Medicaid

Ensuring that Noncustodial Parents Provide Health Insurance Can Save Costs Gao ID: HRD-92-80 June 17, 1992

In fiscal year 1990, the states and the federal government spent $18 billion on medical assistance for low-income families with children. GAO found that the states are not ensuring that noncustodial parents provide health insurance for their children, even when such insurance is available through the noncustodial parents' employers. GAO estimates that the states and the federal government could save at least $122 million in medical costs annually if noncustodial parents provided health insurance available through their jobs. Two main problems limit the effectiveness of state enforcement. First, federal requirements are vague, allowing wide variability in the laws and practices states have adopted to enforce medical support. Second, employers covered by the Employee Retirement Income Security Act of 1974 who self-insure can exclude a noncustodial parent's children from coverage. Since state authority over these employers' plans is limited, states cannot compel their compliance with state medical support requirements. GAO recommends that Congress require states to pass effective enforcement laws and that state medical support responsibilities be clarified. GAO also recommends that Congress broaden current state authority over plans covered by the Employee Retirement Income Security Act.

GAO found that: (1) states are not ensuring that noncustodial parents provide health insurance to their children; (2) states and the federal government could save about $122 million annually if noncustodial parents provided insurance available through their employers; (3) federal requirements permit wide variability in state laws enforcing medical support; and (4) employer health plans covered by the Employee Retirement Security Act of 1974 (ERISA) can exclude noncustodial parents' children from coverage, and states cannot compel coverage with their medical support requirements.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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