NPRM: Extension of IV-D Child Support Enforcement Services

AT-89-10

Publication Date: May 26, 1989
Current as of:

ACTION TRANSMITTAL

OCSE-AT-89-10

May 26, 1989

TO:  STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS

SUBJECT:  Extension of IV-D Child Support Enforcement Services to Medicaid-only Applicants and Recipients and to Former AFDC Recipients.

ATTACHMENT: Extension of Services to Medicaid Applicants and Recipients and to Former AFDC Recipients  [P. 22325-22335]

The attached proposed regulations implement the requirements of sections 9141 and 9142 of the Omnibus Budget Reconciliation Act (OBRA) of 1987 (P.L. 100-203), which amended title IV-D of the Social Security Act (the Act). Section 9141, effective December 22, 1987, amended section 457(c) of the Act to require State IV-D agencies to provide appropriate notice and to continue to provide IV-D services to persons no longer eligible for Aid to Families with Dependent Children (AFDC) under title IV-A of the Act. The IV-D agency must continue to provide services and pay any amount of support collected to the family on the same basis and under the same conditions as pertain to other non-AFDC families, except that no application, other request to continue services or any application fee for services may be required.

Section 9142, effective July 1, 1988, amended section 454 of the Act to require State IV-D agencies to provide IV-D services to all families with an absent parent who receive Medicaid and have assigned to the State, under section 1912 of the Act, their rights to medical support, and to provide for distribution by the State of medical support collections under section 1912 of the Act.

REGULATION REFERENCE:  45 CFR Parts 301 through 304, and 306.

COMMENT PERIOD:  Consideration will be given to written comments and suggestions received by July 24, 1989. Address comments to: Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S.W., Washington, D.C., 20447, Attention: Director, Policy and Planning Division.

RELATED REFERENCE:  OCSE-AT-88-3, dated April 8, 1988.

INQUIRIES TO:  OCSE Regional Representatives

Robert C. Harris

Associate Deputy Director

Office of Child Support Enforcement

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Family Support Administration

Office of Child Support Enforcement

45 CFR Parts 301 302, 303, 304 and 306

RIN 0970-AA61

Child Support Enforcement Program - Extension of Services to Medicaid Applicants and Recipients and to Former AFDC Recipients

AGENCY: Office of Child Support Enforcement (OCSE), HHS

ACTION: Notice of proposed rulemaking

SUMMARY: These proposed rules implement sections 9141 and 9142 of P. L. 100-203, the Omnibus Budget Reconciliation Act of 1987, which amended title IV-D of the Social Security Act (the Act). Section 9141, effective December 22, 1987, amended section 457(c) of the Act to require State Child Support Enforcement (IV-D) agencies to provide appropriate notice and to continue to provide IV-D services to persons no longer eligible for Aid to Families with Dependent Children (AFDC) under title IV-A of the Act. The IV-D agency must continue to provide services and pay any amount of support collected to the family on the same basis and under the same conditions as pertain to other non-AFDC families, except that no application, other request to continue services or any application fee for services may be required.

Section 9142, effective July 1, 1988, amended section 454 of the Act to require State IV-D agencies to provide IV-D services to all families with an absent parent who receive Medicaid and have assigned to the State, under section 1912 of the Act, their rights to medical support, and to provide for distribution by the State of medical support collections under section 1912 of the Act.

DATES: Consideration will be given to written comments and suggestions received by July 24, 1989

ADDRESS: Address comments to: Associate Deputy Director, Office of Child Support Enforcement, Department of Health and Human Services, 370 L'Enfant Promenade, S. W., Washington, D.C. 20447. Comments will be available for public inspection Monday through Friday, 8:30 a.m. to 5:00 p.m. in the Department's office at the above address.

FOR FURTHER INFORMATION CONTACT: Andrew J. Hagan, Policy Branch, OCSE, (202) 252-5375.

SUPPLEMENTARY INFORMATION:

Paperwork Reduction Act

Public reporting burden for the collections of information requirements at 45 CFR 302.33(a), 302.33(a)(4), 302.33(d)(1)(ii), 302.33(d)(5), 302.33(e)(2), 302.51(e), 303.72(h)(3), 303.72(i)(2), 303.102(c), 306.50(a) and combined 306.50(b) and 306.51(c) is estimated to average 5.0, 0.5, 1.0, 0.5, 0.5, 0.5, 0.1, 0.1, 0.1, 5.0, and 0.1 minutes per response, respectively, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. We have combined the reporting burden at 42 CFR 306.50(b) and 306.51(c) since they have the same information requirement of informing the individual of the availability of medical support enforcement services. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Child Support Enforcement, Family Support Administration, 370 L'Enfant Promenade, S.W., Washington, D.C. 20447; and to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503.

Background

Continuation of Services to Former AFDC Recipients. When section 457(c) of the Act was amended by the Child Support Enforcement Amendments of 1984 (Pub.L. 98-378) to require (rather than allow) provision of IV-D services to families after AFDC eligibility ends, the intent of Congress was that all IV-D services continue to be provided, as in non-AFDC IV-D cases, to families whose AFDC eligibility was terminated, without payment of a fee or filing of an application for services. However, the Act, as amended by Pub.L. 98-378, provided a transition period of up to five months during which former AFDC cases were treated differently from non-AFDC cases.

During the five-month period, States were not given the option to recover costs of providing services as in other non-AFDC cases and distribution of amounts collected was inconsistent with distribution in other non-AFDC cases. The statute also required authorization for continuation of IV-D services after the five-month period, while prohibiting the necessity of filing an application or paying an application fee. The enactment of section 9141 of Pub.L. 100-203, effective December 22, 1987, eliminates this temporary category of cases. Without an application or application fee, these cases become non-AFDC cases once AFDC eligibility ends.

Services to Medicaid-only applicants and recipients. Applicants and recipients of Medicaid are required under section 1912(a)(1) of the Act to assign to the State their rights to support for medical care and payment for medical care from any third party and to cooperate with the State in establishing paternity and securing support. However, when assignment of rights to medical support was made a condition of eligibility for Medicaid by the Deficit Reduction Act of 1984 (section 2367 of Pub.L. 98-369), there was no corresponding amendment added to title IV-D of the Act requiring IV-D agencies to provide services to Medicaid applicants and recipients who assigned their rights to support under section 1912 of the Act. Therefore, prior to enactment of Pub.L. 100-203, IV-D agencies were required to provide services only to Medicaid families who were referred to the IV-D agency because they were AFDC applicants and recipients. IV-D services were also available to Medicaid-only families (those families determined eligible for or receiving Medicaid but not AFDC), but only by application (and payment of an application fee), making these cases indistinguishable from non-AFDC IV-D cases.

Effective July 1, 1988, section 9142 of Pub.L. 100-203 requires that the IV-D agency provide IV-D services to families who have assigned their rights to medical support as a condition of receipt of Medicaid. IV-D agencies must provide all appropriate IV-D services to Medicaid applicants and recipients with an absent parent, whether or not they are also eligible for AFDC, without an application or application fee.

We are considering the types of information collection that would be useful in monitoring medical support enforcement in general and the implementation of section 9142 of Pub.L. 100-203 (and this regulation) in particular. At this point, there is no dependable data on medical support. One option is to add medical support information and Medicaid-only caseload data to existing program reports. We request comment on the desirability and usability of such data and the effort required to develop it. We request suggestions of any other options that could yield annual, statistically valid data on medical support.

