BILL ANALYSIS
SB 580
Page 1
Date of Hearing: June 15, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 580 (Wright) - As Amended: June 7, 2010
Proposed Consent
SENATE VOTE : 36-0
SUBJECT: Child Support: Health Insurance
KEY ISSUE : IN ORDER TO COMPLY WITH FEDERAL REQUIREMENTS FOR
MEDICAL SUPPORT ORDERS, SHOULD THE TERMS "REASONABLE COST" AND
"ACCESSIBLE" BE PROPERLY DEFINED?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
In addition to providing child support, parents are required to
provide medical support for their children. In 2008, the
federal Office of Child Support Enforcement (OCSE) issued new
regulations to implement the provisions of the federal Deficit
Reduction Act of 2005 (DRA) that revise federal requirements for
establishing and enforcing medical support obligations. In
accordance with the new regulations, California state law must
be amended to revise the definition of reasonable-cost
insurance, and to require that health insurance be accessible.
This bill, sponsored by the Department of Child Support Services
(DCSS), defines the terms "reasonable cost" and "accessible" as
they pertain to medical support orders in order to meet federal
requirements. This bill is supported by the Family Law Section
of the State Bar and the Governor's Office of Planning and
Research. There is no known opposition.
SUMMARY : Defines the terms "reasonable cost" and "accessible"
for purposes of health care coverage for a child under a support
obligation. Specifically, this bill :
1)Provides that health insurance for a child under a support
obligation is rebuttably presumed to be reasonable in cost if
the cost to the parent providing medical support does not
exceed five percent of that parent's gross income.
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2)Provides that if an obligor is entitled to a low-income
adjustment, as defined, medical support shall be deemed to be
not reasonable, unless the court determines that not requiring
medical support would be unjust or inappropriate in the
particular case.
3)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 subject to the support order.
EXISTING LAW :
1)Requires that a parent maintain health insurance coverage for
a child under a child support obligation when that insurance
is available at no cost or at a reasonable cost to the parent.
(Family Code Section 3751. Unless otherwise stated, all
further statutory references are to that code.)
2)Provides that health insurance coverage shall be rebuttably
presumed to be reasonable in cost if it is employment-related
group health insurance. Provides that the actual cost of the
health insurance to the obligor must be considered in
determining whether the cost of insurance is reasonable.
(Id.)
3)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.)
4)Provides that the court shall order additional child support
for the reasonable uninsured health care costs of the
supported child. (Section 4062.)
5)Requires that all support orders in cases receiving services
under Title IV-D of the Social Security Act (42 U.S.C. Section
651 et seq.) address medical child support. Defines
reasonable-cost health insurance, and require health insurance
to be accessible, as defined by the state. (45 CFR Sections
303.30-303.31.)
6)Provides that if an obligor's net disposable income is less
than $1,000 a month, there is a rebuttable presumption that
the obligor is entitled to a low-income adjustment to the
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child support guideline. Provides that the presumption can be
rebutted by evidence showing that application of the
low-income adjustment would be unjust and inappropriate in a
particular case. (Section 4055(b)(7).)
COMMENTS : The DRA, in addition to reauthorizing and making
changes in the Temporary Assistance to Needy Families (TANF)
program, 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 child support 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."
The federal OCSE issued regulations to implement the provisions
of the DRA that revise federal requirements for establishing and
enforcing parents' medical support obligations, effective on
July 21, 2008. In accordance with the new regulations,
California state law must be amended to redefine reasonable-cost
insurance, and to require that health insurance to be
accessible. This bill, the product of a DCSS-conveyed
workgroup, defines the terms "reasonable cost" and "accessible"
as they pertain to medical support orders in order to meet
federal regulation requirements.
Federal OCSE Finds California Out of Compliance with Federal
Requirements for Medical Support : After adoption of the new
regulations, 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 state law changes were necessary in order to maintain
compliance with the new regulations. DCSS also solicited
feedback from 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
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time parameters, and (3) make a technical correction to a
provision that implies medical support need not be ordered in
every case.
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 makes
these changes and ensures that California is in compliance with
federal regulations.
This Bill Brings California into Conformity with Federal Medical
Support Regulations : Existing law requires the court to order
health insurance coverage for the supported child in any case
that current support is ordered. 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.
Health insurance coverage is presumed to be reasonable in cost
if it is employment-related group health insurance or other
group health insurance. 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
must state its reasons on the court record.
This bill provides 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 303.31(a)(3).) In applying the five percent for the
cost of health insurance, the cost is the difference between
self-only and family health coverage.
This bill further provides that if an obligor is entitled to a
low-income adjustment (available to obligors with net income
below $1,000 a month), medical support is deemed to be
unreasonable, unless a court determines that not requiring
medical support would be unjust or inappropriate in a particular
case. This is the same standard used to rebut application of
the low-income adjustment to the monthly child support
obligation and helps ensures that courts can do justice in
particular cases. Thus, a low-income earner who may not be able
to afford the cost of health insurance would be exempted from
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the five percent standard, unless it would be unjust to do so in
the particular situation.
Current state law requires the courts to consider geographic
access when examining whether an order for medical support is
reasonable, but does not have a quantifiable standard. The OCSE
has stated that a quantifiable value is required to comply with
the new federal regulations. Accordingly, 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 subject to the support order. The preamble to the
federal medical support regulations (p. 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 50 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 must
state its reasons on the record.
Finally, 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. 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 child and specifies how it shall be computed.
(Emphasis added.) 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" is removed by this
bill. This is really only a technical amendment, since current
law already mandates the sharing of unreimbursed medical
expenses by both parents.
Prior Legislation : AB 2208 (Caldera), Chap. 1269, Stats. 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), Chap. 162, Stats. 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
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cost to the parent or parents.
ARGUMENTS IN SUPPORT : The Governor's Office of Planning and
Research writes that without this bill, "California could be
fined millions for being found out of compliance with federal
regulations and the state's child support placed on corrective
action. During a time the state is struggling to address a
crippling deficit, such results would be disastrous."
REGISTERED SUPPORT / OPPOSITION :
Support
Department of Child Support Services (sponsor)
Family Law Section of the State Bar
Office of Planning and Research
Opposition
None on file
Analysis Prepared by : Leora Gershenzon / JUD. / (916) 319-2334