec.  303.31(a)(3), cash medical support or the cost of 
private health insurance is considered reasonable in cost if the cost 
to the parent responsible for providing medical support does not exceed 
five percent of his or her gross income or, at State option, a 
reasonable alternative income-based numeric standard defined in State 
law, regulations, or court rule having the force of law or State child 
support guidelines adopted in accordance with 45 CFR 302.56. In 
applying the five percent or alternative State standard for the cost of 
private health insurance, the cost is the cost of adding the child(ren) 
to existing coverage or the difference between self-only and family 
coverage.
    A State would compute the five percent standard based on the income 
of the parent being ordered to secure, or pay for private health 
insurance coverage. The five percent reasonableness standard would be 
applied to the parent who is ordered to pay cash medical support for 
the premium of health insurance, whether it is provided by the 
obligated parent or another parent. If both parents are ordered to 
contribute to the cost of the premium, then the individual cost could 
not be more than five percent of each parent's income (or the 
alternative standard adopted by the State). Similarly, if a 
noncustodial parent is ordered to pay $50 a month to reimburse the 
custodial parent for out-of-pocket medical costs not covered by 
insurance, the five percent reasonableness standard would be applied to 
the obligated parent's income. Therefore, since the facts of a 
particular case would vary from case to case, a State would need to 
determine at the time the order is entered to whose income the five 
percent standard is applied. States should establish guidelines for 
applying the five percent standard as appropriate.
    In response to comments, we added ``the cost of'' before ``private 
health insurance,'' substituted the phrase ``the parent responsible for 
providing medical support'' for ``obligated parent,'' and added ``in 
State law, regulations, or court rule having the force of law or'' to 
recognize how States adopt such standards.
    Section 303.31(b)(1) requires the State to petition the court or 
administrative authority to include private health insurance coverage 
in the support order if it is accessible to the child(ren), as defined 
by the State, and is available to the parent responsible for providing 
medical support at reasonable cost, as defined under paragraph (a)(3), 
in new or modified court or administrative orders for support.
    Under Sec.  303.31(b)(2), if private health insurance described in 
paragraph (b)(1) is not available at the time the order is entered or 
modified, the IV-D agency must petition to include cash medical support 
that is reasonable in cost, as defined in paragraph (a)(3), in new or 
modified orders until such time as private health insurance, that is 
accessible and reasonable in cost as defined under paragraph (a)(3), 
becomes available. In appropriate cases, as defined by the State, cash 
medical support may be sought in addition to health insurance coverage. 
It is not mandatory that a State petition to modify an order that 
includes cash medical support if the State learns that health insurance 
is now available. However, delaying petitioning for health insurance 
coverage for as long as three years would not be in the best interests 
of the children. If the order includes

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language that requires health insurance be provided should it become 
available in the future, and that cash medical support is ordered until 
such time, the need to petition to modify the order and allow the State 
to take steps to immediately secure private health insurance coverage 
for the children would be avoided. Absent such a provision, the State 
would need to petition to modify the order to take advantage of the 
currently available coverage.
    In response to comments, we added the term ``private'' before 
``health insurance'' in Sec.  303.31(b)(1) and (2) for clarity. We also 
substituted, in paragraph (b)(1) and (2), the phrase ``the parent 
responsible for providing medical support'' for ``obligated parent'' 
for consistency with the parallel change to Sec.  303.31(a)(3). We also 
changed the word ``ordered'' to ``sought'' in paragraph (b)(2) for 
consistency with the concept that IV-D agencies petition the court or 
administrative authority to establish support orders. And finally, we 
added the phrase ``that is reasonable in cost, as defined in paragraph 
(a)(3) of this section'' after the term ``cash medical support'' in 
Sec.  303.31(b)(2) for consistency with paragraph (b)(1).
    Section 303.31(b)(3) requires a State agency to establish written 
criteria to identify orders that do not address the health care needs 
of children based on--
    (i) Evidence that private health insurance that is accessible to 
the child(ren), as defined by the State, may be available to either 
parent at reasonable cost, as defined under paragraph (a)(3); and
    (ii) Facts, as defined by State law, regulation, procedure, or 
other directive, and review and adjustment requirements under Sec.  
303.8(d), which are sufficient to warrant modification of the existing 
support order to address the health care needs of children in 
accordance with Sec.  303.31(b)(1).
    In response to comments we added the word ``private'' before health 
insurance and reference to accessibility and reasonable cost to 
subparagraph (i). We also removed reference to paragraph (b)(2) at the 
end of subparagraph (ii) in response to comments.
    Section 303.31(b)(4) requires IV-D agencies to petition to modify 
support orders to include private health insurance and/or cash medical 
support in accordance with paragraphs (b)(1) and (2). In response to 
comments, we added ``private'' before ``health insurance'' for clarity.
    Section 303.31(b)(5), under the proposed rule, required the IV-D 
agency to notify the Medicaid agency when a new or modified order 
includes health insurance and/or cash medical support. In response to 
comments it was deleted and Sec.  303.31(b)(6) was renumbered as (b)(5) 
and requires that the IV-D agency periodically communicate with the 
Medicaid agency to determine whether there have been lapses in health 
insurance coverage for Medicaid applicants and recipients.
    Section 303.31(c) requires the IV-D agency to inform an individual 
who is eligible for services under Sec.  302.33 that medical support 
services will be provided and to provide the services specified in 
Sec.  303.31(b). In response to comments, ``enforcement'' is deleted 
from the subsection.

