Question: What are the action items for employers that receive a National Medical Support Notice (NMSN) requiring coverage for an employee’s child(ren)?
Short Answer: The NMSN serves as legal notice that the employee is obligated by a court or administrative child support order to provide health coverage for the child(ren). Employers need to promptly respond and complete the enrollment to satisfy their obligations under the NMSN.
General Rule: ERISA Preemption of State Court Orders
ERISA expressly preempts state laws that relate to ERISA plans. Unless an exception applies as described below, state domestic relations and related court orders are therefore preempted by ERISA. This means that a state court order purporting to affect the terms of an ERISA plan, including the plan’s eligibility terms, is not enforceable against the plan.
The result is that the terms of the plan govern as written and cannot be modified by the terms of any such order.
For more details, see:
Exception to ERISA Preemption: Qualified Medical Child Support Orders (QMCSOs)
ERISA has created certain exceptions to federal preemption that make specific state domestic relations orders enforceable against an ERISA plan. The primary exceptions are Qualified Domestic Relations Orders (QDROs) that provide rights to a portion of an employee’s 401(k) or pension plan, and Qualified Medical Child Support Orders (QMCSOs) that require employees to cover a child under a health plan.
When these state orders meet the “qualified” standards set forth in ERISA, they must be given effect. The preemption exception for QMCSOs is set forth in ERISA §609.
Nationwide Uniform Version of QMCSO: National Medical Support Notice (NMSN)
An NMSN is a form of QMCSO that has been standardized in a uniform format to assist child support agencies, courts, and employers. As with a standard QMCSO, the NMSN serves as legal notice that the employee identified is obligated by a court or administrative child support order to provide health care coverage for the child(ren) identified.
The NMSN is divided into two parts, Part A and Part B. Part A is a Notice to Withhold for Health Care Coverage and includes the Employer Response and instructions. Part B is a Medical Support Notice to the Plan Administrator and includes the Plan Administrator Response and instructions.
Blank versions of both Part A and Part B are available through the HHS Office of Child Support Enforcement division and the DOL’s QMCSO Guide:
Child support agencies send the NMSN to employers when:
- A new child support order is issued requiring a (typically noncustodial) parent-employee to provide medical coverage;
- An existing NMSN is modified;
- The parent-employee ordered to provide health coverage has a change in employment; and
- It is not clear that the employer is complying with an existing order requiring the parent-employee to provide coverage.
The NMSN is deemed to be a valid and enforceable QMCSO if it is properly completed with the name of the issuing agency, the name and mailing address of the employee and child(ren) (or the name and address of a substituted official or agency in place of the child’s), and identification of an underlying child support order.
NMSNs include check boxes to specify in which lines of group health coverage the employee and child(ren) must be enrolled pursuant to the underlying child support order. These include medical, dental, vision, prescription drug, mental health, other (as specified), or all health coverages available.
NMSN Employer Responsibility #1: Notify the Employee and Child(ren)
Employers have an obligation to “promptly” notify the employee and child(ren) of the NMSN, and within a “reasonable period” notify the employee and child(ren) of its determination whether the NSMN is valid and enforceable.
The “prompt” timeframe for notifying the employee and child(ren) of receipt of the NMSN is not defined. California Child Support Services directs employers to complete this step by providing a copy of the NMSN within 10 days. That seems appropriate as a general rule of thumb.
DOL guidance states that the “reasonable” timeframe for notifying the employee and child(ren) whether the order is valid and enforceable “will depend on the circumstances,” and that “an order that is clear and complete when submitted should require less time to review than one that is incomplete or unclear.” Given that the employer response to the issuing agency is due within 20 business days as an outer limit, a 20 business-day outer limit for notifying the employee and child(ren) is likely an appropriate timeframe, too.
The NMSN instructions provide that notifying the custodial parent of the order is deemed to also notify the child(ren) if they reside at the same address. The instructions also provide that any of these employer notifications to the employer and child(ren) can be satisfied by sending a copy of the NMSN and completed Part B Plan Administrator Response, which is likely the simplest path for most employers as a way to satisfy both the employee and child(ren) notification obligations quickly and simultaneously.
NMSN Employer Responsibility #2: Complete Part A (Employer Response)
Employers must complete and return to the issuing agency the “Employer Response” section in Part A of the NMSN within 20 business days after the date of the notice, or sooner if reasonable.
