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A Service of OnQue Technologies, Inc. |
The National Medical
Support Notice
What Employers and COBRA Administrators Need To
Know About Court-Ordered Health Coverage For Children
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June 30, 2003
Santa Rosa,
CA |
Divorce agreements often
require noncustodial parents to provide health benefits for their kids,
including COBRA continuation coverage, but those parents do not always comply
voluntarily with the terms of such agreements. To make sure that health care
for the children of divorced or separated employees doesn't fall through the
cracks, child medical support orders are often processed by state and local
child support enforcement agencies. These agencies are required by federal law
to provide employers with the National Medical Support Notice (NMSN) to
implement medical child support orders.
Due to the high divorce rate, it
is likely that employers and plan administrators will, sooner or later, receive
an NMSN. Employers that fail to comply with the legal duties imposed by the
NMSN may be subject to penalties under state laws and ERISA, including fines
and, in some states, criminal prosecution. This COBRA Tip explains how to
properly implement the NMSN when you are faced with one.
What is an
NMSN?
In the past, employers would receive child medical
support orders in many different forms from various state and local support
agencies, resulting in confusion and spotty enforcement. In January 2001, the
federal government addressed this problem by passing legislation that requires
child support enforcement agencies to use a standardized form to authorize
employers to provide group health plan coverage for the minor children of
noncustodial employees. This form, the National Medical Support Notice, or
NMSN, authorizes employers to withhold from the employee's wages the cost of
the child's coverage.
The NMSN consists of four parts, including
instructions:
- Part A is the "Notice to Withhold for Health Care
Coverage." This section authorizes the employer to withhold from the employee's
pay any contributions required by the group health plan in which the child is
enrolled, including COBRA premiums.
- Part B is the "Medical Support Notice to the Plan
Administrator." This section must be forwarded to the employer's plan
administrator to enroll the eligible child.
- Employer Response. This section allows employers to
tell the agency that: it does not provide health care coverage for any
employees; the employee is not eligible for health care coverage; the employee
no longer works for the employer; or it cannot withhold the cost of the
coverage because legal withholding limits apply.
- Plan Administrator Response: This section must be
completed by the plan administrator according to the accompanying instructions
and returned to the child support agency.
IMPORTANT: Federal law specifies that
children covered by medical support orders must be enrolled in the group health
plan that the parent is eligible for, whether or not the parent is currently
enrolled. If a plan does not provide dependent-only coverage, the Department of
Labor (DOL) has taken the position that employers are to enroll the parent and
the child even if the employee does not consent to the enrollment. Part B of
the NMSN specifies: "If the plan requires that the participant be enrolled in
order for the child to be enrolled, and the participant is not currently
enrolled, you must enroll both the participant and the child." The DOL notes in
the summary to the NMSN final rule that the law requires the plan administrator
to provide benefits in accordance with the terms of the order. It does not
believe "that Congress intended child support orders to be given effect only
where the employee consents to enrollment."
What are the employer's
responsibilities under an NMSN?
If the person who is the subject of the NMSN is not
a current employee, is not eligible for plan coverage (such as a part-time
employee), or family health care coverage is not available to any employees,
then the employer must fill out and return the Employer Response section of the
NMSN. No further action is required in these circumstances.
But, if family health care coverage is available,
the employer must:
- provide a copy of Part B of the notice to its plan
administrator within twenty days of the date of the NMSN.
- withhold from the employee's income any employee
contributions required by the group health plan as soon as the child is
enrolled, or complete the Employer Response, notifying the agency that
enrollment cannot be completed because of legal limitations on
withholding.
- notify the plan administrator as soon as any
eligibility waiting period has expired if the employee is subject to a waiting
period longer than 90 days from the date the administrator receives Part B of
the notice, or if the waiting period is determined by some other measurement,
such as a particular number of hours worked.
- notify the issuer of the support order when an
employee who is subject to an NMSN income withholding order has been terminated
from employment. This may be done by sending a copy of the required COBRA
notification or a Health Insurance Portability and Accountability Act (HIPAA)
notice.