Statutory Authority

This regulation is published under the authority of section 1102 of the Act which requires the Secretary to publish regulations that may be necessary for the efficient administration of the functions for which he is responsible under the Act.

Section 9141 of Pub.L. 100-203, effective December 22, 1987, amended section 457(c) of the Act to require State IV-D agencies to provide appropriate notice and to continue to provide IV-D services to persons no longer eligible for AFDC under title IV-A of the Act. The IV-D agency must continue to provide services and pay any amount of support collected to the family on the same basis as in the case of other non-AFDC families, except that no application, other request to continue services or application fee may be required.

Section 9142 of Pub.L. 100-203, effective July 1, 1988, amended section 454(4) of the Act to require State IV-D agencies to provide IV-D services to families who have assigned to the State, under section 1912 of the Act, their rights to medical support and payment for medical care from any third party, and have agreed to cooperate with the State in establishing paternity and securing support, unless the Medicaid agency determines that it is against the best interests of the child to do so. Section 9142 also amended section 454(5) of the Act to require that, in any case in which support payments assigned by an individual under section 1912 of the Act are collected, the payments shall be made to the State for distribution under section 1912, except that this requirement shall not apply to payments for any month after the month in which the individual ceases to be eligible for Medicaid.

Changes to Existing Regulations

45 CFR PART 301

Section 301.1 - General definitions.

Section 301.1 contains definitions of terms used in the IV-D regulations. We propose to revise §301.1 to include definitions of the terms "assigned support obligation," "assignment," and "Medicaid-only applicant or recipient."

"Assigned support obligation" would be defined as, unless otherwise specified, any support obligation which has been assigned to the State under 45 CFR 232.11 (AFDC cases) or section 471(a)(17) of the Act (title IV-E foster care cases), or any medical support obligation or payment for medical care from any third party which has been assigned to the State under 42 CFR 433.146 (which implements assignment of medical support rights under section 1912 of the Act.) "Assignment" would be defined as, unless otherwise specified, any assignment of rights to support under 45 CFR 232.11 or section 471(a)(17) of the Act, or any assignment of rights to medical support and to payment for medical care from any third party under 42 CFR 433.146.

By including the definitions of "assigned support obligation" and "assignment" in §301.1, we would be able to simplify IV-D regulations which refer to assigned support obligations or assignments under the AFDC, title IV-E foster care and Medicaid programs by deleting reference to each type of assignment under the various programs. For example, in §302.31, instead of adding reference to an assignment under 42 CFR 433.146 to require IV-D agencies to establish paternity and secure support for children with respect to whom an assignment under §232.11, section 471(a)(17) or 42 CFR 433.146 is effective, we would merely revise §302.31 to refer to providing services to children for whom an assignment as defined in §301.1 is effective. Thus, unless a regulation specifically defines an assigned support obligation as other than that included in the definition in §301.1, any reference to an assigned support obligation would encompass assignments under the AFDC, title

IV-E foster care and Medicaid programs. We address each of these conforming changes later in this preamble.

"Medicaid-only applicant or recipient" would be defined as any individual who has been determined eligible for or is receiving Medicaid under title XIX of the Act but who has not been determined eligible for or is not receiving AFDC under title IV-A of the Act. We are proposing to include this term to differentiate between individuals determined eligible for or receiving both AFDC and Medicaid and individuals determined eligible for or receiving only Medicaid. As discussed in more detail under changes to §302.33, Services to Individuals Not Otherwise Eligible for Paternity and Support Services, it is necessary to differentiate between these two types of cases because we propose that Medicaid-only applicants and recipients will be treated for the most part as non-AFDC cases.

45 CFR PART 302

We propose to revise certain sections in Part 302 to clarify treatment of Medicaid-only and former AFDC cases.

1. Section 302.31 - Establishing paternity and securing support

Section 302.31, which implements section 454(4) of the Act, requires IV-D agencies to undertake to establish paternity and secure support for any individual for whom an assignment is effective under the AFDC or title IV-E foster care program. Section 9142 of Pub.L. 100-203 amended section 454(4) to require IV-D agencies to establish paternity and secure support for individuals who have assigned their rights to medical support under section 1912 of the Act, unless the Medicaid agency determines that it is against the best interests of the child to do so. We would implement these new requirements in two ways.

First, rather than add reference to assignments under the Medicaid program to §302.31(a)(1) and (2), we would delete, for simplicity, reference to assignment "under §232.11 of this title or section 471(a)(17) of the Act" from §302.31(a)(1) and (2). As previously discussed, the term "assignment" would be defined broadly to include, except where otherwise specified, assignment of rights to support under the AFDC, title IV-E foster care, and Medicaid programs.

Second, we would include reference in §302.31(b) and (c) to the Medicaid agency as a source of notice of claims or determinations of good cause for failing to cooperate in establishing paternity and securing support. Sections 302.31(b) and (c) address suspension of efforts to establish paternity or secure support if the IV-D agency is notified by the IV-A or IV-E agency that there has been a claim or determination of good cause for failing to cooperate. Therefore, proposed §302.31(b) would require the IV-D agency, upon receiving notice from the IV-A, IV-E, or Medicaid agency that there has been a claim of good cause for failure to cooperate, to suspend all activities to establish paternity or secure support until notified of a final determination by the appropriate agency (i.e., either the IV-A, IV-E or Medicaid agency.)

Proposed §302.31(c) would prohibit the IV-D agency from undertaking to establish paternity or secure support in any case for which it has received notice from the IV-A, IV-E or Medicaid agency that there has been a finding of good cause unless there has been a determination by the appropriate agency that support enforcement may proceed without the participation of the caretaker or other relative.

2. Section 302.32 - Support Payments to the IV-D Agency.

Section 302.32(b) requires the IV-D agency to notify a family which ceases to receive AFDC that it will continue to provide services pursuant to §302.51(e)(1). Section 302.51(e) addresses required IV-D activities once eligibility for AFDC ends. As discussed in more detail below, we propose to address the changes made by Pub.L. 100-203 to requirements for continuation of services to former AFDC cases by deleting §302.51(e) and revising §302.33, Services to Individuals Not Otherwise Eligible for Paternity and Support Services. To correspond with those changes, we propose to change the reference in §302.32(b) from §302.51(e)(1) to §302.33.

3. Section 302.33 - Individuals not Otherwise Eligible for Paternity and Support Services.

Section 302.33 sets forth requirements for providing IV-D services to any individual not receiving AFDC who files an application for services. We propose to revise §302.33 to implement changes made by Pub.L. 100-203 with respect to providing services to individuals once AFDC eligibility ends and services to individuals who have been determined eligible for or are receiving Medicaid but not AFDC (Medicaid-only applicants and recipients, as defined in this proposed regulation.) First, we will explain our rationale for treating both types of cases as non-AFDC cases. Then we will address specific changes to implement the new statutory requirements as well as other proposed changes to this section.

a. Continuation of services after AFDC eligibility ends. As explained earlier, section 9141 of Pub.L. 100-203 revised section 457(c) of the Act to eliminate the temporary category of cases which existed for a period of up to five months between the end of AFDC eligibility and conversion to regular non-AFDC status. Section 457(c) now requires the State to provide notice to the family and to continue to provide IV-D services under the same conditions and on the same basis as provided to other non-AFDC cases. The State may not require an application or other request to continue services or an application fee in these cases.

