The Employee Retirement Income Security Act (ERISA) requires certain employer-sponsored benefit plans to provide medical insurance coverage to an alternate beneficiary, such as an employee’s child or stepchild, on the plan when ordered to do so by a state or local authority. Medical benefits may include health, dental, vision coverage, and flexible spending accounts. A state court or agency requiring a child to be covered under a plan will provide an employer with a medical child support order (MCSO). These judgments or decrees result from state domestic relations or other state laws. The Social Security Act (SSA) prohibits states from receiving federal Medicaid funds if they do not have specific laws in place regarding medical child support. A state child support enforcement agency may provide an employer with a national medical support notice (NMSN), which may also be considered a qualified medical child support order (QMCSO). The Child Support Performance and Incentive Act (CSPIA) requires state and local government plans to comply with NMSNs and church plans to comply with NMSNs and QMCSOs. Upon receipt of an order, an employer must determine if the order is qualified.
Group health plans must create written procedures for administering support orders. A QMCSO and an NMSN have similar, but not identical, administration requirements. Plans must also consider other requirements coordinating with QMCSO. ERISA requires plans to include QMCSO requirements and provide summary plan descriptions (SPDs) to all alternate beneficiaries. Plans subject to federal or state COBRA laws must treat alternate beneficiaries as qualified beneficiaries if the employee covering the dependent loses coverage subject to COBRA.
Receiving an Order or Notice
Upon receipt of an order or notice, the plan administrator must:
- Determine whether an MCSO is qualified within a reasonable amount of time as contained in their written and adopted procedures (typically 30 days). An NMSN requires a 20-day timeline.
- Provide the participant and any alternate recipients with the following information:
- An acknowledgment that an order or notice was received; and
- A copy of the plan’s written procedures for determining qualifications.
A QMCSO or an NMSN is considered qualified if the plan that determines the order contains the following:
- Accurate and complete information, including:
- The name of the child support enforcement agency;
- The period of time the order applies to;
- A reasonable description of the type of health coverage to be provided or the way health coverage is to be determined;
- The name and mailing address of the employee; and
- The name and mailing address of each child covered by the notice. The order may substitute an alternate recipient’s address by adding the name and mailing address of the issuing agency.
- Does not require any benefits that are not already included or available by the plan except as required obligations under federal or state law.
Requirements After Determination
An MCSO that is determined to be qualified requires the plan to provide coverage to the named child(ren) if the named employee is eligible to enroll or covered by the named plans. The plan must provide the employee and the named alternate recipients with the following:
- An acknowledgment that the order is deemed qualified;
- The start date of the alternate recipients’ coverage;
- Information about the coverage, including required Summary of Benefits and Coverage, SPD, COBRA initial notice, and other applicable new enrollee notices; and
- Any enrollment or change forms and instructions for facilitating enrollment.
If an MCSO is deemed not qualified, the plan must provide the employee and named alternate recipients with the following:
- An acknowledgment that the order is deemed not qualified;
- The reason for the determination; and
- Any subsequent actions.
The NMSN plan requirements are slightly different from an MCSO. An NMSN is generally made up of four documents:
- Part A – Notice to Withhold for Health Care Coverage: Completed by the child support agency and sent to the employer.
- Employer Response Form: Filled out by the employer and sent back to the child support agency if the child is not eligible to enroll in the employer’s plan (e.g., the employer does not provide health insurance to dependents, an individual has been terminated from employment, etc.).
- Part B – Medical Support Notice to Plan Administrator: The employer must complete Part B if the child can be enrolled in the employer’s plan and sent to their plan administrator within 20 business days from the date of the original NMSN.
- Plan Administrator Response: Completed by the plan administrator and returned to the child support agency.
Employers should refer to any instructions provided by the state and may refer to the NMSN samples provided in the appendix of the Department of Labor’s Qualified Medical Child Support Orders guide.
Determining Eligibility for Enrollment
An employer’s plan documents describe the rules for eligibility in the plan. A notice or order deemed qualified may not always mean enrollment of the named alternate recipients. Once an MCSO or an NMSN is determined to be a QMCSO, the plan must review the named employee’s current or future state of eligibility in the plan and include that information in the required responses to the employee and alternate recipients and the state or local authority providing the order. Some examples illustrating the above scenario include:
- A newly hired nonseasonal, full-time employee has not completed their 90-day new hire waiting period;
- A part-time employee is being measured in a look-back measurement method for 12 months to determine whether they achieve full-time status;
- The named individual is no longer an employee of the employer; or
- A small employer, not subject to any state or federal laws requiring benefits be provided, does not provide an employer-sponsored benefit plan.
For an active employee not eligible for employer-sponsored benefits, the enforcement agency may require the employer to withhold contributions for the alternate recipient covered under a governmental or individual plan.
Other Statutory and Plan Considerations
A plan may require that the eligible employee must be enrolled to add a dependent to the plan. An eligible employee who previously waived coverage may need to enroll themselves with the dependent.
A plan may require a participant to have the same level of coverage as their dependents. The participant may be required to switch to another available plan sponsored by their employer to meet the QMCSO requirements.
When an alternate recipient is covered under the employee’s plan, the employee is responsible for any additional required contributions determined by the plan. Employers should be aware of any federal or state withholding limitations that may prevent the additional dependent contributions from being withheld. If the withholding violates federal or state laws, the plan is not required to enroll the dependent without the employee’s consent. In this instance, the employer should notify the employee and the applicable enforcement agency.