Section 303.32--National Medical Support Notice (NMSN)

    Section 303.32(a) was amended to include reference to use of the 
NMSN to enforce the provision of health care coverage for children of 
custodial parents, at State option, in addition to noncustodial 
parents. A similar change was made to Sec.  303.32(c)(6) to require 
employers to notify the State about the termination of employment of 
custodial parents if the State has opted to use an NMSN to enforce the 
custodial parent's obligation to provide health care coverage for his/
her children.
    Proposed changes to Sec.  303.32(c)(4), which would have 
prioritized employers withholding of various support obligations if 
there were insufficient wages to satisfy all obligations, were removed 
in response to comments received.

Section 304.20(b)(11)--Services and Activities for Which FFP Is 
Available

    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, 303.31, and 
303.32. We added ``and 303.32.'' after ``Sec. Sec.  303.30, 303.31''.

Section 304.23(g)--Services and Activities for Which FFP Is Not 
Available

    In response to comments to correct an error in current regulations, 
the cross-reference in Sec.  304.23(g) has been corrected to refer to 
FFP as not being available for costs associated with cooperative 
agreements with Medicaid agencies under section 1912(a)(2) of the Act. 
We replaced reference to ``Sec. Sec.  303.30, and 303.31'' with 
``section 1912(a)(2) of the Act.''

Section 305.63(c)(5)--Providing Services Required in 75 Percent of the 
Cases Reviewed During a Substantial Compliance Audit

    Under Sec.  305.63(c)(5), for the purposes of optional Federal 
audits to determine substantial compliance with requirements, a State 
must provide certain medical support services, including all the 
requirements under Sec.  302.32, and use of the NMSN in at least 75 
percent of the cases reviewed. We added ``and Sec.  302.32'' after 
``under Sec.  303.31''.

Section 308.2--Required Medical Support Compliance Criteria for State 
Self-Assessment

    Under Sec.  308.2(e), for purposes of the State's annual self-
assessment review and report, a State must evaluate whether it has 
provided certain required medical support services including use of the 
NMSN in at least 75 percent of the cases reviewed as required in Sec.  
303.32.
    Under Sec.  308.2(e)(1), a State must determine 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 Sec.  308.2(e)(2), 
States are required to assess their own performance according to their 
criteria, whether the NMSN was used to enforce the order in accordance 
with the requirements in Sec.  303.32, if reasonable and accessible 
health insurance was available and required in the order, but not 
obtained.
    Proposed Sec.  308.2(e)(3), which in the proposed rule required a 
State to determine whether the State Medicaid agency was informed that 
coverage had been obtained, was deleted in response to comments. 
Proposed paragraph (e)(4) (renumbered Sec.  308.2(e)(3) in the final 
rule), is revised in response to comments, to read as follows. A State 
must ``determine whether the State transferred notice of the health 
care provision, using the National Medical Support Notice required 
under Sec.  303.32 of this chapter, where appropriate, to a new 
employer when a noncustodial parent, or under State option a custodial 
parent, was ordered to provide health insurance coverage and changed 
employment.'' The reference to custodial parents was added in response 
to comments received.

Response to Comments

    We received 36 letters from States, Tribes, advocacy groups, and 
other interested individuals. This section of the preamble describes 
the specific

[[Page 42419]]

aspects of the final regulations and identifies changes made to 
proposed rules. We received many thoughtful comments requesting 
clarification of aspects of medical support case processing that are 
not addressed in the Federal regulations, or asking for more 
specificity in requirements when the regulations allowed for State 
flexibility or did not agree with positions proposed in the regulation 
because the commenter's State had already implemented a policy, in the 
absence of Federal regulations, that was inconsistent with some of the 
proposed requirements. Since the Working Group's report was sent to 
Congress in 2000, many States have already moved forward to establish 
medical support services and approaches based on their recommendations 
in the absence of proposed Federal regulations in this area.
    On the whole, comments were positive and welcomed the proposed 
update of medical support regulations, particularly with respect to the 
definition of reasonable cost and the authority to close cases in which 
an individual in a Medicaid only, child-only case is not cooperating 
with the IV-D agency. We also made a number of changes to the proposed 
regulations to accommodate practices already in place in States that 
are leaders in seeking medical support for children. For instance, we 
eliminated a proposed specific order of allocation satisfaction of 
child support and medical support which employers would have been 
required to follow. To impose a requirement now, when States have moved 
forward without Federal guidance or mandate, would be unfair to those 
States and contrary to our commitment to State flexibility. On the 
other hand, we did not agree with comments to expand States' authority 
to close Medicaid-only, child-only cases to include authority to close 
any Medicaid-only case, because the authority would be too broad and 
inappropriate when assignment and cooperation with the IV-D agency is 
required in such cases.
    We believe States that have not taken the lead in medical support 
activities in the IV-D program can learn from the innovative approaches 
implemented in States that have already developed robust medical 
support programs. Therefore, changes to the regulations were not 
significant but rather technical in nature and consistent with our 
commitment to a longstanding partnership with State Child Support 
Enforcement programs.

