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All newsletters are downloadable from the MiSDU Website Volume 8, Issue 1

Inside this issueDepartments• Payment Processing ~ Research - CIRU

• Disbursements ~ Customer Service

• H R ~ Administration ~ Employer Outreach

• Quality Assurance ~ Training ~ IT

• Ancillary Services ~ Finance

Child Support and the Child Support and the Affordable Care ActAffordable Care Act

For decadesFor decades, the child support program has had a responsibility to secure health care coverage for each child on its caseload. Nationally, this goal is accomplished by establishing and enforcing medical support orders requiring parents to secure health care coverage or otherwise provide for the child’s health care needs.¹ In Michigan, the definition of “child support” includes the payment of medical and health care related expenses.² Similarly, there is a statutory requirement that child support orders require one or both parents to obtain or maintain health care coverage for their child that is available to them at a reasonable cost as a benefit of employment.

The Affordable Care Act (ACA)The Affordable Care Act (ACA) aims to increase the affordability and prevalence of health insurance coverage for Americans and reduce the overall costs of health care. The ACA requires insurance companies to cover all applicants within new minimum standards and offer the

same rates regardless of age, pre-existing conditions, or gender. Employers who have 50 or more full time employees are required to provide employer-provided health coverage.

Parents with a child support orderParents with a child support order will first look towards employers for health insurance coverage before determining if there is a self-coverage option that meets the criteria outlined under the ACA. Depending on its size, a company may be required to provide health coverage or pay an Employer Shared Responsibility Payment (ESRP).

Employer MandateEmployer Mandate

Businesses with 50 or more employeesBusinesses with 50 or more employees are considered a "large business" under the ACA. The ESRP is a requirement under the ACA that will apply to some larger companies with 100 or more full-time employees starting in 2015 and employers with 50 or more full-time employees starting in 2016.

To avoid an ESRPTo avoid an ESRP, employers will need to offer coverage to 70 percent of their full-time employees³ in 2015 and coverage to 95 percent of their employees in 2016 and beyond.

A large employer will be liableA large employer will be liable for an ESRP only if:

(a) The employer does not offer health coverage or offers coverage to less than 95% of its full-time employees and dependents, and at least one of the

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Child Support And the Affordable Care ActChild Support And the Affordable Care Act

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full-time employees receives a premium tax credit to help pay for coverage on a Marketplace;

OR

(b) The employer offers health coverage to at least 95% of its full-time employees, but at least one full-time employee receives a premium tax credit to help pay for coverage on a Marketplace.

Continued from page 1

If an employeeIf an employee’’s shares share of the premium for employer-provided coverage would cost the employee more than 9.5% of that employee’s annual household income, the coverage is not considered affordable for that employee. Because employers generally do not know their employees’ household incomes, employers can take advantage of one or more of the three “safe harbors” to estimate the cost of coverage to their employees: (1) W-2 wages, (2) the rate of pay, and (3) the federal poverty line.

If an employer meetsIf an employer meets the requirements of any of these safe harbors, coverage will be deemed affordable regardless of whether it was affordable to the employee for purposes of the premium tax credit.

When ESRP is AssessedWhen ESRP is Assessed

If a large employer does notIf a large employer does not offer coverage or offers coverage to fewer than 95% of its full-time employees, it owes an ESRP equal to the number of its full-time for the year multiplied by $2,000, as long as at least one full-time employee receives the premium tax credit.

If an employer offersIf an employer offers coverage for some months but not others, the ESRP is computed separately for each month that the employer did not offer coverage. Such an employer owes a monthly ESRP equal to the number of full-time employees employed for the month multiplied by 1/12 of the $2,000 fine.

The ESRP provides forThe ESRP provides for an inflation adjustment mechanism beginning in 2015.

Reasonable Cost v. ACAReasonable Cost v. ACA

In MichiganIn Michigan, when a friend of the court (FOC) office reviews health care coverage, the FOC uses a standard

of “reasonable cost.” The Michigan Child Support Formula (MCSF) states that the cost is “reasonable” where it does not exceed five percent of a parent’s gross income. When applying the MCSF reasonable cost definition, the FOC must use the amount that it costs a parent to add the child(ren) to existing coverage, or the difference between self-only and family coverage per federal regulations.

In contrastIn contrast, the ACA requires each person to have “minimum essential coverage” or qualify for an exemption for each month in the calendar year. People are required to have coverage outside of an exemption if insurance can be obtained at a rate of 8% or less than the household annual taxable income. The ACA does not examine the difference between self-only and family coverage.

For exampleFor example, let us assume that an obligor is required to provide health insurance for him/herself and one child under a child support order. Obligor’s annual household income is $40,000. Coverage through obligor’s employer is $200/month for personal coverage, but $300/month to cover obligor and the child (family coverage). Please see Chart A on page 3 to see how the assessment of “reasonable cost” and the ACA would break down.

