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.
(more)
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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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