Section 302.56--Guidelines for Setting Child Support Awards

    1. Comment: An income shares child support guidelines schedule 
incorporates some medical costs within the guideline schedule itself 
(e.g., $250 per year per child) and medical costs are considered as 
part of the basic child support obligation amount that is ordered to be 
paid by the obligated parent. Additionally, the costs of health 
insurance and/or medical costs not covered by insurance are apportioned 
between the parents based on the percentages of their respective shares 
of their combined net income. Since future out-of-pocket medical costs 
for each child are unknown and undeterminable at the time an order is 
being established or modified, it is virtually impossible for the 
courts to include a specific monthly dollar amount for cash medical 
support in support orders. Does this approach in a State's guidelines 
meet the cash medical support requirements in the proposed regulation?
    Response: Yes. As indicated in the preamble to the proposed rule, 
Sec.  302.56(c) 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. The 
regulation does not mandate that State guidelines label the payment of 
medical costs as a stand-alone item. However, 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 
health insurance coverage for the parties' child, the noncustodial 
parent may be required to pay a share of the premium's cost. Also, each 
parent may be ordered to pay a fixed sum or a percentage of the cost of 
treatments such as allergy shots, orthodontic work and/or psychological 
counseling, not covered by insurance.
    2. Comment: If the final rule eliminates the words ``other means'' 
for providing for the child(ren)'s health care needs beyond health care 
coverage and cash medical support, it is unclear how alternative health 
care coverage such as the Defense Enrollment Eligibility Reporting 
System (DEERS) enrollment provided for dependents of military service 
members or Department of Defense employees or how Indian Health 
Services (IHS) coverage would fulfill the requirement of the IV-D 
agency to obtain a medical support order. Definitions of DEERS and IHS 
coverage outside Title 45 of the Code of Federal Regulations make it 
clear that these are not forms of ``insurance'', and they may not 
require the payment of a premium or cash medical support contribution 
by either parent.
    Response: We believe that the definition of health insurance in 
Sec.  303.31(a)(2) is broad enough to encompass both DEERS and IHS 
coverage because it includes ``other types of coverage * * * under 
which medical services could be provided to the dependent child(ren).''
    3. Comment: The proposed regulation requires that State child 
support 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.'' Proposed Sec.  303.31(b) places various medical support 
related duties on the IV-D agency, such as petitioning to establish and 
modify medical support orders. It also refers to accessibility of 
coverage ``as defined by the State,'' and to ordering cash medical 
support in addition to health insurance coverage ``in appropriate 
cases, as defined by the State.'' The commenter reads the proposed 
regulation as recognizing that medical support will inevitably be a 
guidelines issue but, since medical support affects the amount of 
support obligations, the regulation still provides States with the 
flexibility to define certain medical support standards by statute, 
regulation, or other appropriate means outside the guidelines, as the 
State determines. The commenter requests that OCSE confirm this 
reading.
    Response: We agree with this assessment of the regulations.
    4. Comment: Several commenters found the proposed Sec.  302.56(c) 
unclear because the cross-reference to Sec.  303.31(b) (medical support 
requirements for IV-D cases) creates confusion about the scope of the 
change. The guidelines regulation (Sec.  302.56) currently applies to 
all orders issued in the State, whether in IV-D or non-IV-D cases. 
However, Sec.  303.31(b) specifically says, ``The State IV-D agency 
must:'' If the reference to Sec.  303.31(b) in Sec.  302.56(c) means 
those requirements also apply in non-IV-D orders, we recommend the 
regulation not cross-reference Sec.  303.31(b).
    Response: While child support guidelines must be used in setting 
all support orders in the State, Sec.  303.31(b) clearly only applies 
to IV-D cases by its reference to the IV-D agency. Therefore, the 
required IV-D activities in

[[Page 42420]]