What Does this Mean for Employers?What Does this Mean for Employers?

The ACA does not changeThe ACA does not change any health care coverage enforcement requirements for the child support program. While parents may not be required to have health insurance for themselves and their dependents under the ACA, they may still be required to have medical coverage for a dependent pursuant to the court order. Federal law requires child support orders to include a provision for healthcare coverage. FOC staff has been advised to continue to enforce healthcare coverage provisions, including the continued use of National Medical Support Notices (NMSNs).

The ACA assessesThe ACA assesses a tax penalty through the IRS if a parent does not provide health insurance for his or her dependent(s). This tax penalty does not affect the child support program.

As an employerAs an employer, we ask that you continue to comply with the NMSN. If coverage is not being supplied by your company, we ask that you refer parties to the Federal

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Family coverage: No. Since coverage of the family would be greater than the 8% standard set forth in the ACA, obligor would not be assessed an IRS penalty for not insuring him/herself or the child. The obligor could be eligible for a subsidy under the ACA to provide health insurance for the child, however, the obligor would avoid the IRS penalty.

Family coverage: Yes. 5% of obligor’s annual taxable income is $2,000. The cost of insuring the child is $1,200 a year. Since the cost of insuring the child is less than the 5% standard set forth in the MCSF, obligor will be required to provide coverage for the child.

Self-coverage: Yes. Obligor would be required to obtain health insurance, since Obligor self-coverage amount ($2,400) is less than the 8% standard ($3,600).

Self-coverage: No. Not required under MCSF.

ACA’s standard is 8% of taxable annual income. 8% of the $40,000 annual income is $3,200/year.

Michigan’s reasonable cost standard is 5% of the parent’s gross income, or the difference between self-only and family coverage. 5% of obligor’s income is $2,000.The difference between self-only coverage and family coverage is $100/month ($1,200/year).

Household income is $40,000Self-coverage is $200/month ($2,400/year)Family coverage is $300/month ($3,600/year)

Household income is $40,000Self-coverage is $200/month ($2,400/year)Family coverage is $300/month ($3,600/year)

Under the ACAUnder Reasonable Cost

Chart AChart A This article was written by Elizabeth A. Stomski, Management Analyst

State Court Administrative Office Friend of the Court Bureau

Child Support and the Affordable Care ActChild Support and the Affordable Care ActContinued from page 2

Reasonable Cost and ACA AssessmentReasonable Cost and ACA Assessment

Marketplace to find health insurance coverage. You canremind employees that exemption from the ACA does not exempt an employee from complying with court-ordered medical coverage.

When in doubtWhen in doubt, follow the court order and comply with the NMSN. If the employee has questions regarding exemptions or different financial circumstances under his or her court order, you can direct the employee to contact the local FOC for further investigation and possible modification.

¹ 42 USC § 652(f).² MCL 552.602(ee)³ For calculation of the ESRP, the IRS has determined it an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week.

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Processing Support ObligationsProcessing Support Obligations

The Michigan State Disbursement UnitThe Michigan State Disbursement Unit (MiSDU) is a federally mandated program, established by the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), commonly known as welfare reform. It is the main focus of all activity for Centralized Collections, a federally mandated program also established by the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), and is a component of the Title IV-D (child support enforcement) program.

We are your centralized locationWe are your centralized location for the collection and disbursement of support payments. If non-custodial parent income is subject to withholding, Federal law requires that all SDUs process payments under orders in all Title IV-D (4-D) cases, as well as all non Title IV-D cases in which the support order was initially issued in the state on or after January 1, 1994.

As an employerAs an employer, you share an important role in making sure that Michigan’s children receive the support they deserve.

Payment Related CorrespondencePayment Related Correspondence

Sometimes it is necessarySometimes it is necessary for employers to communicate changes to an employee’s status; including notices of termination, non-negotiable checks, and change of address requests. Please do not include these or other notifications in the same mailing as your payment. Remember that –

Post office boxes 30350 (for employers), and 30351 Post office boxes 30350 (for employers), and 30351 (for obligors), (for obligors), are specifically assigned by the Postal Service for payments only. Mail payments and remittances only to these two P.O. boxes.

A list of MiSDU mail boxesA list of MiSDU mail boxes and their assigned usage is below.

Employer Payments: P.O. Box 30350, Lansing, MI 48909-7850

Obligor Payments: P.O. Box 30351, Lansing, MI 48909-7851

Financial Correspondence & Miscellaneous: P.O. Box 30354, Lansing, MI 48908-7854

Please always include pertinent case information with your correspondence.

MiSDU MiSDU –– Your Centralized Single Collections SourceYour Centralized Single Collections Source

Case Related CorrespondenceCase Related Correspondence

All caseAll case--relatedrelated inquiries, including arrears, account balances, and all other correspondence that is not directly payment-related, are processed at the County that issued the order. Case related information must be directed to the appropriate County Friend of the Court.