We propose to implement this change by deleting current requirements in §302.51(e) governing the former temporary category of cases (to be discussed later) and requiring under §302.33 that IV-D agencies provide services to former AFDC recipients under the same conditions and requirements as apply in other non-AFDC cases. We propose to revise §302.33 to require States to notify the family that the case will become a non-AFDC case and that IV-D services will continue to be provided without the need for an application, other request for continued services or payment of an application fee. The notice would inform the family that services will be continued unless the IV-D agency is notified by the family that continued services are not desired. However, families which continue to be eligible for Medicaid after AFDC eligibility ends may not refuse IV-D services for their Medicaid eligible dependents.

Once Medicaid eligibility ends in former AFDC cases, the IV-D agency must continue to provide services as a non-AFDC case unless the family refuses IV-D services. Once Medicaid eligibility ends in Medicaid-only cases in which the family was not receiving AFDC, the family must apply for IV-D services and pay an application fee in accordance with §302.33 in order to continue to receive IV-D services, because the statute does not waive application or an application fee in these cases.

These proposed changes would implement the statutory requirements and are consistent with the intent of Congress that former AFDC recipients continue to receive IV-D services on the same basis as other non-AFDC cases. This means that all appropriate services must be provided in these cases. The State may charge fees other than the application fee and recover costs of providing services in these cases if it recovers costs of providing services in other non-AFDC cases in accordance with §302.33(d).

Distribution of collections for former AFDC recipients would be consistent with each State's non-AFDC distribution policy, i.e., priority must be given to current support but the State may choose whether to distribute collections of past-due support first to reimburse itself for AFDC payments or to the family. For purposes of computing incentives under §303.52 and the performance indicator components of the program audit under §305.98, collections in these cases which the State uses to reimburse itself for AFDC payments would be counted and reported as AFDC collections, while collections which the State distributes to the family would be counted and reported as non-AFDC collections. Under §302.51(f), the IV-D agency must attempt to collect any unpaid support obligation which had accrued under the assignment of support rights while the family was receiving AFDC. In sum, in nearly every way these former AFDC cases are non-AFDC cases, except that the State may not require an application or other request to continue services or an application fee and the family may not opt out of the IV-D program for as long as it continues to receive Medicaid.

b. Provision of services to Medicaid-only applicants and recipients. As explained earlier, Pub.L. 100-203 revised section 454 of the Act to require State IV-D agencies to provide IV-D services to Medicaid applicants and recipients who assigned their rights to support under section 1912 of the Act. Since Medicaid cases which are also AFDC cases are automatically referred to the IV-D agency by the IV-A agency, the primary impact of this statutory change is on families who have been determined eligible for or are receiving Medicaid but not AFDC. The intent of Congress is that these Medicaid-only applicants and recipients receive IV-D services without having to file an application or to pay an application fee.

For simplicity of IV-D program administration, we propose to treat these Medicaid-only cases basically as non-AFDC cases because Medicaid-only cases closely resemble non-AFDC cases,except in the following ways. As with former AFDC cases, the IV-D agency may not require an application or application fee. The second distinguishing factor is that, because Medicaid-only applicants and recipients are required to assign medical support rights to the State and cooperate in establishing paternity and obtaining support as a condition of eligibility for Medicaid, Medicaid-only applicants and recipients may not refuse these IV-D services. Therefore, while the assignment is limited to medical support rights, Medicaid-only applicants and recipients may not refuse any appropriate IV-D services, because they are required to cooperate in establishing paternity and securing support, unless the Medicaid agency determines it is not in the best interests of the child(ren) to proceed. However, if both Medicaid eligible and non-Medicaid eligible children are in the household, the custodial parent should be permitted to decline IV-D services for the non-Medicaid eligible children.

The third factor that distinguishes Medicaid-only cases from other non-AFDC cases is that the State may not charge fees or recover costs of providing services in these cases, even if it recovers costs in other non-AFDC cases in accordance with §303.33(d), because the Medicaid-only recipient may not refuse IV-D services.

Finally, collections of support assigned under 42 CFR 433.146 must be distributed in accordance with 42 CFR 433.154, which governs distribution of medical support collections under section 1912 of the Act, as opposed to paying those collections to the family.

In all other ways, we propose that these Medicaid-only cases be treated as non-AFDC cases. This means that all appropriate services must be provided in these cases and neither a Medicaid-only applicant or recipient nor the IV-D agency may opt to receive or provide only medical support enforcement services in these cases if other services are appropriate. The IV-D agency would be required to establish paternity and a support obligation, if necessary, including petitioning the court or administrative authority to include health insurance in accordance with §306.51, if appropriate.

The IV-D agency would be required to enforce any support order, including collecting specific dollar amounts designated for medical care purposes in the order, using appropriate enforcement techniques. Although we believe requiring the absent parent to obtain health insurance coverage for the child(ren) is generally preferable to including a specific dollar amount for medical purposes in the support order, there are some cases in which the court or administrative authorities have considered specific cash amounts for medical purposes to be more appropriate. The IV-D agency's responsibility to enforce support obligations which order the absent parent to secure health insurance would be limited, as provided under §306.51, to ensuring that the absent parent secures health insurance. Collecting health insurance payments would be necessary only if the IV-D agency enters into a cooperative agreement with the Medicaid agency to so do in accordance with Subpart A of Part 306.

For purposes of computing incentives under §303.52 and performance indicator components for purposes of the audit under §305.98, any collections in these cases would be counted as non-AFDC collections since the statutory definition of "AFDC collections" for purposes of computing incentives was not amended to include collections in these cases. Support collections would be reported as non-AFDC collections.

Distribution of support collections, other than those assigned under 42 CFR 433.146, for Medicaid-only applicants and recipients would be consistent with each State's non-AFDC distribution policy, i.e., priority must be given to current support and the State may choose whether to reimburse itself for any AFDC payments made to the family first or pay collections of past due support to the family first. Distribution of assigned collections which represent specific dollar amounts designated for medical purposes in the order will be discussed under changes to §302.51.

c. Proposed changes to §302.33 to include Medicaid-only and former AFDC recipients. For the reasons set out above, we propose to revise §302.33 as follows. We propose to revise the title of §302.33 to more accurately reflect to whom services are available under this section. The section would be entitled Services to Individuals Not Receiving AFDC or Title IV-E Foster Care Assistance.

We propose to revise §302.33(a) to require, in paragraph (a)(1), that IV-D services be made available to any individual who: 1) has not been determined to be eligible for or is not receiving assistance under the AFDC, title IV-E foster care, or Medicaid programs who files an application for services with the IV-D agency; 2) is a Medicaid-only applicant or recipient; or 3) is no longer eligible for assistance under the AFDC program. As is currently the case under §302.33, in an interstate case only the initiating State may require an application for IV-D services. After title IV-E foster care or Medicaid-only assistance ends, individuals would be required to file an application and pay an application fee in order to receive IV-D services, because the statute does not waive application or an application fee in these cases.

Proposed §302.33(a)(2) would prohibit the State from requiring an application for services, other request for services or an application fee from any current Medicaid-only applicant or recipient or former AFDC recipient. Proposed §302.33(a)(3) would prohibit the State from charging fees or recovering costs from any Medicaid-only applicant or recipient.

Finally, proposed §302.33(a)(4) would specify that, whenever a family is no longer eligible for assistance under the AFDC program, the IV-D agency must notify the family that services will be continued unless the IV-D agency is notified to the contrary by families who have not been determined eligible for or are not receiving Medicaid. The notice must inform the family of the consequences of continuing to receive IV-D services, including the available services and the State's fees, cost recovery and distribution policies. A family no longer eligible for AFDC which continues to be eligible for Medicaid must be notified that they may not refuse IV-D services for their Medicaid eligible dependents until Medicaid eligibility ends.