Sec.  303.31(b) do not apply to non-IV-D cases.
    5. Comment: The proposed rule asked for comments on whether the new 
requirements will require a change in a State's child support 
guidelines. This commenter indicated that it is likely guidelines will 
need to be revised because the new requirement is an addition to 
existing minimum requirements for guidelines in Sec.  302.56. However, 
the commenter indicates that it is likely that amending the guidelines 
cannot be accomplished before the rule becomes final because a State 
will have to seek legislative authority in early 2007 in an attempt to 
comply, with the understanding that additional changes may be needed 
once the final rule is published. The commenter asks for confirmation 
of this assumption.
    Response: States should plan to implement the medical support 
provisions of the DRA of 2005 in accordance with the statutory language 
by the appropriate effective date that applies to each State.
    6. Comment: A person with available insurance coverage can also be 
a recipient of a state-funded medical insurance program, a form of 
public assistance. Generally, courts are unwilling to order that person 
to carry coverage and/or to enforce an order requiring them to carry 
coverage.
    Response: Section 303.31(b) requires the IV-D agency to petition 
for health insurance coverage that is accessible and available at 
reasonable cost. Section 303.31(a)(3) defines reasonable cost as a cost 
that does not exceed five percent of the obligated parent's gross 
income or, at State option, a reasonable alternative income-based 
numeric standard defined in State law, regulations, or court rule 
having the effect of law or in State child support guidelines. We 
believe that these requirements allow States and courts flexibility to 
determine when it is appropriate to require an obligated person to 
carry health insurance.
    7. Comment: One commenter indicated that in an obligor child 
support guidelines model, only income and resources of the noncustodial 
parent are gathered and considered. The commenter has concerns about 
how the income and resources of both parents can effectively be 
considered in such obligor-model guidelines. Proposed regulations which 
require States to look at the income and resources of both parents in 
determining medical support responsibility means a State with that 
model of guidelines would need to gather income and resource 
information from the custodial parent for this purpose alone. This will 
lead to the need for considerable legislative changes, policy changes, 
and automated system changes. It also will be a significant human 
resource issue. Further, the commenter stated that States should be 
afforded flexibility in determining which parent shall provide medical 
support because, while Federal law clearly requires the establishment 
of medical support against either or both parents, it does not specify 
how States are to apply this provision and Federal law does not address 
reasonable cost.
    Response: We believe that the Federal statute clearly takes into 
consideration the availability of health insurance to the custodial, as 
well as the noncustodial parent, at reasonable cost. These requirements 
will ensure that parents share primary responsibility for their 
children's health care needs, when appropriate. State child support 
guidelines must, at a minimum, ``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'' [45 CFR 
302.56(c)(3)]. The mechanism for accomplishing this mandate is 
determined by each State.
    8. Comment: One commenter described a State guidelines statute as 
requiring allocation of responsibility for unreimbursed medical 
expenses between the parties based on each individual's respective 
proportion of combined income. The commenter requested clarification as 
to whether a specified amount must be ordered to be considered cash 
medical support. If so, the commenter believes that the term ``* * * 
medical costs not covered by insurance * * *'' is somewhat confusing as 
it cannot be addressed in an order until the amount of uncovered costs 
is identified.
    Response: Section 303.31(a)(1) defines cash medical support as ``an 
amount ordered to be paid * * * for other medical costs not covered by 
insurance.'' An order that includes an allocation between the parents 
for responsibility for unreimbursed medical expenses based on each 
individual's respective proportion of combined income would meet this 
requirement.
    9. Comment: One commenter was concerned that the proposed amendment 
to Sec.  302.56(c) does not require any specific language be included 
in these medical support orders, leaving each State with a great deal 
of freedom on how to comply with this amendment. The proposed amendment 
adds an additional requirement that orders States to ``address how the 
parents will provide for'' the children's health care needs. However, 
the inclusion of these words alone provides little guidance to States 
beyond what the current guidelines suggest. The Working Group 
recognized the importance of providing structured and equitable 
guidance. In their report, the Working Group proposed a ``decision 
matrix'' to provide guidance to decision-makers in deciding which 
health care coverage to order. Additional requirements, even beyond the 
recommendations in the Working Group report, are needed so that States 
can draft their respective guidelines efficiently. Requiring specific 
provisions in each support order will allow the agencies to focus on 
enforcement rather than interpreting these regulations.
    Response: We agree that the Working Group Report is a rich source 
of information for States in determining how best to proceed, given the 
flexibility allowed under these regulations. The Working Group Report 
may be found at: https://www.acf.hhs.gov/programs/cse/pubs/2000/reports/
medrpt. However, we support State flexibility, within a context of 
broader Federal requirements, to determine the details of how best to 
proceed, and are confident States will implement the requirements in a 
way that protects children and families.

Section 303.11--Case Closure Criteria

    1. Comment: A number of commenters supported the language in the 
proposed rule in Sec.  303.31(b)(11) because the reference to Sec.  
302.33(a)(1) would allow closure of any Medicaid-only case, not just 
the ``child-only'' Medicaid cases, upon noncooperation of the 
custodian. These commenters favor a broad interpretation under which 
any non-TANF Medicaid cases may be closed for noncooperation of the 
custodian because it allows more flexibility for States to focus on 
providing services for custodial parents who want such services.
    Other commenters believed the proposed change to Sec.  
303.11(b)(11) was too broad because assignment of support rights and 
cooperation with the IV-D agency is a condition of eligibility for 
individuals who are included with children in a Medicaid case, unless 
the adult recipient falls within certain statutory exemptions addressed 
in DCL-00-122. DCL-00-122 explains the Federal Medicaid assignment and 
cooperation requirements and exemptions, options pertaining to 
paternity and medical support and describes the child support 
enforcement services available to families receiving Medicaid. Since 
the regulation must be consistent with Federal statute, these 
commenters request that closure for noncooperation of the custodian be 
limited to non-TANF child-only

[[Page 42421]]