- retain the order for a period of time that varies
from state to state - often 90 days - when an employee who is subject to a
withholding order is temporarily laid off. Upon rehire during that period, the
employer must reactivate the health coverage under the original order.
- continue withholding payment for health coverage
until official notification to stop is received from the state agency, or the
employee is terminated.
What are the plan administrator's
responsibilities under an NMSN?
If the employer can provide coverage, it must
forward Part B of the NMSN to its plan administrator. Of course, if the
employer is also the plan administrator, it must perform the administrator's
duties as well.
The plan administrator must:
- complete the "Plan Administrator's Response Form"
contained in Part B and return it to the state agency within forty days from
the date of the NMSN.
- provide the child with coverage without regard to
"enrollment season" restrictions, or other factors such as the child being born
out of wedlock, not claimed as dependent for income tax purposes, not living
with the employee, or living outside the insurer's service area. (Enrollment
must be completed upon expiration of applicable waiting
periods.)
- provide a method for the custodial parent to
enroll the covered child, file medical claims and receive benefits
payments.
- continue coverage until the employer is provided
with written evidence that the order is no longer in effect, or that the child
is enrolled in comparable coverage elsewhere.
- maintain written procedures for administering
NMSNs and the benefits provided under the orders.
Can sanctions be imposed on
employers?
Employers may face penalties under state
laws, including fines and even criminal prosecution in some states, if they
circumvent medical child support orders. Sanctions may be imposed for:
- discharging an employee from employment because of
a medical child support order;
- refusing to employ someone who is subject to a
medical child support order;
- taking disciplinary action against an employee
because of a medical child support order;
- failing to withhold income for benefits as
ordered; or
- failing to transmit payments to the applicable
health plans, as directed under an NMSN withholding order.
How do NMSNs affect COBRA administration?
Administrators and employers must treat a child who
is the subject of a qualified medical support order in the same manner as any
other beneficiary under its group health plan - including offering COBRA
continuation coverage when applicable. For example, the death of a covered
noncustodial parent is a COBRA qualifying event that triggers a 36-month
extension of group health plan coverage for the enrolled child. COBRA notices
should be sent directly to each child subject to the order, and to the
custodial parent at the child's last known address.
How do support orders affect
COBRA rights?
The interaction between COBRA rights and medical
child support orders is not always clear. Federal and state laws do not
specifically address how employers and administrators can best provide health
coverage for children who may also be eligible for COBRA continuation coverage.
Medical support orders contain specific limits on the duration of the ordered
medical support, which may be more or less generous than applicable COBRA
coverage. When COBRA rights conflict with, or are different from, the terms of
a medical child support order, seek competent legal advice when determining
which coverage should be made available.
ERISA requirements:
ERISA-covered group health plans must provide benefits under all medical child
support orders, including NMSNs, as long as they meet the requirements of a
qualified medical child support order (QMCSO.) A support order must be
submitted to the plan administrator to determine whether it is "qualified."
Properly completed NMSNs are to be treated as qualified medical child support
orders that meet ERISA requirements.
Under ERISA, a medical child support order is
"qualified" for enforcement if it contains:
- the name of the issuing state
agency;
- a description of the type of coverage to be
provided;
- the duration of the period to which the order
applies;
- the name and mailing address of the employee who is
a participant under the group health plan;
- the name and address of the children who are
subject to the order, or the mailing address of a state official or agency as a
substitute for the child's address.
Note: A child medical support order that
requires the employer to provide benefits not offered under its group health
plan is not "qualified" for ERISA purposes, and need not be
enforced.
Conclusion: Medical child support orders
should be taken very seriously by employers and benefits administrators because
federal and state laws protect the welfare of children who are subject to
divorce. The mandated procedures for administering NMSNs must be strictly
followed, and reasonable written procedures for determining whether medical
child support orders are "qualified" under ERISA standards must be maintained.
Benefits need to be administered in a manner that guarantees conformity with
the specific requirements of each child medical support
order.
For information and a link to the federal rule requiring the use of NMSNs,
including the complete form, click here:
The Office of Child Support Enforcement.
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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