We propose to revise §302.33(d), which sets forth conditions under which States may elect to recover any costs incurred in providing services in non-AFDC cases, to allow cost recovery in former AFDC cases, once Medicaid eligibility ends. We propose to substitute the phrase "is receiving IV-D services under paragraph (a)(1)(i) of this section, or paragraph (a)(1)(iii) of this section, but only after Medicaid eligibility ends," for the phrase "has filed an application for IV-D services" in §302.33(d)(1)(ii) to clarify that a State may recover costs from any former AFDC recipient to whom it is providing services under paragraph (a)(1)(iii) of this section, after their eligibility for Medicaid ends, and not just from those who have filed an application for services. For the same reason, in §302.33(d)(5), we would replace the phrase "has filed an application for IV-D services" with the phrase "is receiving IV-D services under paragraphs (a)(1)(i) and (iii) of this section" and the word "applicant" with the phrase "individual not receiving services." d. Proposed changes to §302.33(e) to reflect changes in the Bankruptcy Code. Section 302.33(e) allows IV-D agencies to take assignments of support rights in non-AFDC cases because some States' laws require the State to be a party to any legal action to pursue support. Section 302.33(e)(2) prohibits States from making such assignments a condition of eligibility for services and requires States to notify families of that fact as well as to inform them that assignments in such cases may have the effect of making the support debt dischargeable in bankruptcy. There was a possibility that debts assigned to the States in non-AFDC cases could be discharged in bankruptcy actions filed prior to October 8, 1984 (ninety days after the July 10, 1984 enactment of Pub.L. 98-353) because section 553(a)(5)(A) of the Bankruptcy Code only prohibited the discharge of support debts which were assigned to the State as a condition of receiving AFDC. On July 10, 1984, Pub.L. 98-353 amended section 523(a)(5)(A) to prohibit discharge in bankruptcy of any support assigned to the State (effective as to cases filed ninety days after the July 10, 1984 enactment). Therefore, we propose to delete the requirement in §302.33(e)(2) that States which take assignment of support rights in non-AFDC cases notify the individual that an assignment may have the effect of making the support debt dischargeable in bankruptcy.

We also propose to replace the reference in paragraph (e)(1) to taking assignments from an individual who "applies for services" with a reference to an individual who is "receiving services" under §302.33 and the reference in paragraph (e)(2) to the "applicant" with a reference to the "recipient" for consistency with other changes made in this proposed rule.

As a result of these proposed changes, §302.33(e) would be revised to indicate in paragraph (e)(1) that the IV-D agency may take an assignment of support rights not already assigned to the State from an individual receiving services under §302.33. However, an assignment by an individual under §302.33 would not constitute an assignment as defined in §301.1 and may not be a condition of eligibility for services under §302.33. Paragraph (e)(2) would require the IV-D agency, before the recipient of IV-D services makes an assignment of support rights, to inform the individual that the assignment is not a condition of eligibility for services.

4. Section 302.50 - Support obligations.

We propose to make a conforming change to §302.50, which addresses support obligations assigned to the State, by substituting the phrase "An assignment of support rights, as defined in §301.1 of this chapter, constitutes" for the phrase "The support rights assigned to the IV-D agency pursuant to §232.11 of this title or section 471(a)(17) of the Act constitute" in §302.50(a) to clarify that all support obligations assigned to the State, as defined in section 301.1, and not just assignments under AFDC and title IV-E foster care cases, are included in this provision.

Section 302.50(a)(3) exempted support obligations established prior to July 1, 1975, from the requirements of paragraphs (a)(1) and (2). Since all such obligations were required to be superseded with orders that meet the requirements of paragraphs (a)(1) and (2) no later than January 1, 1977, we propose to delete this paragraph. In concert with the deletion of §302.50(a)(3), we propose to delete the word "or" at the end of paragraph (a)(2) and add the word "or" at the end of paragraph (a)(1).

In §302.50(e), we propose to substitute the phrase "an assigned support obligation as defined under §301.1 of this chapter" for the phrase "a support obligation assigned under §232.11 of this title" and to clarify that no portion of child support collected which represents an assigned support obligation defined under §301.1 may be used to satisfy a medical support obligation unless the support order designates a specific dollar amount for medical purposes.

5. Section 302.51 - Distribution of support collections.

Section 302.51 sets forth requirements for distribution of support collections in AFDC cases. Paragraph (e) of that section contains requirements with respect to the transitional five-month period beginning after AFDC eligibility ends and ending when former AFDC cases become non-AFDC cases. To implement section 9141 of Pub.L. 100-203, which revised section 457(c) of the Act to delete this transitional period, we propose to incorporate certain aspects of the present §302.51(e) (for example, notice of the consequences of continuing to receive IV-D services) into §302.33 and delete the remainder of §302.51(e), as discussed earlier under changes to §302.33.

A new §302.51(e) would implement the new section 454(5)(B), added by section 9142 of Pub.L. 100-203, under which amounts collected pursuant to an assignment under section 1912 of the Act shall be made to the State for distribution pursuant to section 1912. Section 454(5)(B) also specifies that this distribution requirement shall not apply to payments for any month after the month in which the individual ceases to be eligible for medical assistance.

Proposed §302.51(e) would specify that amounts collected by the IV-D agency which represent specific dollar amounts designated for medical purposes in the order that have been assigned to the State under 42 CFR 433.146, shall be forwarded to the Medicaid agency for distribution under 42 CFR 433.154 and that this requirement shall not apply to such collections for any month after the month in which the individual ceases to be eligible for Medicaid. The Medicaid agency will be responsible for determining the status and extent of medical assistance provided to the family under the Medicaid program and for distributing the assigned collections in accordance with 42 CFR 433.154.

Distribution under §302.51(e) is limited to collections which represent a specific dollar amount designated in the support order for medical purposes for the following reasons. Section 306.51 requires IV-D agencies to petition to include health insurance that is available to the absent parent at reasonable cost in child support orders, unless satisfactory health insurance other than Medicaid is otherwise available to the custodial parent and child(ren). The IV-D agency also must take steps to enforce the health insurance coverage required by the support order if health insurance is available to the absent parent and has not been obtained at the time the order is entered. However, IV-D agencies are required to collect only specific dollar amounts designated in the support order for medical purposes. IV-D agencies are not responsible for collecting medical support in the form of health insurance payments unless collections are made pursuant to a cooperative agreement with the Medicaid agency under Subpart A of Part 306.

If a dollar amount which is designated in a support order for medical purposes is collected in an interstate case, the responding State IV-D agency would send it to the initiating State IV-D agency and the initiating State would be responsible for distribution in accordance with 42 CFR 433.154. Child support collections in interstate Medicaid-only cases would be forwarded to the initiating State IV-D agency which would be responsible for distribution to the family in accordance with the State's distribution policy in other non-AFDC cases.

In §302.51(f)(4), which requires that priority be given to collection of current support for former AFDC recipients, we propose a conforming amendment to change the citation from §302.51(e) to §302.33(a)(1)(iii).