Medicaid cases only if the custodian is not required to assign his or 
her rights to medical support and cooperate with the IV-D agency 
pursuant to section 1912 of the Act (42 U.S.C. 1396k.)
    Response: We agree with commenters that suggested the proposed 
revision to Sec.  303.11(b)(11) was overly broad. The change was 
proposed because former Sec.  303.11(b)(11) did not allow case closure 
for noncooperation in non-IV-A Medicaid cases and States indicated that 
there are custodial parents of children in child-only Medicaid cases 
who refuse to cooperate with the IV-D agency. However, in non-TANF 
Medicaid cases in which both the custodian and child(ren) are receiving 
Medicaid, all recipients must assign rights to medical support and 
cooperate with the IV-D agency as a condition of receipt of Medicaid. 
As stated in the letter to all Medicaid Directors shared with IV-D 
Directors in DCL-00-122:
    ``If parents or other adults apply for Medicaid on behalf of 
themselves and their children, they must assign medical support and 
payment rights to the State and cooperate in establishing paternity, 
obtaining medical support and payments, and providing information about 
liable third parties as a condition of their own eligibility, unless 
they are exempt. Pregnant women eligible under Section 1902(l)(1)(A) of 
the Act (poverty level pregnant women) are exempt from the requirements 
to cooperate in establishing paternity of a child born out of wedlock, 
and in obtaining medical support and payments for themselves and the 
child born out of wedlock. (These women must, however, assign the 
rights to medical support and payments.) In addition, individuals with 
good cause, as described by Federal regulation 42 CFR 433.147(c), are 
exempt from cooperating in establishing paternity, obtaining medical 
support and payment, and pursuing third party liability. Applicants 
must be effectively informed of these exemptions and told that the 
decision whether or not to cooperate will not affect their child's 
eligibility for Medicaid.'' Sec.  303.11(b)(11) must be revised as 
follows: (b) In order to be eligible for closure, the case must meet at 
least one of the following criteria * * * (11) In a non-IV-A case 
receiving services under Sec.  302.33(a)(1)(i) or (iii), or under Sec.  
302.33(a)(1)(ii) when cooperation with the IV-D agency is not required 
of the recipient of services, the IV-D agency documents the 
circumstances of the recipient of services' noncooperation and an 
action by the recipient of services is essential for the next step in 
providing IV-D services.
    2. Comment: Another commenter would support the approach of 
allowing States to close any Medicaid-only case in which the custodial 
parent is not cooperating. For example, States may close a case 
involving the following situation: A Medicaid-only case is referred to 
the State with a custodial parent and child receiving Medicaid. The 
custodial parent subsequently fails to cooperate, and Medicaid 
sanctions are put in place that result in only the child receiving 
Medicaid. The commenter wants to be able to close this case and is not 
clear as to whether this type of case would be considered a ``child-
only Medicaid-only'' case.
    Response: Once the custodial parent is denied receipt of Medicaid, 
the case would be considered a ``child-only, Medicaid-only'' case and 
could be closed under Sec.  303.11(a)(11) because of the documented 
noncoopertion and sanction.
    3. Comment: It has been one commenter's experience that when a 
custodial parent is receiving Medicaid services/benefits and does not 
cooperate with the IV-D program, the IV-D program is forced to bring 
the custodial parent before the court. Once before a judge the 
custodial parent has clearly stated that he/she has no interest in 
obtaining child support from the noncustodial parent and the judges 
have ruled in the custodial parent's favor, thus causing the IV-D 
program to expend time and money without a positive result for the 
child(ren).
    Response: If the custodial parent is not cooperating with the IV-D 
agency as required, the IV-D agency should notify the Medicaid agency 
and have them take steps to sanction the custodial parent accordingly. 
Threatened loss of Medicaid benefits may then encourage the custodial 
parent to cooperate. If he or she does not cooperate, the IV-D agency 
could choose to close the case under Sec.  303.11(b)(11).
    4. Comment: One commenter stated that, if OCSE will permit States 
to close child-only, Medicaid-only cases for noncooperation of a 
custodian, States should also be allowed to close cases on the request 
of the custodial person pursuant to Sec.  303.11(b)(8). If Sec.  
303.11(b)(8) is not amended, the IV-D agency would be compelled to deny 
a request for IV-D case closure from a custodian in a non-TANF Medicaid 
case. However, if the custodian subsequently fails to cooperate because 
of the custodian's lack of interest in IV-D assistance, the IV-D case 
closure requested by the custodian would eventually result. The delay 
in accomplishing case closure would be inefficient.
    Response: An amendment to Sec.  303.11(b)(8) is inappropriate. 
Although the parent is not required to assign the child's rights to 
medical support, section 1902(a)(25)(H) of the Act requires States to 
have laws which automatically assign an individual's rights to payment 
for medical care by third parties, to the extent that Medicaid has made 
a payment. These laws assign to States an individual's, (e.g. , a 
child's) rights whether or not an assignment was executed. When only 
the child is applying for Medicaid, under section 1902(a)(25)(A) the 
State must ask the parent whether the child has health insurance in 
order to identify legally-liable third party resources. Because there 
is an assignment of the child's rights to medical support as a 
condition of the child's receipt of Medicaid, a IV-D agency may not 
close the case at the request of the custodial parent or caretaker in 
such cases.
    5. Comment: A commenter indicated that the IV-D agency receives 
child-only Medicaid-only referrals, but the Medicaid agency has not 
imposed an assignment or cooperation responsibility in those cases. 
Child support services, thus, have the appearance of a choice offered 
to the family; they can continue the services or not. Given that 
scenario, rather than documenting noncooperation, is it possible to 
send child-only cases a ``continuation of services'' letter to 
determine whether or not the family wants services to continue?
    Response: Although the parent is not required to assign the child's 
rights in a child-only Medicaid case, section 1902(a)(25)(H) of the Act 
requires States to have laws which automatically assign an individual's 
rights to payment for medical care by third parties to the extent that 
Medicaid has made a payment. These laws assign to States an 
individual's rights whether or not an assignment was executed and if 
the case is referred to the IV-D agency, it is the IV-D agency's 
responsibility to seek medical support for that child. Therefore, it 
would be inappropriate to treat these cases like former TANF cases in 
which, in accordance with Sec.  302.33(a)(4), States send a notice to 
the custodial parent indicating that IV-D services will be provided 
unless the agency is notified by the custodial parent to close the 
case.
    6. Comment: Two commenters indicated that case processing would be 
facilitated if Sec.  303.11(b)(10) was expanded to include child-only 
Medicaid cases. This would allow States to close child-only Medicaid 
cases in the same manner allowed for applications and former assistance 
cases