Assuming the plan is maintained by the employer (as opposed to, for example, an outside union multiemployer plan), the employer can ignore the directions related to forwarding the response to the plan administrator. The employer is also the plan administrator in a single employer plan.
The Employer Response form directs the employer to notify the issuing agency of any reasons why the NMSN may not be sufficient to secure coverage for the named child(ren). Examples include the named individual is not an employer, the health plan does not offer child coverage, the employee is not eligible for the plan or has not satisfied the applicable waiting period, or there are income withholding limitations that prevent the employer from taking the requisite employee-share of the premium.
Where none of those barriers are an issue (as in the vast majority of cases), the employer simply completes the contact information section and moves on to Part B.
NMSN Employer Responsibility #3: Complete Part B (Plan Administrator Response)
Assuming the plan is a single employer plan maintained by the employer (as opposed to, for example, an outside union multiemployer plan), the employer is also the plan administrator. Therefore, in most cases the employer is also responsible for completing the “Plan Administrator Response” section in Part B of the NMSN.
Although the Plan Administrator Response is due back to the issuing agency within 40 business days after the date of the notice, or sooner if reasonable, employers that are also the plan administrator should generally aim to provide both the Employer Response from Part A and the Plan Administrator Response from Part B within the 20-business day outer limit set forth in Part A to satisfy both obligations simultaneously.
If the employee is already enrolled in coverage, the Plan Administrator Response requires the employer to state when the child(ren) coverage will be effective in Response 2, as well as the provider, policy, and group numbers for such coverage if fully insured.
If the employee is not currently enrolled and there are multiple plan options available, the employer will complete Response 3 to notify the issuing agency of those available plan options, and which option the employee and child(ren) will be enrolled in by default if the issuing agency does not respond within 20 business days selecting a specific plan option. It generally makes sense to rely on the lowest-cost plan as the default coverage for these purposes because the employee will be required to pay the employee-share of the premium for such coverage.
If the employee is not currently enrolled and is subject to a waiting period that has not yet been satisfied, the employer will complete Response 4 to notify the issuing agency of the waiting period status (i.e., date of expiration or other requirement such as hours worked).
In the rare case that the employer determines the NMSN is not a valid QMCSO, the employer will notify the issuing agency of the flaws with the order in Response 5.
NMSN Employer Responsibility #4: Enrollment as of Earliest Possible Date
DOL guidance provides that the employer must enroll the child(ren) as of the “earliest possible date” following its determination that the order is a valid NMSN.
The example provided states that if employers typically enroll new participants as of the first day of each month, the plan would be required to provide coverage for the child(ren) as of the first day of the first month following the determination that the order is qualified (i.e., a valid NMSN).
Important Note: If the employee is not already enrolled, DOL guidance and the NMSN instructions confirm that the NMSN will require the employer to enroll both the employee and the child(ren) to provide coverage.
NMSN Employer Responsibility #5: Mandatory Enrollment and the Employee-Share of the Premium
A QMCSO, including the NMSN variety discussed here, is the only time the employer may and must involuntarily enroll employees and compel them to pay for the cost of their coverage and the required child(ren) coverage.
In other words, the employer is required to enroll both the employee (if not already enrolled) and the child(ren) even if the employee does not want the enrollment. There is no election process for the employee in the NMSN process. Assuming the employee and child(ren) are eligible, the employer must complete the enrollment of the child(ren) (and the employee if not previously enrolled) regardless of the employee’s wishes.
Of course, the main reason an employee would not desire such enrollment would be the required employee-share of the premium for the coverage. The QMCSO and NMSN rules provide that the employee is required to bear such costs—even if the withholding for the enrollment is involuntary.
DOL guidance confirms this point and provides additional information related to wage withholding limitations as follows (Q 2-9):
“The Notice provides that the employee named in the Notice is liable for any employee contributions required under the plan for enrollment of the children. However, if Federal or state withholding limitations prevent the withholding of the required employee contributions from the employee’s paycheck, the plan is not required to provide coverage to the child. The employer is required to notify the state agency if such withholding limitations prevent the withholding of the required employee contributions. (See Qs 1-25 and 1-26).” (emphasis added)
Page 2 in Part A of the NMSN includes more details on the limitations on withholding. Furthermore, the HHS Office of Child Support Enforcement provides an extensive state-by-state income withholding matrix with an overview of the applicable federal (CCPA) and state wage withholding limits, priorities, and timeframes. The Employer Response in Part A includes a checkbox (#5) for the rare scenario where state or federal wage withholding limitations prevent enrollment.