6. Section 302.70 Required State laws.

We propose to revise §302.70(a)(3), which requires States to enforce overdue support due in IV-D cases by offsetting State income tax refunds, by deleting the references to support due individuals who are receiving aid under the AFDC and title IV-E foster care programs or who apply for services under §302.33. Section 302.70(a)(3) would require States to have in effect and use procedures for obtaining overdue support from State income tax refunds on behalf of individuals receiving IV-D services, in accordance with the requirements of §303.102. These revisions would clarify that IV-D agencies must use State income tax refund offset procedures in any appropriate IV-D case, including Medicaid only and former AFDC cases.

45 CFR PART 303

We propose to revise several sections in Part 303 to clarify that Medicaid-only and former AFDC cases are included as non-AFDC cases.

1. Section 303.10 - Procedures for Case Assessment and Prioritization.

Section 303.10, which specifies requirements any system implemented by a State for case assessment and prioritization must meet, presently requires in paragraph (b)(2) that the IV-D agency include all of its cases in the system, including AFDC, non-AFDC, and interstate cases. Rather than expand the types of cases listed to include Medicaid-only and former AFDC cases, we propose to delete reference to any type of case and simply indicate that all IV-D cases must be included in any case prioritization system in place in a State.

2. Section 303.52 - Incentive Payments to States and Political Subdivisions.

Section 303.52(a) contains definitions of terms used in §303.52, which sets forth requirements governing incentive payments to States and political subdivisions under the IV-D program. We propose to delete the words "and collections made under §302.51(e) of this chapter" from the end of the definition of non-AFDC collections because §302.51(e), governing treatment of former AFDC cases during the five-month transitional period, would be deleted in these proposed regulations. Section 458(b)(1) of the Act defines AFDC collections for purposes of computing incentives under the IV-D program to include only AFDC and title IV-E foster care cases and defines non-AFDC cases to be all other cases. Therefore, the definition of non-AFDC collections in §303.52(a) would include any collections on behalf of Medicaid-only applicants and recipients and any collections paid to former AFDC recipients.

3. Section 303.71 - Requests for Full Collection Services by the Secretary of the Treasury.

OCSE proposes to revise §303.71, which sets forth requirements for requesting full collection services by the Secretary of the Treasury, by clarifying in paragraph (b) that States may request the Secretary to certify the amount of child support owed in any IV-D case for full collection services under section 6305 of the Internal Revenue Code of 1954. Paragraph (c)(5) would specify that only the State that has taken an assignment as defined in §301.1 or an application or referral under §302.33 may request full collection services. These revisions would clarify that Medicaid-only cases and former AFDC cases are eligible for requests for full collection services by the Secretary of the Treasury if they meet the other requirements delineated in §303.71.

4. Section 303.72 - Requests for Collection of Past-Due Support by Federal Tax Refund Offset.

OCSE proposes to revise §303.72, which specifies requirements governing requests for collection of past-due support by Federal tax refund offset, to clarify that past-due support owed in Medicaid-only and former AFDC cases is eligible for Federal tax refund offset, if the requirements in §303.72 for submitting past-due support owed in non-AFDC cases are met. Although the Congress, as part of Pub.L. 100-203, did not amend section 464 of the Act governing the Federal income tax refund offset process to include assignment of support rights under section 1912 of the Act, we are using our general rulemaking authority, under section 1102 of the Act, to allow States to submit any past-due support which the State has agreed to collect in a IV-D case which meets conditions for submittal in Federal statute and regulations. We believe that these cases should have access to the same establishment and enforcement services as other IV-D cases and are extending access to this particularly effective enforcement technique to ensure equal access for all those in need of IV-D services.

Therefore, we propose to revise §303.72(a)(1) to specify that past-due support qualifies for offset if there has been an assignment of support rights under §232.11 of this title or section 471(a)(17) of the Act to the State making the request for offset or the IV-D agency is providing services under §302.33 of this chapter. We would amend the introductory language in paragraph (a)(3), which sets forth the conditions for submittal of past-due support in non-AFDC cases, to refer to support owed in cases where the IV-D agency is providing IV-D services under §302.33. All other requirements governing the submittal of past-due amounts in non-AFDC cases for Federal tax offset would apply in these cases, e.g., notice of offset and procedures for contesting.

We would amend §303.72(h)(1) which specifies requirements for distribution of amounts received by the IV-D agency as a result of Federal tax refund offset to include reference to proposed §302.51(e) which provides for distribution by the State of specific dollar amounts which are designated in the order for medical purposes. Past-due support which is designated for medical purposes in a support order and submitted for Federal tax refund offset must be distributed in accordance with proposed §302.51(e). All other past-due support due in Medicaid-only and former AFDC cases would be distributed in accordance with §302.51(b)(4) and (5).

Conforming amendments would be made to paragraphs (h)(3) and (4) and (i)(2) as follows. Section 303.72(h)(3) would be amended to specify that the IV-D agency must inform individuals receiving (as opposed to just those applying for) services under §302.33, in advance, that amounts offset will be applied first to satisfy any past-due support which has been assigned to the State in AFDC, Medicaid-only or title IV-E foster care cases. Section 303.72(h)(4) would be amended to require that, if amounts collected are in excess of the amounts required to be distributed under §§302.51(b)(4) and (5), 302.51(e) or 302.52(b)(3) and (4), the IV-D agency must repay the excess to the absent parent whose refund was offset or to the parties filing a joint return within a reasonable period in accordance with State law. Finally, §303.72(i)(2) would be revised to clarify that the IV-D agency may charge an individual, who is receiving non-AFDC IV-D services under §302.33(a)(1)(i) (those who apply) or (iii) (former AFDC cases), a fee for submitting past-due support for Federal tax refund offset, but must notify the individual in advance of the amount of any fee charged.

5. Section 303.102 - Collection of Overdue Support by State Income Tax Refund Offset.

We propose to revise §303.102, which sets forth requirements for collection of overdue support by State income tax refund offset, to clarify that Medicaid-only and former AFDC cases are eligible for the State income tax refund offset, if they meet the other requirements in §303.102. We would delete the references to AFDC and title IV-E foster care assignments, as well as reference to an application for IV-D services, and revise paragraph (a)(1) to specify that overdue support qualifies for State income tax refund offset if there has been an assignment as defined in §301.1 or the IV-D agency is providing services under §302.33.

We also propose to revise §303.102(c), which requires notice to the custodial parent in non-AFDC cases of how amounts offset will be distributed, to clarify that the IV-D agency must notify the custodial parent in advance when overdue support is submitted for offset: (1) That, for cases in which medical support rights have been assigned under 42 CFR 433.146, and amounts are collected which represent specific dollar amounts designated in the support order for medical purposes, amounts offset will be distributed under §302.51(e) of this chapter; and (2) if amounts offset will be applied first to satisfy any past-due support which has been assigned to the State under §232.11 of this title or section 471(a)(17) of the Act.

We propose to revise §303.102(f) to clarify that the fee for State tax refund offset which States may charge in non-AFDC cases may be charged only to those who are receiving non-AFDC IV-D service under §302.33(a)(1)(i) (those who apply) and (iii) (former AFDC cases).

Finally, we propose to revise §303.102(g)(1), which specifies the requirements for distribution of amounts received by the IV-D agency as a result of State income tax refund offset, to include in revised §303.102(g)(1)(i) and new §303.102(g)(1)(iv) reference to proposed §302.51(e) which provides for distribution by the State of specific dollar amounts which are designated in the order for medical purposes. Past-due support which is designated for medical purposes in a support order and submitted for State tax refund offset must be distributed in accordance with proposed §302.51(e). Reference to proposed §302.51(e) would be added to the distribution requirements for an AFDC case in §303.102(g)(1)(i). We also propose to revise §303.102(g)(1)(iii), which allows States to determine the order of distribution in non-AFDC cases, to exclude medical support collections which have been assigned under 42 CFR 433.146. Distribution of those collections would be addressed in §303.102(g)(1)(iv) under which, for cases in which medical support rights have been assigned under 42 CFR 433.146, amounts collected which represent specific dollar amounts designated in the support order for medical purposes must be distributed in accordance with proposed §302.51(e).

