Establishes definitions for "cash medical support", "reasonable in cost" and "reasonably accessible"; repealer

Summary of provisions

Sections 1 and 2 of the bill would amend section 413 of the Family Court Act (FCA) and section 240 of the Domestic Relations Law (DRL), respectively, to require the court to determine the availability of private health insurance benefits, define the term "cash medical support," and provide an income-based numeric standard for determining when cash medical support should be ordered and the amount of each parent's contribution. For children enrolled in the State Child Health Insurance Program (SCHT), the portion of cash medical support attributable to public coverage is the pro rata share of the family contribution under the State's child health insurance plan. For children enrolled in the Medical Assistance (MA) program, the non-custodial parent's obligation for the portion of cash medical support attributable to public benefits is the lesser of (1) the amount that would be required under SCRIP using the combined income of the parents as if the child(ren) were in a two-parent household; or, (2) the actual amount expended by the MA program. For children enrolled in either program, the total cash medical support obligation for costs attributable to public coverage or benefits shall not exceed 5% of the non-custodial parent's income or reduce the parent's income below the self-support reserve.

Sections 3 and 4 of the bill would amend section 416 of the FCA and section 240 of the DRL, respectively, to define the terms "reasonable in cost" and "reasonably accessible," to aid the court in determining whether private health insurance benefits are available to a child.

Sections 5 and 6 of the bill would amend section 416(e)(2)(iii) of the FCA and section 240(1)(c)(2)(iii) of the DRL. These sections provide that when private health insurance benefits are unavailable, the custo- dial parent must be directed to apply for SCRIP or MA. The current language allowing the court to apportion the cost of any premium, family contribution, or health expense associated with participation in such plan or program is deleted.

Sections 7 and 8 of the bill would amend section 416(f) of the FCA and section 240(1)(d) of the DRL. These sections currently provide for the proration of costs between the parties where private health insurance is ordered. The subdivisions are amended to state that the cost of private health insurance, or the cost of any premium, family contribution, or health expense incurred as a result of enrollment in SCRIP or the MA program shall be deemed cash medical support and each parent's contrib- ution will be determined under the amended provisions in sections 1 and 2 of this bill.

Sections 9 and 10 of the bill would amend sections 514 and 545 of the FCA, respectively, to provide that the necessary expenses incurred by or for the mother in connection with her pregnancy, confinement and recov- ery shall be deemed a cash medical support obligation and the court shall determine the obligation of either or both parties to contribute to the cost pursuant to section 413 of the FCA, the Child Support Stand- ards Act.

Section 11 of the bill would amend section 5241(b)(2)(i) of the Civil Practice Law and Rules (CPLR) to correct a statutory reference.

Section 12 of the bill would amend section 5241(h) of the CPLR to revise the priority of deductions made by an employer or income payor in response to an income execution, medical support execution or income deduction order. Under this bill, the employer will first deduct the amount due for current child support obligations, then the cost of health insurance premiums, then the additional amount to reduce support arrears.

Section 13 of the bill would provide that the amendments would be effec- tive on the ninetieth day after it shall become law and apply to any proceeding to establish or modify a child support obligation, including a medical support obligation, commenced on or after that date.

Existing law

Various sections of the FCA, the DRL and the Social Services Law (SSL) contain provisions concerning the obligation of parents to support their children and provide procedures for the estab- lishment of paternity and the establishment, enforcement and modifica- tion of child support obligations, including the cost of health insur- ance coverage and other health care expenses. Section 5241 of the CPLR contains the procedure associated with utilizing income executions and medical support executions for support enforcement.

Justification

The provision of health insurance benefits and medical support is an important component of child support. This bill would allow New York to comply with the federal final rules (45 CFR 302.56; 303.31) pertaining to medical support, which requires states to define the terms "reasonable in cost" and "reasonably accessible" in relation to the availability of private health insurance, and also the federal mandate to set a reasonable income-based numeric standard for determin- ing when cash medical support should be ordered.

Under federal regulations, private health insurance is considered "available" when it is reasonable in cost and reasonably accessible as those terms are defined by a state. In the event that private health insurance is not "available", the regulations mandate that states seek an order for "cash medical support" until such time as private health insurance becomes available. Additionally, the final medical support regulations allow states to define when it is appropriate to seek cash medical support in addition to private health insurance benefits.

This bill would define "cash medical support" under the child support standards as the amount to be paid for the cost of health insurance provided by a public entity or by a parent through an employer or organ- ization, and/or for other health care costs not covered by insurance. It sets out the method of apportioning the cost of the different types of cash medical support, such as private health insurance premiums, bene- fits provided by the SCHIP and the MA program, as well as health care expenses not covered by health insurance. The bill also limits the establishment of cash medical support obligations in support orders so that the non-custodial parent's income will not be reduced below the self-support reserve (135% of the federal poverty income guidelines for a single person).

This bill would adopt the federal option for the State definition of cash medical support and provide a method for the court to determine the parties' obligation to provide each of the three types of cash medical support. First, if private health insurance benefits are determined by a court to be "available" (i.e., the cost of securing such benefits is 5% or less of the parties' gross income), the court must order the non-cus- todial parent to pay his or her pro rata share of the health insurance premium. The primary goal of these provisions is to ensure that private health insurance is utilized when available at reasonable cost. The use of private health insurance may reduce the cost of health care for the child expended by the parents and the public.