NMSN Employer Responsibility #6: Section 125 Permitted Election Change Event for Pre-Tax Payment
Enrollment of the child(ren) (and the employee if not previously enrolled) pursuant to a QMCSO (including an NMSN) creates a Section 125 permitted election change event. Therefore, in connection with the mandatory mid-year enrollment pursuant to the NMSN, the employee may pay the employee-share of the premium for the coverage on a pre-tax basis through the Section 125 cafeteria plan.
NMSN Employer Responsibility #7: Monitor Duration of the Order
The instructions in Part B of the NMSN provide that the order requiring coverage for the child(ren) remains in effect until:
- The employer receives written notice that the court or administrative child support order is no longer in effect;
- The employer receives written notice that the child is or will be enrolled in comparable coverage which will take effect no later than the date coverage will end under the employer’s plan;
- The employer eliminates child coverage for all employees; or
- COBRA is not elected or the maximum coverage period expires.
The HHS Office of Child Support Enforcement revised Part A of the NMSN in 2019 to include a new checkbox at the top of the form indicating termination of the order, plus additional information on page 2 outlining the effective date and reason for termination. This is now an optional method for child support agencies to notify employers that the medical support order has termination. Related guidance from the Office of Child Support Enforcement provides that upon receipt of a NMSN termination order, employers may terminate coverage for the named child(ren) unless the employee voluntarily wishes to continue the coverage.
If an employee terminates employment while the NMSN is in effect, the employer must promptly notify the issuing agency listed in the order of the termination. The Part A instructions provide that employers can satisfy this obligation by sending a new copy of the Part A Employer Response with Response 4 checked, or by sending the issuing agency a copy of the COBRA election notice.
Note that in this situation DOL guidance confirms the children have the right to elect COBRA as qualified beneficiaries. The DOL guidance also confirms that if the plan terminates coverage upon the employee’s termination from employment, and neither the employee nor the children elect COBRA, the plan may discontinue coverage for the children. However, Office of Child Support Enforcement guidance confirms that the employer must continue to enforce the NMSN to cover the children if the employee elects COBRA—even if that election is purportedly limited to self-only coverage.
Summary: Employer NMSN Obligations Overview
The following approach for employers will apply in most situations upon receipt of an NMSN:
- Notify the Employee and Child(ren)
- Prompt notification of existence of the order required (10-day rule of thumb).
- Notification required within a reasonable timeframe as to whether order is valid (20-day outer limit).
- Best practice: Satisfy both notices simultaneously by providing a copy of the NMSN and the completed Part B Plan Administrator Response within 10 days.
- Complete Part A: Employer Response
- Respond to issuing agency within 20 business days after the date of the notice, or sooner if reasonable.
- Best practice: Satisfy Part A and Part B responses simultaneously by responding to both within 20 business days after the date of the notice.
- Complete Part B: Plan Administrator Response
- Respond to issuing agency within 40 business days after the date of the notice, or sooner if reasonable.
- Best practice: Satisfy Part A and Part B responses simultaneously by responding to both within 20 business days after the date of the notice.
- Health Plan Enrollment as of the Earliest Possible Date
- Enroll the child(ren) (and the employee if not previously enrolled) as of the earliest possible date following the determination that the order is a valid NMSN.
- the child(ren) as of the first day of the first month following the determination that the order is a valid NMSN.
- Mandatory Enrollment and the Employee Share of the Premium
- Complete the enrollment of the child(ren) (and the employee if not previously enrolled) regardless of the employee’s wishes.
- Confirm the employee-share of the premium is within applicable federal and state wage withholding limitations.
- Best practice: Be clear about the cost to the employee in any communications to minimize the chance of the enrollment process becoming contentious.
- Section 125 Permitted Election Change Event for Pre-Tax Payment
- The employee may pay the employee-share of the premium for the coverage on a pre-tax basis through the Section 125 cafeteria plan.
- Best practice: There is almost no scenario where the employee would not prefer to make payments for the coverage pre-tax.