45 CFR Part 304

We propose several revisions to portions of Part 304 to clarify that Federal funding is available for necessary expenditures under a State's IV-D plan for Medicaid-only and former AFDC cases.

1. Section 304.20 - Availability and Rate of Federal Financial Participation.

OCSE proposes to revise §304.20, governing the availability and rate of Federal funding of IV-D expenditures, by deleting the references to assignment of rights under the AFDC and title IV-E foster care programs in paragraph (a)(1) and referring to assignments as defined under §301.1. We would also delete paragraphs (a)(2) and (b)(4)(ii) which refer to the availability of Federal funding for collection services pursuant to §302.51(e)(1) since we propose to delete current §302.51(e) and include services to former AFDC recipients under §302.33, referred to under current §304.20(a)(4). Current paragraphs (a)(3) and (4) would be redesignated as paragraphs (2) and (3); and current paragraphs (b)(4)(iii) through (vi) would be redesignated as (b)(4)(ii) through (v). These changes will clarify that Federal funding is available for necessary expenditures of providing IV-D services in Medicaid-only and former AFDC cases.

OCSE proposes to revise §304.20(b)(1), which specifies which administrative functions are reimbursable under the State IV-D plan, by adding a new §304.20(b)(1)(ix) to address the establishment of agreements with Medicaid agencies necessary to carry out required IV-D activities. Paragraph (b)(1)(ix) would specify that Federal funding is available for expenditures incurred in the establishment of agreements with Medicaid agencies necessary to carry out required IV-D activities. Such agreements could establish criteria for: 1) Referring cases to the IV-D agency; 2) reporting on a timely basis information necessary to the determination and redetermination of eligibility for Medicaid; 3) determining if individuals are cooperating adequately; and 4) transferring support collections from the IV-D agency to the Medicaid agency in accordance with proposed §302.51(e).

These agreements are not to be confused with cooperative agreements with Medicaid agencies under Subpart A of Part 306. The agreements addressed in paragraph (b)(1)(ix), as proposed, should cover only those activities necessary for the IV-D agency to carry out its required functions for Medicaid-only cases under the IV-D plan.

Finally, OCSE proposes to add a new §304.20(b)(4)(vi) to clarify that Federal funding under the IV-D program is available for costs incurred in making the Medicaid agency aware of amounts collected and distributed to the family for the purposes of determining eligibility for Medicaid.

45 CFR Part 305

We are not including any revisions to Part 305, which governs the audit of State IV-D programs, in this proposed regulation since we are in the process of revising Part 305 under separate proposed regulations as part of a plan to eliminate redundancy in Part 305 as it relates to other title IV-D regulations. We would audit State IV-D program performance in providing services in former AFDC cases and Medicaid-only cases by measuring compliance with applicable Federal requirements in the title IV-D regulations.

45 CFR Part 306

We propose to revise 45 CFR Part 306 to clarify that IV-D agencies must provide medical support enforcement services in Medicaid-only and former AFDC cases in accordance with the requirements of Subpart B. A IV-D agency may provide required medical support enforcement services, in addition to other services which are not mandatory, as part of a cooperative agreement with the Medicaid agency under Subpart A, as long as all program requirements governing medical support enforcement are met. For example, a IV-D agency may collect support designated in a support order as a specific dollar amount for medical purposes (a mandatory service), as well as seek health insurance payments (which is not a required IV-D activity) under a cooperative agreement with the Medicaid agency under Subpart A. Therefore, a IV-D agency is not precluded from meeting program requirements through cooperative agreement with the Medicaid agency. However, in accordance with §304.23(g), Federal funding under the IV-D program is not available for medical support enforcement activities performed under a cooperative agreement with a Medicaid agency under Subpart A.

OCSE proposes to revise §306.50, which requires IV-D agencies to secure medical support information, and §306.51, which sets forth requirements regarding securing and enforcement of medical support obligations, by substituting the phrase "an assignment as defined in §301.1 of this chapter is in effect" for "an assignment is in effect under §232.11 of this title or section 471(a)(17) of the Act" in both §306.50(a) and §306.51(b). OCSE also proposes to revise §306.50(b) by replacing the words "applies for" with the words "is eligible for" immediately before the words "services under §302.33".

We propose to revise §306.51(c) to clarify when notice and services under §306.51 must be provided in non-AFDC cases. Section 306.51(c) would provide that the IV-D agency shall inform an individual who is eligible for services under §302.33 that medical support enforcement services are available and shall provide the services specified in §306.51(b): 1) If an individual eligible for services under §302.33 is a Medicaid applicant or recipient; or 2) with the consent of the individual who is eligible for services under §302.33 and is not a Medicaid applicant or recipient, except that health insurance information shall not be transmitted to the Medicaid agency.

All of the foregoing revisions are proposed to clarify that IV-D agencies must provide medical support enforcement services to Medicaid-only and former AFDC cases, in accordance with §§306.50 and 306.51.

Regulatory Flexibility Analysis

The Secretary certifies, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (Pub.L. 96-354), that this regulation will not result in significant impact on a substantial number of small entities. The primary impact is on State governments and political subdivisions and we believe that this impact will be nominal because the proposal merely extends the provision of IV-D services to Medicaid-only applicants and recipients and eliminates the requirement that these applicants and recipients file an application and pay an application fee. This proposal also eliminates a mandatory transitional five-month period between the end of AFDC eligibility and transfer of a former AFDC case to non-AFDC status.

This automatic provision of IV-D services to certain families will not increase the IV-D caseloads in the States because most of the affected individuals are already, or would have become, non-AFDC IV-D recipients anyway by applying for services and paying the application fee, or by being automatically converted to non-AFDC status after the transitional five-month period ended.

Executive Order 12291

The Secretary has determined, in accordance with Executive Order 12291, that this rule does not constitute a "major" rule. A major rule is one that is likely to result in:

  • An annual effect on the economy of $100 million or more;
  • A major increase in costs or prices for consumers, individual industries, Federal, State or local government agencies, or geographic regions; or
  • Significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of the United States-based enterprises to compete with foreign-based enterprises in domestic or import markets.

The proposal is expected to have an insignificant impact on State and Federal expenditures because the proposal merely requires the provision of IV-D services to Medicaid-only applicants and recipients without filing an application or paying an application fee and automatically transfers former AFDC cases to non-AFDC status by eliminating a mandatory five-month transitional period during which they received the same services. This clarification will not significantly increase the IV-D caseloads in the States because most of the affected individuals are already receiving IV-D services or would have become IV-D cases under former procedures. These requirements merely eliminate the need to apply for services and pay the application fee in Medicaid-only cases and eliminate a transitional five-month period during which services were provided in former AFDC cases before those cases were automatically transferred to non-AFDC status.

List of Subjects

45 CFR Parts 301, 303, 304

Child support, grant programs/social programs, reporting and recordkeeping requirements.

45 CFR Part 302

Child support, grant programs/social programs, reporting and recordkeeping requirements, unemployment compensation.

45 CFR Part 306

Child support, grant programs/social programs, Medicaid, reporting and recordkeeping requirements.

