Ms. Venus Conklin
Byerly & Company
7600 E. Orchard Road
Suite 250 South
Englewood, CO 80111
Dear Ms. Conklin:
This is in response to your inquiry regarding the qualified medical child support order (QMCSO) provisions of the Employee Retirement Income Security Act (ERISA). We have enclosed a copy of the provisions to which you refer. These amendments to ERISA were part of the Omnibus Budget Reconciliation Act of 1993 (OBRA), which also added related provisions to the Social Security Act (SSA). We hope that the following general information will be helpful.
1. Who will be regulating this new law?
The Department of Labor (the Department) has administrative and interpretive authority with respect to ERISA section 609(a), and the authority to issue regulations in consultation with the Secretary of Health and Human Services. Section 609(a) establishes the obligations of group health plans to extend health care coverage to children named in qualified medical child support orders. OBRA also added section 1908 to the SSA (copy enclosed), conditioning States' eligibility for Federal Medicaid funding on their enactment of certain laws relating to medical child support. The Department of Health and Human Services has the administrative and interpretive authority with respect to SSA section 1908, while the States have the responsibility to administer and enforce the State laws described in section 1908, as well as the authority to enforce compliance with QMCSOs.
2. Who or what is the QMCSO aimed at regulating? The employer, the insurance company, the employee?
The QMCSO provisions of section 609(a) apply to group health plans that are subject to Title I of ERISA, which includes most private-sector employer and union-sponsored medical plans. Under section 609(a), the administrator of the plan is obligated to determine whether a medical child support order as defined in section 609(a)(2)(B) is a "qualified" order within the meaning of section 609(a). If the order is a QMCSO, the plan is obligated to provide benefits according to the terms of the order.
3. What real power or authority does it have?
If a medical child support order is a "qualified" order within the meaning of section 609(a), the group health plan is required to provide coverage to the designated alternate recipients, i.e., the child(ren) recognized under the order as having a right to enrollment under the plan. Failure to comply with the provisions of section 609 could subject the plan fiduciaries to civil liability under section 502 of ERISA.
4. An order issued by the Department of Social Services states that the employer "is required to deduct from the wages due the obligor an amount sufficient to provide for premiums for health insurance for the obligor and his/her child(ren)." "It is your responsibility to ensure the enrollment of the child(ren) of the obligor in a health insurance plan and that premium payments are withheld and forwarded to the insurer." What happens if the employee refuses to pay for the coverage? Is the employer supposed to follow the court order to the letter? If the employer does, can the employee sue the employer? What are the consequences?
Without commenting on the legal effect of the specific language that you quote, we can provide the following information. ERISA section 609(a) establishes obligations for employee benefit plans, not employers. Nevertheless, among the laws described in SSA section 1908 are laws separately requiring the employer and the insurer (defined to include an ERISA-covered group health plan as well as an insurance company) to enroll the child in the plan upon application of the child's custodial parent or the State child support enforcement agency, and to require the employer to withhold from the employee's compensation the employee's share (if any) of the applicable premium (subject to the limits on withholding provided under section 303(b) of the Consumer Credit Protection Act) and to pay such share of the premiums to the insurer. In this regard, we note that a QMCSO is defined in ERISA section 609(a)(2) to include a medical child support order that enforces a State law described in SSA section 1908. Accordingly, if the QMCSO enforces State laws described in SSA section 1908, the plan is legally obligated to comply with such State laws.
5. What would be the consequences if the order was of a generic nature?
In order for a "medical child support order", as defined in section 609(a)(2)(B), to be "qualified", the order must meet the requirements of section 609(a). Among the requirements for information to be included in a QMCSO is that the order clearly specify: (1) the name and last known mailing address (if any) of the participant and the name and mailing address of each alternate recipient covered by the order; (2) a reasonable description of the type of coverage to be provided, or the manner in which the coverage will be determined; (3) the period to which the order applies; and (4) each plan to which the order applies. Section 609(a)(5)(A) requires the plan administrator to determine whether an order is a qualified order within a reasonable period after the receipt of the order. It has yet to be determined what degree of specificity is required with respect to this information.
6. A QMCSO states that payments for medical services are to be paid to an alternate recipient. Colorado Blue Cross Blue Shield has stated that they will continue to pay the employee for the medical services, not the alternate recipient as stated in the order. What are the consequences of this action?
Without commenting on the legal effect of your factual representations, we can provide the following information. ERISA section 609(a)(8) specifically provides that any payment for benefits made by a group health plan pursuant to a medical child support order in reimbursement for expenses paid by an alternate recipient or an alternate recipient's custodial parent or legal guardian shall be made to the alternate recipient or the alternate recipient's custodial parent or legal guardian. In addition, section 1908(a)(5) of the SSA contemplates enactment of State laws that would require an insurer, in any case in which a child has health coverage through the insurer of a noncustodial parent, to make payment on claims submitted by the custodial parent or provider directly to the custodial parent, the provider, or the State child support enforcement agency. Thus, a plan or insurer's refusal to make payments directly to the alternate recipient or the custodial parent may involve violations of both Title I of ERISA and State law. An alternate recipient may have a cause of action against the plan for the payment or reimbursement for benefits (even if they have already been paid to the employee), and may have a State law cause of action to the extent that an applicable State law described in SSA section 1908 has been enacted.
We hope that this information is of assistance to you. If you have any further questions, please contact Mr. David Lurie of my staff, at (202) 219-7901.
Robert J. Doyle
Director of Regulations
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