BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 580| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: SB 580 Author: Wright (D) Amended: 1/13/10 Vote: 21 SENATE JUDICIARY COMMITTEE : 5-0, 1/12/10 AYES: Corbett, Harman, Hancock, Leno, Walters SUBJECT : Child support: health insurance SOURCE : Department of Child Support Services DIGEST : This bill defines the terms reasonable cost and accessible as they pertain to medical support orders in order to meet federal regulation requirements. ANALYSIS : 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. (Section 3751 of the Family Code) 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. (Section 3751 of the Family Code) 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. (Section 3751 of the Family Code) CONTINUED SB 580 Page 2 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. (Section 4063 of the Family Code) Existing law provides that the court shall order additional child support for the reasonable uninsured health care costs of the supported child(ren). (Section 4062 of the Family Code) Existing federal regulations require that all support orders in program cases receiving services under Title IV-D of the Social Security Act (42 USC Section 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 Sections 303.30-303.31) This bill provides 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/her gross income. This bill provides that if an obligor is entitled to a low-income adjustment, medical support shall be deemed to be not reasonable. This bill provides 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. 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 the Health and Human Services Agency to issue regulations which SB 580 Page 3 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 (OCSE) issued proposed regulations to implement the provisions of the DRA that revise federal requirements for establishing and enforcing parents' medical support obligations. 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 one to three 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 defines the terms "reasonable cost" and "accessible" as they pertain to medical support orders in order to meet federal regulation requirements. This bill makes 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). (Section 4062 of the Family Code) 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 SB 580 Page 4 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. (Sections 4062-4063 of the Family Code) 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(s). FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 1/14/10) Department of Child Support Services (source) ARGUMENTS IN SUPPORT : According to the author's office, "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 SB 580 Page 5 (3) make a technical correction to a provision that implies medical support need not be ordered in every case. This bill has been introduced in order to make these changes and maintain compliance with federal regulations." RJG:mw 1/14/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****