Second, if the child covered by private health insurance incurs addi- tional unreimbursed health care expenses, the court shall order the non-custodial parent to pay his or her pro rata share of the reasonable cash medical support expenses. Orders requiring the non-custodial parent to pay his or her share of unreimbursed health care expenses are currently a mandatory provision under the Child Support Standards Act. The bill continues this obligation. When combined with the cost to the parent for private health insurance or public coverage, the total payment ordered by the court for cash medical support may not cause his or her income to fall below the self-support reserve.

Third, where private health insurance benefits are determined by the court not to be "available," the custodial parent will be ordered, in accordance with current law, to apply for SCHIP or MA. If the child is determined eligible for SCHIP, the portion of cash medical support asso- ciated with public coverage or benefits is the prorated share of the family contribution under SCHIP. For children, enrolled in MA (regard- less of whether it is managed care or fee-for-service), the non-custodi-

al parent's obligation towards the portion of cash medical support for public coverage or benefits is the lesser of the amount that would be required under SCHIP using the combined income of the parents as if the children) were in a two-parent household, or the actual amount expended by the MA program. In managed care cases, the court will order a monthly obligation for the portion of cash medical support associated with public coverage. In fee-for-service cases, for the portion of cash medical support associated with public coverage, the court will set forth in the order the maximum annual cash support obligation based on the amount that would be required under SCHIP in a two-parent household.

For children enrolled in either program, in no case shall the cash medical support obligation for public coverage or benefits exceed 5% of the non-custodial patent's gross income, or the difference between the non-custodial parent's income and the self-support reserve, whichever is less.

The bill would also define two terms that are considered by courts in determining whether private health insurance benefits are available to a child. Private health insurance benefits must be "reasonable in cost" and "reasonably accessible" in order to be deemed available.

The first term, "reasonable in cost," is defined in this bill to mean that the cost of premiums and deductibles for private health insurance attributable to the child(ren) does not exceed five percent of the combined parental gross income. However, no benefits will be considered "reasonable in cost" if the cost to a parent of extending coverage to the child(ren) would reduce the income of that parent below the self- support reserve. In addition, upon a finding of the court that the cost borne by a parent is unjust or inappropriate, the presumption of cost reasonableness may be rebutted.

Pursuant to the federal regulations, where the child(ren) will be added to existing benefits, the "cost" to be considered in determining reason- ableness is the cost of adding the child who is the subject of the order. However, the "cost" to be considered in determining reasonable- ness is the difference between self-only (individual) benefits and health insurance benefits which extend to all the children who are the subject of the order. This would include determining the portion of any deductible attributable to the child(ren) which should be considered for purposes of this analysis. Only the incremental increase in the deduct- ible associated with adding the child(ren) to existing coverage or, the incremental difference between the deductible for self-only coverage and coverage extending to the child, is to be considered.

"Reasonably accessible" is defined to mean that the child lives within the geographic area covered by the plan or lives within thirty minutes or thirty miles of services covered by the health insurance benefits or through benefits provided under a reciprocal agreement. The presumption of accessibility may be rebutted for good cause shown which may include, but is not limited to, a consideration of the special health needs of the subject child.

In addition to complying with the federal mandate, these provisions will improve child support orders. Currently, the courts do not have a stand- ard definition of reasonable cost. Different courts apply different standards, and even calculate the cost of health insurance differently. Greater consistency in determining whether health insurance is available - that is, reasonable in cost and reasonably accessible - is anticipated as a result of this bill. In addition, the court is given flexibility to address the parties' individual circumstances and set an order that is just and appropriate.

The bill would also clarify that the cost of private health insurance premiums or any premium, family contribution, or health expense associ- ated with enrollment of a child in SCRIP or MA is cash medical support. The proposed amendments refer the court to the Child Support Standards Act to calculate the amount of each parties' contribution to the cost of these expenses.

The bill would further clarify that the necessary expenses incurred by or for the mother in connection with her pregnancy, confinement and recovery are a cash medical support obligation to the father. Where these expenses were paid under the MA program on the mother's behalf, the father's liability to the social services district and the State will be subject to the same cap and low income protections as cash medical support for other MA expenses.

Finally, the bill amends the priorities for income withholding by an employer or other income payor. Consistent with the goal of providing private health insurance benefits whenever possible, deductions to satisfy support obligations will have the following priority: (1)current support obligations (2) health insurance premiums; (3) arrears.

Legislative history

In the 2008 Legislative Session, provisions simi- lar to sections three and four of this bill were part of S.8340, but S.8340 was not reported from the Senate Rules Committee.

Fiscal implications for state and local governments

Failure to pass this bill will put the State out of IV-D Plan compliance and subject the State to elimination of federal reimbursement.

Effective date

The bill would take effect on the ninetieth day after it shall become law and apply to any proceeding to establish or modify a child support obligation, including a medical support obligation, commenced on or after that date.