[[Page 42422]]

when the IV-D agency is unable to contact the custodial parent within a 
60 calendar day period despite an attempt of at least one letter sent 
by first class mail to the last known address. One commenter suggested 
that we amend Sec.  303.11(b)(10) to read as follows: ``In a non-IV-A 
case receiving services under Sec.  302.33(a)(1)(i) or (iii), or under 
Sec.  302.33(a)(1)(ii) when cooperation with the IV-D agency is not 
required of the recipient of services, the IV-D agency is unable to 
contact the recipient of services within a 60 calendar day period 
despite an attempt of at least one letter sent by first class mail to 
the last known address.''
    Response: We agree with these commenters and have included the 
change to Sec.  303.11(b)(10) as requested above. The IV-D agency would 
be required to meet the requirements of Sec.  303.11(c) by sending the 
recipient of services or initiating a notice of the State's intent to 
close the case in writing 60 calendar days prior to closure of the 
case. The case should not be closed if contact is reestablished with 
the recipient of services within the 60 day timeframe.
    7. Comment: One commenter requested clarification with regard to 
custodial or caretaker noncooperation with medical support requirements 
in any IV-D case including active IV-A or IV-E foster care cases or 
non-IV-A cases. The commenter's State has taken the position thus far 
that noncooperation with medical support would not extend to closing an 
active IV-A or IV-E case or non-IV-A case.
    Response: Custodial or caretaker noncooperation with the IV-D 
agency in medical support requirements in a IV-D case, that is also an 
active IV-A, IV-E, or non-IV-A Medicaid-only case, would not authorize 
closure under Sec.  303.11(b)(10) or (11).
    8. Comment: One commenter was concerned that the proposed amendment 
to Sec.  303.11(b)(11) seems to contradict the policy behind the 
regulation, to secure medical coverage for children. Instead of 
promoting the best interests of children, the closure of the case would 
leave the custodial parent and child without assistance in obtaining 
and enforcing child support orders. Moreover, the child support and 
health care coverage enforced by the IV-D agency ultimately benefits 
the child rather than the custodial parent. Therefore, it is the child 
who stands to lose additional protections because of his or her 
parent's actions.
    Response: Case closure is optional for IV-D agencies and is allowed 
only under a limited set of specific circumstances in which there is 
little chance of success. In addition, statutory limitations with 
respect to mandated cooperation of parents and other custodians often 
remove the primary source of critical information (the custodian) 
needed by IV-D agencies.
    9. Comment: With regard to case closure for child-only Medicaid 
cases, is noncooperation with medical support services a basis for case 
closure in a non-IV-A case where the recipient of services has 
otherwise cooperated?
    Response: The final regulation clarifies that case closure under 
paragraph (b)(11), is only authorized (although not required) if the 
recipient of services is not required to cooperate with the IV-D agency 
as a condition of receiving Medicaid services.

Section 303.31--Securing and Enforcing Medical Support Obligations

Section 303.31(a): Explanation of Terms Used in Sec.  303.31
(1) Cash Medical Support
    Comment: A commenter suggests that the term ``cash medical 
support'' be clarified, so that public coverage cases can be 
recognized, and that States be allowed to determine methods of 
reimbursement that align with each State's available programs.
    Response: We believe the current language in Sec.  303.31(a)(1), 
which defines cash medical support, does recognize public health 
coverage, such as Medicaid, State Child Health Insurance Program 
(SCHIP), the Indian Health Service, and Defense Enrollment Eligibility 
Reporting System. ``Cash medical support'' is defined 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 premiums or co-payments required in the SCHIP or Medicaid 
program, for example. In addition, the regulation, while defining what 
can be considered as cash medical support, leaves States discretion to 
determine methods of reimbursement that align with each State's 
available programs.
    2. Comment: One commenter requested that we add two definitions to 
Sec.  303.31(a) to read: ``(4) Poverty line has the meaning given such 
term in section 673(2) of the Community Services Block Grant Act (42 
U.S.C. 9902(2)), including any revision required by such section.
    ``(5) A child is considered eligible for medical assistance under 
the State Plan under title XIX of the Social Security Act (Act) or for 
child health assistance under the State Plan under title XXI of the Act 
if the child's family income is below the income standard of the 
applicable State Plan in the State in which the child resides, 
regardless of whether the child has applied for or is enrolled in the 
program under either State Plan.''
    Response: We believe these decisions and definitions are best left 
to States unless specified under Federal statutes applicable to State 
IV-D programs.
    3. Comment: One commenter indicated that, based on experience 
working with Medicaid and SCHIP agency program staff and having 
discussions regarding distributing cash medical support to those 
agencies, it is evident that those agencies need Federal guidance on 
accepting cash medical support from the child support agency and 
reconciling those amounts. Therefore, it is their recommendation that 
collaboration between child support and public health insurance 
entities take place on a Federal level. This concern was shared by many 
commenters concerned in particular that Medicaid agencies may refuse to 
accept assigned cash medical support from the IV-D agency.
    Response: HHS has sponsored two sets of collaboration meetings over 
the past two years that brought together State program directors and 
staff from the IV-D, IV-E foster care, Medicaid, and SCHIP programs. 
States raised issues they face in securing health care for children and 
discussed possible solutions that would be needed to resolve them, 
through collaboration, regulations, or statutory change. A report on 
the 2005 meetings is at: https://www.acf.hhs.gov/programs/cse/pol/DCL/
2006/dcl-06-09.
    Some State IV-D agencies reported that State Medicaid agencies 
would not accept assigned cash medical support collections because they 
had no authority to do so. In discussing this issue with Federal Center 
for Medicare and Medicaid Services (CMS) participants, we learned that, 
for States that operate Medicaid programs as fee-for-service programs, 
there is no authority to accept assigned medical support unless the 
child to whom the medical support is owed has actually received 
Medicaid services and the Medicaid agency has paid the provider a fee 
for such services. In other words, without having expended funds on the 
health care of the particular child, the Medicaid agency has no 
authority to keep the assigned cash medical support. Of course, if fees 
for services have been paid, assigned medical support may be retained 
to reimburse the Medicaid program. While directly addressing this issue 
would require a change to the Federal Medicaid statute, this problem

