BILL ANALYSIS                                                                                                                                                                                                    






                             SENATE JUDICIARY COMMITTEE
                           Senator Ellen M. Corbett, Chair
                              2009-2010 Regular Session


          SB 580
          Senator Wright
          As Amended December 15, 2009
          Hearing Date: January 12, 2010
          Family Code 
          KB:jd
                    

                                        SUBJECT
                                           
                          Child Support:  Health Insurance

                                      DESCRIPTION  

          This bill, sponsored by the Department of Child Support  
          Services, would define the terms "reasonable cost" and  
          "accessible" as they pertain to medical support orders in order  
          to meet federal regulation requirements.  

                                     BACKGROUND  

          The federal Deficit Reduction Act of 2005 (DRA) was signed into  
          law on February 8, 2006.   In addition to reauthorizing and  
          making changes in the Temporary Assistance to Needy Families  
          program (TANF), the DRA made major funding and program changes  
          to the child support program.  Specifically, the DRA directed  
          the Secretary of Health and Human Services 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 coverage is available to the noncustodial  
          parent at reasonable cost."  Section 7307 of the DRA  
          additionally stated, "[f]or the 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 payments  
          for medical expenses incurred on behalf of a child."  

           On September 20, 2006, the federal Office of Child Support  
          Enforcement issued proposed regulations to implement the  
          provisions of the DRA that revise federal requirements for  
          establishing and enforcing parents' medical support obligations.  
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           The final regulations became effective on July 21, 2008.  In  
          accordance with the new regulations, California state law must  
          be amended to redefine reasonable-cost insurance, and require  
          health insurance to be accessible.   Noncompliance with the new  
          regulations could result in the state's child support program  
          being placed in corrective action and could result in penalties  
          of 1 to 3 percent of the state's TANF Block Grant.  One percent  
          of California's TANF Block Grant equals approximately $37  
          million.
          This bill is the product of a workgroup convened by the  
          Department of Child Support Services and would define the terms  
          "reasonable cost" and "accessible" as they pertain to medical  
          support orders in order to meet federal regulation requirements.  
           

          In order to address concerns regarding the substantive spot  
          nature of the bill as amended December 15, 2009, the author  
          provided substantive amendments to the committee in time to be  
          analyzed by committee staff.  This analysis reflects those  
          amendments, which will be adopted in committee.

                                CHANGES TO EXISTING LAW
          
          Existing law  requires that a parent maintain health insurance  
          coverage for a supported child when that insurance is available  
          at no cost or at a reasonable cost to the parent.  (Fam. Code  
          Sec. 3751.) 

           Existing law  provides that health insurance coverage shall be  
          rebuttably presumed to be reasonable in cost for a supported  
          child if it is group health insurance, as specified.  (Fam. Code  
          Sec. 3751.)

           Existing law  provides that the actual cost of the health  
          insurance to the obligor shall be considered in determining  
          whether the cost of insurance is reasonable.  (Fam. Code Sec.  
          3751.)

           Existing law  provides that the court shall consider geographic  
          access and reasonable availability of necessary health care for  
          a supported child when examining whether an order for medical  
          support is reasonable.   (Fam. Code Sec. 4063.)

           Existing law  provides that the court shall order additional  
          child support for the reasonable uninsured health care costs of  
          the supported child(ren).  (Fam. Code Sec. 4062.)
                                                                      



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           Existing federal regulations  require that all support orders in  
          program cases receiving services under title IV-D of the Social  
          Security Act (42 USC Sec. 651 et seq.) address medical child  
          support.  Existing federal regulations define reasonable-cost  
          health insurance, and require health insurance to be accessible,  
          as defined by the State.  (45 CFR Secs. 303.30-303.31.) 
           
          This bill  would provide that health insurance for a supported  
          child is rebuttably presumed to be reasonable in cost if the  
          cost to the responsible parent providing medical support does  
          not exceed five percent of his or her gross income.  

           This bill  would provide that if an obligor is entitled to a  
          low-income adjustment, medical support shall be deemed to be not  
          reasonable.

           This bill  would provide that health insurance is rebuttably  
          presumed to be accessible if services to be provided are within  
          50 miles of the residence of the child(ren) subject to the  
          support order.  

           This bill  would make a technical amendment pertaining to cash  
          medical support. 

                                        COMMENT
           
              1.   Stated need for the bill

           Federal regulations for the medical support provisions of the  
          Federal Deficit Reduction Act became effective on July 21, 2008.  
           The Department of Child Support Services (DCSS) convened a  
          workgroup comprised of local child support agency directors,  
          department staff, and representatives from the Administrative  
          Office of the Courts in order to assess whether changes had to  
          be made in order to maintain compliance with the new  
          regulations.  DCSS also solicited feedback from the federal  
          Office of Child Support Enforcement (OCSE) as to California's  
          current statutes regarding medical support and conformance with  
          federal regulations.  In a letter dated December 14, 2009, the  
          OCSE informed DCSS that California statutes pertaining to  
          medical support must be amended to (1) define "reasonable cost"  
          with an income-based numeric standard, (2) define private health  
          insurance as being accessible to children through quantifiable  
          geographic and/or time parameters, and (3) make a technical  
          correction to a provision that implies medical support need not  
                                                                      



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          be ordered in every case.  This bill has been introduced in  
          order to make these changes and maintain compliance with federal  
          regulations.  