[Catalog of Federal Domestic Assistance Program No. 13.783, Child Support Enforcement Program]

Dated: November 17,1988

Wayne A. Stanton,

Director, Office of Child Support Enforcement

Approved: December 29, 1988

Otis R. Bowen, M.D.

Secretary

For the reasons set out in the preamble, 45 CFR Parts 301 through 304 and Part 306 are proposed to be amended as follows:

PART 301 - [AMENDED]

1. The authority citation for Part 301 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396k.

2. Section 301.1 is amended by adding the definitions of the terms "Assigned support obligation" and "Assignment" after the definition of the term "Applicable matching rate", and adding the definition of the term "Medicaid-only applicant or recipient" after the definition of the term "IV-D Agency" to read as follows:

§301.1 General definitions.

* * * * *

"Assigned support obligation" means, unless otherwise specified, any support obligation which has been assigned to the State under §232.11 of this chapter or section 471(a)(17) of the Act, or any medical support obligation or payment for medical care from any third party which has been assigned to the State under 42 CFR 433.146.

"Assignment" means, unless otherwise specified, any assignment of rights to support under §232.11 of this chapter or section 471(a)(17) of the Act, or any assignment of rights to medical support and to payment for medical care from any third party under 42 CFR 433.146.

* * * * *

"Medicaid-only applicant or recipient" means any individual who has been determined eligible for or is receiving Medicaid under title XIX of the Act but not AFDC under title IV-A of the Act.

* * * * *

PART 302 - [AMENDED]

1. The authority citation for Part 302 continues to read as follows:

Authority: 42 U.S.C. 651 through 658, 660, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

2. Section 302.31 is amended by revising paragraphs (a)(1)and the first sentence of (a)(2), (b) and the first sentence of (c) to read as follows:

§302.31 Establishing paternity and securing support.

* * * * *

(a) * * *

(1) In the case of a child born out of wedlock with respect to whom an assignment as defined in §301.1 of this chapter is effective, to establish the paternity of such child; and

(2) In the case of any individual with respect to whom an assignment as defined in §301.1 of this chapter is effective, to secure support for a child or children from any person who is legally liable for such support, using State laws and reciprocal arrangements adopted with other States when appropriate.* * *

* * * * *

(b) Upon receiving notice from the IV-A, IV-E or Medicaid agency that there has been a claim of good cause for failure to cooperate, the IV-D agency will suspend all activities to establish paternity or secure support until notified of a final determination by the appropriate agency.

(c) The IV-D agency will not undertake to establish paternity or secure support in any case for which it has received notice from the IV-A, IV-E or Medicaid agency that there has been a finding of good cause unless there has been a determination by the appropriate agency that support enforcement may proceed without the participation of the caretaker or other relative. * * *

§302.32 [Amended]

3. Section 302.32 is amended by replacing the reference to "§302.51(e)(1)" in the last sentence of paragraph (b) with "§302.33".

4. Section 302.33 is amended by revising the title and paragraphs (a), (d)(1)(ii), (d)(5), and (e) to read as follows:

§302.33 Services to individuals not receiving AFDC or title

IV-E foster care assistance.

(a) Availability of Services. (1) The State plan must provide that the services established under the plan shall be made available to any individual who:

(i) Has not been determined eligible for or is not receiving assistance under the AFDC, the title IV-E foster care, or Medicaid programs who files an application for the services with the IV-D agency. In an interstate case, only the initiating State may require an application under this section; or

(ii) Is a Medicaid-only applicant or recipient; or

(iii) Is no longer eligible for assistance under the AFDC program.

(2) The State may not require an application, other request for services or an application fee from any individual who is eligible to receive services under paragraphs (a)(1)(ii) and (iii) of this section.

(3) The State may not charge fees or recover costs from any individual who is eligible to receive services under paragraph(a)(1)(ii) of this section.

(4) Whenever a family is no longer eligible for assistance under the State's AFDC program, the IV-D agency must notify the family that services will be continued unless the IV-D agency is notified to the contrary by a family which has not been determined eligible for or is not receiving Medicaid. The notice must inform the family of the consequences of continuing to receive IV-D services, including the available services and the State's fees, cost recovery and distribution policies. A family no longer eligible for AFDC which continues to be eligible for or is receiving Medicaid must be notified that it may not refuse IV-D services for Medicaid eligible dependents as long as they continue to be eligible for or to receive Medicaid.

* * * * *

(d) * * *

(1) * * *

(ii) From the individual who is receiving IV-D services under paragraph (a)(1)(i), or paragraph (a)(1)(iii) of this section, but only after Medicaid eligibility ends, either directly or from the support collected on behalf of the individual, but only if the State has in effect a procedure for informing all individuals authorized within the State to establish an obligation for support that the State will recover costs from the individual receiving IV-D services under paragraphs (a)(1)(i) and (iii) of this section.

* * * * *

(5) If a State elects to recover costs under this section, the IV-D agency must notify, consistent with the option selected, either the individual who is receiving IV-D services under paragraph (a)(1)(i) or (iii) of this section, or the individual who owes a support obligation that such recovery will be made. In an interstate case, the IV-D agency where the case originated must notify the individual receiving IV-D services of the States that recover costs.

* * * * *

(e) Assignment (1) The IV-D agency may take an assignment of support rights not already assigned to the State from an individual receiving services under this section. However, an assignment by an individual under this section does not constitute an assignment as defined in §301.1 of this chapter and may not be a condition of eligibility for services under this section.

(2) Before the recipient of IV-D services under this section makes an assignment of support rights, the IV-D agency shall inform the individual that the assignment is not a condition of eligibility for services under this section.

5. Section 302.50 is amended by revising paragraphs (a) and (e) to read as follows:

§302.50 Support obligations.

* * * * *

(a) An assignment of support rights, as defined in §301.1 of this chapter, constitutes an obligation owed to the State by the individual responsible for providing such support. Such obligation shall be established by:

(1) Order of a court of competent jurisdiction; or

(2) Other legal process as established by State laws, such as an administrative hearing process or a legally enforceable and binding agreement.

* * * *

(e) No portion of any amounts collected which represent an assigned support obligation defined under §301.1 of this chapter may be used to satisfy a medical support obligation unless the court or administrative order designates a specific dollar amount for medical purposes.

* * * * *

6. Section 302.51 is amended by revising paragraphs (e) and (f)(4) to read as follows:

§302.51 Distribution of support collections.

* * * * *

(e) The amounts collected by the IV-D agency which represent specific dollar amounts designated in the support order for medical purposes that have been assigned to the State under 42 CFR 433.146 shall be forwarded to the Medicaid agency for distribution under 42 CFR 433.154. This requirement shall not apply to such collections for any month after the month in which the individual ceases to be eligible for Medicaid.

(f) * * *

(4) For those case in which collections are authorized under §302.33(a)(1)(iii), priority shall be given to collection of current support.

7. Section 302.70(a)(3) is revised to read as follows:

§302.70 Required State laws.

(a) * * *

(3) Procedures for obtaining overdue support from State income tax refunds on behalf of individuals receiving IV-D services, in accordance with the requirements set forth in §303.102 of this chapter;

* * * * *

PART 303 - [AMENDED]

1. The authority citation for Part 303 continues to read

as follows:

Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).

2. Section 303.10(b)(2) is revised to read as follows:

§303.10 Procedures for case assessment and prioritization.

* * * * *

(b) * * *

(2) Include all of its cases in the system.

