Child Support and the Employer

Transcription

1 Child Support and the Employer An Update From the Federal Perspective Nancy Benner Employer Services Team Federal Office of Child Support Enforcement

2 The Child Support Enforcement Program Established in 1975 as a cost-recovery program and was expanded in the 1980 s to be available to all states State/county-run programs have variations due to state options Federal government provides oversight, policy and funding 2

3 What s New in Child Support? Changes to the Income Withholding Order for Support (IWO) form Lump sum payments Federal/state fees Medical support E-payments E-IWO Insurance Match Initiative Passport Denial Program 3

4 Income Withholding Order (IWO) Revised, fall 2007

5 Changes to the IWO Child s name and date of birth - Moved to front of form Termination of IWO - Separate page Lump sum payments 5

6 Lump Sum Payments Lump sum payments are defined according to state statutes. Not all states have a legislative definition of lump sum payments. Some states include certain lump sum payments in their state s s definition of income. States use a variety of documents to collect lump sum payments, e.g. a lien/levy. 6

7 States Requiring Lump Sum Reporting 7

8 Lump Sum Payments Lump sum payments may include: Bonuses Severance pay Sick pay Vacation pay Insurance settlements Commissions Stock options Lottery winnings Awards Payments as a result of verdicts 8

9 Medical Support Deficit Reduction Act of 2005, Public Law : 171: States required to consider health care coverage available from either custodial or noncustodial parent. An employer may receive an order to put a child on the custodial parent s health insurance policy. An employer may receive an order for cash medical support. 9

10 Federally Mandated Fees Deficit Reduction Act of 2005, Public Law : 171: Mandatory annual $25 fee in never-tanf child support (IV-D) cases in which a state collected and paid at least $500 in support to families in an FFY or SFY States have 4 options: 1. Retain from support collected 2. Collect from individual applying for child support services 3. Collect from the noncustodial parent (ID, IN, MI, MS); GA splits cost between CP and NCP 4. Pay with state funds 10

11 State Fees Employers may receive order to collect an annual or other processing fee from the employee/non-custodial parent. A few states (GA, IN, ID, NV, WI) have imposed these fees. 11

12 Electronic Payments (E-Payments) Benefit employers, state t child support agencies and families: cheaper, faster, safer, more accurate Most large employers and payroll service providers remit e-payments through the ACH network 12

13 E-Payment Statistics E-payments to states are increasing. Percent of payments received electronically at state disbursement units (SDUs): % 33% 38% 13

14 States Requiring E-Payments 14

15 Getting Set Up for E-Payments Contact t your bank to discuss sending ACH credit payments, ask for Treasury Management Contact the state where you send the most payments, see the EFT Contact list Perform case reconciliation - exchange information by encrypted Send a test or zero dollar file Go live 15

16 Web-Based Payments Designed for small- to mid-sized employers 28 states offer web-based based payment services: AR, CA, FL, IA, ID, IL, IN, LA, MA, MD, MI, MO, MN, MT, NC, NE, ND, NH, NY, OH, OK, OR, PA, TN, TX, VA, WA, WV 16

17 Where are you sending your payments? To the SDU? To the custodial parent or a private attorney? To a court? To a private collection agency? Federal law requires almost all payments to be sent to the SDU. 17

18 Independent Contractor Reporting 12 states/territories mandate reporting: AL, CA, CT, GU, IA, MA, ME, MI, MN, NH, NJ, and OH State-specific thresholds for reporting independent contractors: CA & MA if paid > $600 CT if paid > $500 GU, ME, MN only state agencies required to report IA must be 18 years old and working in Iowa 18

19 OCSE Insurance Match Deficit Reduction Act of 2005 authorized OCSE to compare delinquent obligor data with information maintained by insurers (or their agents) concerning claims, settlements, payments and awards OCSE provides matched data to state t CSE agencies Voluntary for insurers and states t 19

20 Insurance Match Options Matching Partners: OCSE provides insurer (or agent) with insurance-match-eligible obligors for comparison with claims, payments, awards and settlements; insurer returns matches to OCSE Insurer provides OCSE with claims data for comparison with insurance-match match-eligible obligors 20

21 Self-Insured Options Self-insured employers may also participate using these options: Sign ISO/Claims Repository Authorization i for matching Submit all claims to OCSE for matching Receive OCSE debtor file, conduct match and return matches 21

22 Passport Denial Program Implemented in 1998 through Dept. of State Denies passports to delinquent parents owing more than $2, passports denied daily $21,000 average arrearage per NCP $144 million collected to date Largest lump sum payment reported to date: $311,491 22

