Employers Face Potential New Responsibilities Under Welfare Reform

Employers should also be aware of aspects of the new welfare reform act, the Personality Responsibility and Work Opportunity Reconciliation Act of 1996 ("Welfare Act"). Since 1993, administrators of group health plans have been required to honor "qualified medical child support orders" ("QMCSOs") issued by courts of competent jurisdiction. A QMCSO is a court judgement, decree or order, including a court approved settlement, that (a) provides for child support related to health benefits with respect to the child of a group health plan participant, or requires health benefit coverage of such child and is ordered under state domestic relations laws or (b) enforces a state medical child support law enacted under the Social Security Act. The Welfare Act amended ERISA to include medical child support orders issued through an administrative process established under state law that has the force and effect of law under applicable state law; essentially, plan administrators are required to honor QMCSOs issued by authorized state agencies.

Therefore, employers and plan administrators must have procedures in place to notify participants when the plan has received an order and to inform participants of the plan's procedures for determining if the order is a QMCSO. Plan administrators should also have in place procedures to alter an employee's enrollment status and to adjust an employee's salary reductions, if any, in light of a QMCSO.

As state agencies become more accustomed and, therefore, more prone to issuing QMCSOs, it will become more and more imperative that plan administrators prepare appropriate internal procedures to address the proper enrollment of dependent children in group health plans pursuant to QMCSOs. If you have any questions regarding a QMCSO or would like assistance in establishing procedures to accommodate QMCSOs, please contact a member of the Employee Benefits and Executive Compensation Group.