* * * * *

§303.52 [AMENDED]

3. Section 303.52(a) is amended by removing the words "and collections made under §302.51(e) of this chapter" at the end of the definition of "non-AFDC collections".

4. Section 303.71 is amended by revising the last sentence in paragraph (b) and revising paragraph (c)(5) to read as follows:

§303.71 Requests for full collection services by the Secretary of the Treasury.

* * * * *

(b) * * * Requests may be made on behalf of families who make assignments as defined in §301.1 of this chapter and on behalf of families receiving services under §302.33.

(c) * * *

(5) Only the State that has taken an assignment as defined in §301.1 of this chapter or an application or referral under §302.33 of this chapter may request IRS collection services on behalf of a given case.

* * * * *

5. Section 303.72 is amended by revising paragraphs (a)(1)and (3) introductory text, (h)(1), (3), and (4) and (i)(2) to read as follows:

§303.72 Requests for collection of past-due support by Federal tax refund offset.

(a) * * *

(1) There has been an assignment of the support rights under §232.11 of this title or section 471(a)(17) of the Act to the State making the request for offset or the IV-D agency is providing services under §302.33 of this chapter.

* * * * *

(3) For support owed in cases where the IV-D agency is providing IV-D services under §302.33 of this chapter:

* * * * *

(h) Distribution of collections. (1) Collections received by the IV-D agency as a result of refund offset to satisfy AFDC or non-AFDC past-due support shall be distributed as past-due support as required under §302.51(b)(4) and (5) and (e) of this chapter.

* * * * *

(3) The IV-D agency must inform individuals receiving services under §302.33 of this chapter in advance that amounts offset will be applied first to satisfy any past-due support which has been assigned to the State under §232.11 of this title, 42 CFR 433.146, or section 471(a)(17) of the Act and submitted for Federal tax refund offset.

(4) If the amount collected is in excess of the amounts required to be distributed under §§302.51(b)(4) and (5) and (e) or 302.52(b)(3) and (4) of this chapter, the IV-D agency must repay the excess to the absent parent whose refund was offset or to the parties filing a joint return within a reasonable period in accordance with State law.

* * * * *

(i) * * *

(2) The State IV-D agency may charge an individual who is receiving services under §302.33(a)(1)(i) or (iii) of this chapter a fee not to exceed $25 for submitting past-due support for Federal tax refund offset. The State must inform the individual in advance of the amount of any fee charged.

* * * * *

6. Section 303.102 is amended by revising paragraphs (a)(1), (c), (f) and (g)(1) (i) through (iii), and adding paragraph (g) (1) (iv) to read as follows:

§303.102 Collection of overdue support by State income tax refund offset.

(a) * * *

(1) There has been an assignment of the support obligation under §232.11 of this title or section 471(a)(17) of the Act or the IV-D agency is providing services under §302.33 of this chapter, and

* * * * *

(c) Notice to custodial parent. When overdue support is submitted for State tax refund offset, the IV-D agency must inform individuals receiving services under §302.33 of this chapter in advance:

(1) That, for cases in which medical support rights have been assigned under 42 CFR 433.146, and amounts are collected which represent specific dollar amounts designated in the support order for medical purposes, amounts offset will be distributed under §302.51(e) of this chapter; and

(2) If amounts offset will be applied first to satisfy any past-due support which has been assigned to the State under §232.11 of this title or section 471(a)(17) of the Act.

* * * * *

(f) Fee for certain cases. The State IV-D agency may charge an individual who is receiving services under §302.33(a)(1)(i) and (iii) of this chapter a reasonable fee to cover the cost of collecting past-due support using State tax refund offset. The State must inform the individual in advance of the amount of any fee charged.

(g) * * *

(1) * * *

(i) For an AFDC case, under §302.51(b)(4) and (5) and (e) of this chapter;

(ii) For a foster care maintenance case, under §302.52(b)(3) and (4) of this chapter; and

(iii) For a non-AFDC case, except as specified in paragraph (g)(1)(iv) of this section, by paying offset amounts to the family first or using them first to reimburse the State, depending on the State's method for distributing arrearage collections in non-AFDC cases.

(iv) For cases in which medical support rights have been assigned under 42 CFR 433.146, and amounts are collected which represent specific dollar amounts designated in the support order for medical purposes, under §302.51(e) of this chapter.

* * * * *

PART 304 - [AMENDED]

1. The authority citation for Part 304 continues to read as follows:

Authority: 42 U.S.C. 651 through 655, 657, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

2. Section 304.20 is amended by revising paragraph (a)(1); deleting paragraph (a)(2) and redesignating paragraphs (a)(3) and (4) as paragraphs (a)(2) and (3); adding paragraph (b)(1)(ix); removing paragraph (b)(4)(ii); redesignating paragraphs (b)(4)(iii) through (vi) as paragraphs (b)(4)(ii) through (v); and adding a new (b)(4)(vi) to read as follows:

§304.20 Availability and rate of Federal financial participation.

(a) * * *

(1) Necessary expenditures under the State title IV-D plan for the support enforcement services and activities specified in this section and §304.21 provided to individuals from whom an assignment of support rights as defined in §301.1 of this chapter has been obtained;

* * * * *

(b) * * *

(1) * * *

(ix) The establishment of agreements with Medicaid agencies necessary to carry out required IV-D activities and to establish criteria for:

(A) Referring cases to the IV-D agency;

(B) Reporting on a timely basis information necessary for the determination and redetermination of eligibility for Medicaid;

(C) Determining if individuals receiving Medicaid are cooperating adequately;

(D) Transferring collections from the IV-D agency to the Medicaid agency in accordance with §302.51(e) of this chapter.

* * * * *

(4) * * *

* * * * *

(vi) Making the Medicaid agency aware of amounts collected and distributed to the family for the purposes of determining eligibility for assistance under the State XIX plan.

(5) * * * * *

PART 306 - [AMENDED]

1. The authority citation for Part 306 continues to read as follows:

Authority: 42 U.S.C. 652, 654(4)(B), 654(5), 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p), and 1396(k).

2. Section 306.50 is amended by revising the introductory language in paragraphs (a) and (b) to read as follows:

§306.50 Securing medical support information.

(a) If the IV-A or IV-E agency does not provide the information specified in this paragraph to the Medicaid agency and if the information is available or can be obtained in a IV-D case for which an assignment as defined under §301.1 of this chapter is in effect, the IV-D agency shall obtain the following information on the case:

* * * * *

(b) When an individual is eligible for services under §302.33 of this chapter, the IV-D agency shall inform the individual that medical support enforcement services are available and shall secure the information specified in paragraph (a) of this section:

* * * * *

3. Section 306.51 is amended by revising the introductory language in paragraph (b) and revising paragraph (c) to read as follows:

§306.51 Securing and enforcing medical support obligations.

* * * * *

(b) With respect to cases for which there is an assignment as defined in §301.1 of this chapter in effect, the IV-D agency shall:

* * * * *

(c) The IV-D agency shall inform an individual who is eligible for services under §302.33 of this chapter that medical support enforcement services are available and shall provide the services specified in paragraph (b) of this section:

(1) If an individual eligible for services under §302.33 is a Medicaid applicant or recipient; or

(2) With the consent of the individual who is eligible for services under §302.33 and is not a Medicaid applicant or recipient, except that health insurance information shall not be transmitted to the Medicaid agency.

* * * * *

[FR Doc. 89-12313 Filed 5-22-89; 8:45 am]

BILLING CODE 4150-01-M