[[Page 42423]]

will diminish over time as more States move to a managed-care approach, 
which eliminates the problem incurred in fee-for-service programs and 
allows Medicaid agencies to retain assigned cash medical support to 
reimburse the program for the cost per child for health care under a 
managed care system. We are aware of those concerns and continue to 
work with our Federal partners to address these issues.
    4. Comment: A commenter asked if proposed Sec.  303.31(a)(1) that 
states, in relevant part, that ``Cash medical support means an amount 
ordered to be paid toward the cost of health insurance provided by a 
public entity'' is intended to address costs associated with ``managed 
care'' Medicaid coverage only, or costs associated with ``fee for 
service'' Medicaid coverage as well? The preamble states this would 
include the cost of premiums when health insurance is provided through 
Medicaid or SCHIP.
    Response: As explained in the response to the previous question, 
there is a Federal statutory impediment under the Medicaid program 
(title XIX of the Act) that prevents States using ``fee-for-service'' 
type Medicaid coverage from retaining assigned cash medical support 
collections if services have not been provided to the child(ren). The 
Medicaid agency has no authority to keep the assigned cash medical 
support.
    5. Comment: A commenter asked for clarification as to what is meant 
by the use of the term ``another parent'' in Sec.  303.31(a)(1), which 
defines ``cash medical support'' to include an amount ordered to be 
paid toward the cost of health insurance provided by a public entity or 
by another parent [emphasis added] through employment or otherwise, or 
for other medical costs not covered by insurance.'' It is not clear 
what is meant by the term ``another parent.''
    Response: The term refers to a parent providing health insurance 
who is not the parent obligated to pay cash medical support.
    6. Comment: A commenter was concerned that including the phrase 
``or for other medical costs not covered by insurance'' in the 
definition of ``cash medical support'' could mean the IV-D agency would 
be responsible for recovering ongoing medical bills. However, the 
commenter indicated that it would be a huge concern and administrative 
burden if the local agencies would now be required to track the payment 
of unreimbursed medical bills and then develop cash orders to pay them.
    Response: State IV-D agencies are not responsible for determining 
the amount of unreimbursed or uncovered medical expenses if the support 
order only addresses how such unquantified expenses are to be shared by 
parents. However, we have a longstanding policy that IV-D agencies 
would be responsible for enforcing an obligated parent's 
responsibility, under the support order, to pay for a portion or all of 
a medical expense if the custodial parent presents bills (i.e. for 
orthodontia), to the IV-D agency. See the first comment and response on 
Sec.  302.50, Support Obligations, in the final rule on ``Extension of 
IV-D Child Support Enforcement Services to Non-AFDC Medicaid Recipients 
and to Former AFDC, Medicaid and Title IV-E Foster Care Recipients,'' 
AT-91-01: Section 302.50--Support obligations as follows:

    Comment: One commenter requested clarification of whether the 
restriction in Sec.  302.50(e), that no child support collected may 
be used to satisfy a medical support obligation unless the support 
order designates a specific dollar amount for medical purposes, 
includes one-time lump sum amounts (i.e. , medical support 
judgments) or only monthly payments ordered in lieu of paying health 
insurance premiums.
    Response: If the support order designates a specific dollar 
amount for medical purposes, whether it is expressed in monthly 
increments (e.g., $50.00 per month) or as a lump sum amount (e.g., 
$1,500.00 to pay for birth expenses), the IV-D agency must collect 
the medical support. If the support order does not designate a 
specific dollar amount for medical purposes (e.g., absent parent is 
ordered to pay for child's orthodontia), enforcement of that aspect 
of the order is not a required IV-D function. We encourage States to 
develop procedures to determine when judgments for medical expenses 
for which the absent parent is responsible under the order should be 
pursued and to pursue such judgments when appropriate. Federal 
matching funds are available for these activities.