- Monitor Duration of the Order
- The NMSN will terminate upon receipt of written notice that the order is terminated or the child has enrolled in other comparable coverage.
- Best practice: Remember the employer must promptly notify the issuing agency when child coverage ends because the employee terminated employment and did not elect COBRA.
Additional NMSN Government Resources
(a) Group health plan coverage pursuant to medical child support orders.
(1) In general. Each group health plan shall provide benefits in accordance with the applicable requirements of any qualified medical child support order. A qualified medical child support order with respect to any participant or beneficiary shall be deemed to apply to each group health plan which has received such order, from which the participant or beneficiary is eligible to receive benefits, and with respect to which the requirements of paragraph (4) are met.
(3) Information to be included in qualified order. A medical child support order meets the requirements of this paragraph only if such order clearly specifies—
(A) the name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate recipient covered by the order, except that, to the extent provided in the order, the name and mailing address of an official of a State or a political subdivision thereof may be substituted for the mailing address of any such alternate recipient,
(B) a reasonable description of the type of coverage to be provided to each such alternate recipient, or the manner in which such type of coverage is to be determined, and
(C) the period to which such order applies.
(5) Procedural requirements.
(A) Timely notifications and determinations. In the case of any medical child support order received by a group health plan—
(i) the plan administrator shall promptly notify the participant and each alternate recipient of the receipt of such order and the plan’s procedures for determining whether medical child support orders are qualified medical child support orders, and
(ii) within a reasonable period after receipt of such order, the plan administrator shall determine whether such order is a qualified medical child support order and notify the participant and each alternate recipient of such determination.
29 CFR §2590.609-2:
(a) This section promulgates the National Medical Support Notice (the Notice), as mandated by section 401(b) of the Child Support Performance and Incentive Act of 1998 (Pub. L. 105-200). If the Notice is appropriately completed and satisfies paragraphs (3) and (4) of section 609(a) of the Employee Retirement Income Security Act (ERISA), the Notice is deemed to be a qualified medical child support order (QMCSO) pursuant to ERISA section 609(a)(5)(C). Section 609(a) of ERISA delineates the rights and obligations of the alternate recipient (child), the participant, and the group health plan under a QMCSO. A copy of the Notice is available on the Internet at www.dol.gov/dol/pwba.
(b) For purposes of this section, a plan administrator shall find that a Notice is appropriately completed if it contains the name of an Issuing Agency, the name and mailing address (if any) of an employee who is a participant under the plan, the name and mailing address of one or more alternate recipient(s) (child(ren) of the participant) (or the name and address of a substituted official or agency which has been substituted for the mailing address of the alternate recipient(s)), and identifies an underlying child support order.
Treas. Reg. §1.125-4(d):
(d) Judgment, decree, or order.
(1) Conforming election change. This paragraph (d) applies to a judgment, decree, or order order) resulting from a divorce, legal separation, annulment, or change in legal custody (including a qualified medical child support order as defined in section 609 of the Employee Retirement Income Security Act of 1974 (Public Law 93-406 (88 Stat. 829))) that requires accident or health coverage for an employee’s child or for a foster child who is a dependent of the employee. A cafeteria plan will not fail to satisfy section 125 if it—
(i) Changes the employee’s election to provide coverage for the child if the order requires coverage for the child under the employee’s plan; or
(ii) Permits the employee to make an election change to cancel coverage for the child if:
(A) The order requires the spouse, former spouse, or other individual to provide coverage for the child; and
(B) That coverage is, in fact, provided.
(2) Example. The following example illustrates the application of this paragraph (d):
(i) Employer M maintains a calendar year cafeteria plan that allows employees to elect no health coverage, employee-only coverage, employee-plus-one-dependent coverage, or family coverage. M’s employee, A, is married to B and they have one child, C. Before the beginning of the year, A elects employee-only health coverage. Employee A divorces B during the year and, pursuant to A’s divorce agreement with B, M’s health plan receives a qualified medical child support order (as defined in section 609 of the Employee Retirement Income Security Act of 1974) during the plan year. The order requires M’s health plan to cover C.
(ii) Under this paragraph (d), M’s cafeteria plan may change A’s election from employee-only health coverage to employee-plus-one-dependent coverage in order to cover C.
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