Telephone number, fax number, and FOC Telephone number, fax number, and FOC addressaddress can be found on page 3 of 3 of the Income Withholding Notice.

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What Employers Should Know When Working With TribesWhat Employers Should Know When Working With TribesOffice of Child Support Enforcement, Administration for Children and Families, U.S. Department of Health and Human Services

Do tribes have their own child support programs?Do tribes have their own child support programs?

Many tribes operate federally funded child support programs, and more are developing programs. These tribal child support agencies are sometimes called “IV-D” (4-D) agencies. “IV-D” refers to the section of the Social Security Act that authorizes federal funding for the child support program.

Do Tribes have their own Laws?Do Tribes have their own Laws?

Yes. Tribes are sovereign nations and have their own governments with the authority to make and enforce laws, to adjudicate civil and criminal disputes, and to tax and license. A tribal child support agency has similar enforcement authority as a state child support agency and should be responded to accordingly.

Do tribal child support agencies use the Office of Do tribal child support agencies use the Office of Management and BudgetManagement and Budget--approved Income approved Income Withholding for Support (IWO) form?Withholding for Support (IWO) form?

Yes. Tribal child support agencies are required to use the Income Withholding for Support form (often called an Income Withholding Order or IWO) approved by OMB.

Must I honor an IWO from a tribe if I am not a tribal Must I honor an IWO from a tribe if I am not a tribal employer or located on tribal land?employer or located on tribal land?

Yes. You are required to honor an IWO from a tribal child support agency just as you would honor one from a

state child support agency.

Where should I send payments for an IWO Where should I send payments for an IWO that comes from a tribe?that comes from a tribe?

Send payments to the address indicated on the IWO. This may be the tribe’s accounting office, the tribal court, or it may be the tribal child support agency.

Must I honor a request for Verification of Must I honor a request for Verification of Employment (VOE) from a tribe if I am not a tribal Employment (VOE) from a tribe if I am not a tribal employer or located on tribal land?employer or located on tribal land?

Yes. Please complete all VOEs sent by a state or tribalchild support agency.

If a noncustodial parent/employee leaves my If a noncustodial parent/employee leaves my employment, where should I send the notification of employment, where should I send the notification of termination?termination?

Send the notice of termination to the address on the IWO.

Should I expect to receive a National Medical Should I expect to receive a National Medical Support Notice (NMSN) from a tribe?Support Notice (NMSN) from a tribe?

Probably not. Although a tribe can use the NMSN to seek health insurance for tribal children.

Questions? Contact Paige Hausburg, Tribal Coordinator, federal Office of Child Support Enforcement at paige.hausburg@acf.hhs.gov or 202-401-5635.

Thank you for helping tribal children!

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Employer Advisory CommitteeEmployer Advisory Committee

If you are an employer who would like the opportunity to share ideas, concerns and solutions relevant to child support administration, please call 1-800-817-0805, or email misduoutreach@michigan.gov.

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� 800-817-0805 | � 517-318-4699 | � misduoutreach@michigan.gov | � www.misdu.com

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The SDU Comes ThroughThe SDU Comes Through

On Monday, January 6, 2014On Monday, January 6, 2014, Ingham County, Michigan and the surrounding areas were hit with a massive snowstorm, with record snow accumulations starting Sunday afternoon through Monday morning. As a result, almost all localities in the county declared snow emergencies, including the city in which the Michigan State Disbursement Unit (MiSDU) is located.

MiSDU operations beginMiSDU operations begin every day at 3:30 a.m., with the first mail drops and deliveries starting at 4:00 a.m.

MiSDU staff that could, braved the roads to be availableto accept the mail deliveries. Upon learning that the mail courier was prohibited from travelling the roads, vendor and state staff personally went to the post office to collect the day’s mailed payments. Although short-staffed, they diligently processed all incoming payments with the same level of accuracy and quality as expected and experienced on a daily basis (99.9% accuracy).

Because the mail courier wasBecause the mail courier was still prohibited from travelling the roads in the afternoon, MiSDU staff personally delivered the day’s check disbursements to the post office. They successfully completed every receipt and disbursement process by 5:00 p.m. – as they do all year long. Customer service staff were available all day to address child support customer questions and inquiries. As a result of their diligence, staff processed - and customers benefited from the following:

• Total Payments Received - $5,573,156.13 (36,747 transactions)

• Total Checks Disbursed - $2,330,724.25 (6,340 Checks)

• Total Direct Deposits - $4,844,101.16 (27,709 transactions)

• Total Calls received – 868

• Total calls answered – 848

by Pratin Trivedi – MiSDU Director

Whatever the seasons may bring, Whatever the seasons may bring, MiSDU remains committed to providing excellent customer service to the children of Michigan.

A Very Special Delivery