    7. Comment: A commenter asked that States not be required to 
address payment of unanticipated medical costs or costs not 
reimbursable by insurance.
    Response: States have discretion within the definition of ``cash 
medical support'' in Sec.  303.31(a)(1) to determine what medical costs 
obligated parents are ordered to pay.
    8. Comment: A number of commenters were concerned that the 
definition of cash medical support requires that medical support 
provisions must be a fixed amount ordered to be paid for health 
insurance or ``other medical costs not covered by insurance'' because 
the ordering of health insurance premiums or other medical costs not 
covered by the insurance could be an ``either/or'' proposition. For 
example, the proposed regulation provides that ``[in] appropriate cases 
cash medical support may be ordered in additional to health insurance 
coverage.'' According to the commenter, many State child support 
guidelines include a provision to order the payment of future 
reasonable health care costs not covered by insurance which cannot be 
determined at the time of the hearing and may exist whether or not 
health care coverage is in place.
    Response: Section 303.31(a)(1) allows cash medical support to be 
ordered, regardless of whether or not health insurance coverage is 
provided. It is up to each State to determine whether or not it is 
advisable to estimate a specific amount for cash medical support in the 
form of shared responsibility for medical costs not covered by 
insurance or, in the absence of health insurance, to set in the order a 
specific amount for cash medical support. For example: A medical 
support order could require that the custodial parent enroll in private 
health insurance, the noncustodial parent contribute to the cost of the 
health insurance premium (e.g., $50 a month), and the parents 
proportionately share the cost of reasonable health care expenses not 
covered by insurance.
    9. Comment: Many commenters were concerned that the responsibility 
for unreimbursed and unspecified future medical costs should not be 
included in the calculation of whether medical support is reasonable in 
cost to the obligated parent. Some commenters recommended clarifying 
the definition of cash medical support to ensure that the unreimbursed 
medical costs not covered by insurance (and that generally cannot be 
fixed at the time of the hearing) are excluded from the definition of 
cash medical support subject to the five percent cost-reasonableness 
standard. In addition, a number of commenters stated that including 
these unfixed, unreimbursed medical expenses in the definition of cash 
medical support subject to the reasonable cost limitations would 
unfairly place the burden for these costs on the custodial parent. And 
finally, a commenter asked whether, if future medical support expenses 
are not subject to the 5 percent cost-reasonableness standard, the cost 
in an order to pay a percentage of future uninsured medical expenses is 
always reasonable?
    Response: We agree that it would not be appropriate at the time an 
order is established to include the cost of future, uncertain and, 
unspecified medical costs when applying the five percent cost-
reasonableness standard (or at State option an allowable alternative

[[Page 42424]]

standard) under Sec.  303.31(a)(3). However, we do not agree that 
responsibility for extraordinary medical costs set in a subsequent 
medical support order, should be ordered without any consideration of 
the obligated parent's ability to pay at the time the cost is incurred 
or reimbursement is sought.
    The Federal statute at section 467 of the Act requires each State 
to have and use child support guidelines as a rebuttable presumption in 
setting child support awards in the State. Federal regulations at Sec.  
302.56(c)(1) require State guidelines to take into consideration all 
earnings and income of the noncustodial parent in determining the 
amount of the support order. A child or medical support order may 
deviate from the amount the guidelines would otherwise require if there 
is a written finding or specific finding on the record that the 
application of the guidelines would be unjust or inappropriate in a 
particular case, as determined by criteria established by the State and 
taking into considering the best interests of the child. Findings that 
rebut the guidelines must state the amount of support that would have 
been required under the guidelines and include a justification of why 
the order varies from the guidelines. Therefore, a State may, on a 
case-by-case basis, deviate from its guidelines in setting 
responsibility for extraordinary, uncovered medical costs incurred if 
the requirements of Sec.  302.56(f) and (g) are met.
    10. Comment: One commenter indicated that the State's guidelines 
give a credit to the parent providing the private health insurance 
which is deducted from the child support amount calculated under the 
formula. Under these guidelines, a parent who provides private health 
insurance for a child receives a credit of 50 percent of the cost of 
the insurance from the other party. When the obligor provides the 
coverage, the child support order is reduced by the amount of the 
credit. When the obligee provides the coverage, the child support order 
is increased by the amount of the credit. These amounts are not 
captured as a stand-alone amount. While the credit appears as a line 
item on the worksheets used to calculate the guidelines, this amount is 
not identified as a separate medical support item in actual orders. Is 
this acceptable?
    Response: We believe that this approach to medical support is 
acceptable because the definition of cash medical support is an amount 
ordered to be paid toward the cost of health insurance. The order 
generated by these guidelines does not include a sum certain in the 
order language itself, but the guidelines worksheet would provide 
documentation and clearly indicate that medical support was ordered.
    11. Comment: A commenter described the situation in which a 
noncustodial parent is ordered to pay an amount that the IV-D agency 
sends to the Medicaid agency. The commenter urged that this approach 
needs to be implemented carefully to avoid conflict with existing rules 
for cost-sharing in public insurance programs. Both Medicaid and SCHIP 
regulations authorize cost-sharing based on different standards. For 
both programs, these standards are applied to the custodial parent's 
household, not to the combined income of both parents. Therefore, in 
States where these costs are assessed, the custodial parent is in 
effect contributing cash medical support to the public entity, which 
may or may not be considered in ordering cash medical support against 
the noncustodial parent.
    Response: If a family is receiving SCHIP or Medicaid services, that 
fact should be explored at the time an order is entered and taken into 
consideration when establishing the cash medical support obligation. 
Whether or not a custodial parent is contributing toward the cost of 
Medicaid services, if there is an assignment of support rights in 
effect, the State has the authority to retain assigned cash medical 
support to reimburse the cost of medical services pro