           2.This bill would bring conformity between state law and federal  
            regulations pertaining to medical child support
           
          Current law requires the court to order health insurance  
          coverage for the supported child in any case that current  
          support is ordered.  (Fam. Code  Sec. 3751.)  The coverage must  
          be maintained by either or both parents if the insurance is  
          available at no cost or at a reasonable cost to the parent.   
          (Id.)  Since there is no definition of reasonable costs, health  
          insurance coverage is presumed to be reasonable in cost if it is  
          employment-related group health insurance or other group health  
          insurance regardless of the delivery service mechanism.  (Id.)  

          In addition, the actual cost of health insurance to the obligor  
          is also considered in determining whether the cost of insurance  
          is reasonable.   If the court determines that the cost of health  
          insurance coverage is not reasonable, the court states the  
          reason on the court record.  (Id.)  If the court determines that  
          health insurance coverage is not available at no cost or at a  
          reasonable cost, the court's order for support must contain a  
          provision that specifies that health insurance coverage shall be  
          obtained if it becomes available at no cost or at a reasonable  
          cost.  (Id.)  The cost of health insurance is in addition to the  
          amount of child support ordered.  The child support obligor is  
          required to keep the local child support agency informed of  
          whether the obligor has health insurance coverage at a  
          reasonable cost and if so, provide the health insurance policy  
          information.  (Id.)

          This bill would provide that that health insurance for a  
          supported child is rebuttably presumed to be reasonable in cost  
          if the cost to the responsible parent providing medical support  
          does not exceed five percent of his or her gross income.  The  
          five percent standard has been established in federal  
          regulations.  (45 CFR 303.21(a)(3).)  In applying the five  
          percent for the cost of health insurance, the cost would be the  
          difference between self-only and family health coverage.  This  
          bill would further provide that if an obligor is entitled to a  
          low-income adjustment ($1,000 per month net disposable income),  
          medical support shall be deemed to be not reasonable.  Thus, a  
          low income earner who may not be able to afford the cost of  
          health insurance would be exempted from the five percent  
                                                                      



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          standard.

          Current law requires the courts to consider geographic access  
          when examining whether an order for medical support is  
          reasonable.   In response to DCSS' question regarding  
          California's current approach to accessibility, the OCSE stated  
          that a quantifiable value was required to comply with federal  
          regulations.  Accordingly, this bill would provide that health  
          insurance is rebuttably presumed to be accessible if services to  
          be provided are within 50 miles of the residence of the  
          child(ren) subject to the support order.  The preamble to the  
          federal medical support regulations (pg. 42432 of the Federal  
          Register, Volume 73, No. 140) suggests a 30 mile/30 minute  
          standard.  However, in light of California's mix of urban and  
          rural communities, the workgroup convened by DCSS determined  
          that fifty miles would be a more acceptable range for rural  
          residents, and would not impose an unrealistic time frame on the  
          residents of heavily trafficked urban areas.  If the court  
          determines that health insurance is not accessible, it would be  
          required to state the reason on the record.  

          Finally, this bill would make a technical correction to the  
          current statute regarding cash medical support.  Current law  
          states that the court shall order additional child support for  
          the reasonable uninsured health care costs of the child(ren).    
          (Fam. Code Sec. 4062.)  However, a provision in Section 4061  
          states that the amounts in Section 4062 "if ordered to be paid"  
          shall be considered additional support for the children and  
          specifies how it shall be computed.  The OCSE stated that this  
          clause seemingly indicates that there may be instances when cash  
          medical support would not be ordered.  Accordingly, per OCSE  
          instruction, the conditional phrase "if ordered to be paid"  
          would be removed by this bill.  This would only be a technical  
          amendment as current law does already mandate the sharing of  
          unreimbursed medical expenses by both parents.  (Fam. Code Secs.  
          4062-4063.)    


           Support  :  None Known

           Opposition  :  None Known
                                        HISTORY
           
           Source  :  Department of Child Support Services

           Related Pending Legislation  :  None Known
                                                                      



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           Prior Legislation  :  

          AB 2208 (Caldera, Chapter 1269, Statutes of 1994) provided that  
          health insurance coverage is rebuttably presumed to be  
          reasonable in cost if it is employment-related group health  
          insurance or other group health insurance regardless of the  
          service delivery mechanism.

          AB 2650 (Speier, Chapter 162, Statutes of 1994) required that  
          health insurance coverage for children be maintained by either  
          or both parents if that insurance is available at no cost or at  
          nominal cost to the parent or parents.

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