23 Electronic Income Withholding Order (E-IWO)

24 What is an e-iwo? States create IWOs in an electronic file no paper sent to the employer States, tribes, territories send IWOs electronically. Employers accept and process IWOs electronically Federal Employer Identification Number (FEIN) is the KEY identifier Electronic acknowledgement from employer advises state of e-iwo status Also handles terminations and lump sum payments 24

25 Background Several states and employers have implemented some form of electronic income withholding Notice/Order To Withhold Income For Child Support form modified in 2004 AT Unique opportunity to develop a standardized electronic format for income withholding 25

26 How We Began First meeting in Chicago August 2004 Attended by 11 employers and 18 states, tribes, and territories Formed workgroups that designed and developed: Flat file layouts and XML schema based on the Order/Notice form An electronic acknowledgement process from employers to states Flat file layouts and XML schema based on the acknowledgement process/design 26

27 The Pilot Established between several states and employers Tested layouts and process developed by the workgroup 27

28 Pilot Implementations State/Employer Format Methodology Indiana/Meijer Indiana/DFAS Colorado/Labor Ready Texas/Labor Ready Texas/H.E. Butt Grocery Oklahoma/DFAS Oregon/DFAS North Carolina/DFAS Flat File Flat File XML XML Flat File Flat File Flat File Flat File Secure File Transfer Protocol (SFTP) OCSE Network State Portal State Portal State Portal OCSE Network OCSE Network OCSE Network Virginia/DFAS Flat File OCSE Network 28

29 Future Implementations California with DFAS Massachusetts with DFAS Nebraska with DFAS Washington with DFAS North Dakota with DFAS 29

30 Preparing to Implement Clean up FEINs and synchronize existing IWOs between states and employers Both employers and states make necessary system changes to accept and process e-iwo data files Record layouts based on IWO form 30

31 Employer Workgroup Some of the larger employers/income payers include: ADP American Airlines Ceridian Chrysler Ford General Motors Labor Ready SSA USPS Verizon Wal-Mart Waste Management Home Depot 31

32 Now It s a Portal A place for states, tribes, territories and employers to pick up and drop off e-iwo files Ability to translate and forward file formats Secure environment SFTP and data is encrypted Portal implementations: Indiana with USPS 11/07 New York testing ti with USPS 3/08 32

33 Electronic Income Withholding Process OCSENet 1. e-iwos are pulled from states via OCSENet State State 9. Acknowledgments are pushed to the States via the OCSENet Router 2. e-iwos are unbatched from States 3. e-iwos are validated for errors and returned to States when critical errors exist 4. When necessary, e-iwos are transformed into a receiver-specific format 5. e-iwos are batched by employer Application Server SFTP SFTP Buffer Server Firewall SFTP Router 6. e-iwos are pushed to employers via the Internet 7. Read Receipts for e-iwos are pulled from employers via the Internet 8. Acknowledgments are pulled from employers via the Internet SFTP SFTP Internet SFTP Employer 33 Employer

34 Portal Registration and Profile Employers, payroll processors and states must register to use the Portal Registration ti includes Agreement to send or receive e-iwos Complete a Profile form indicating contact information, file transfer preferences, server address, etc. 34

35 Costs/Benefits Development costs: $75 per hour Increase in collections: Average order: $50/week First payment received 3 weeks earlier using e-iwo instead of paper Collection percentage: 50% (1 of 2 IWOs successful) Increase: $150 X # e-iwos sent X.50 Administrative savings: $1 per document (postage, paper, p processing time) 35

36 Costs/Benefits Collection Administrative 6/05-8/07 Development Increase Savings Cost (# e-iwos (# e-iwos x Net State (# Hrs x $75) x.5 x $150) $1) Increase Colorado Indiana 400 hours $30, hours * $63,750 6,992 e-iwos $524,400 $6,992 $501,392 2,837 e-iwos $212,775 $2,837 $151,862 North 600 hours 7,775 e-iwos Carolina $45,000 $583,125 $7,775 $545,900 Oregon Texas 187 hours 1,512 e-iwos $14,025 $113,400 $1,512 $100, hours $12,000 7,716 e-iwos $578,700 $7,716 $574,416 * Development costs for other projects included in this amount 36

37 More Benefits Adding additional employers (for states) or states (for employers) Increases collections Saves time, money, and resources Standardized data record ensures uniform IWO data from all states Increases accuracy and reliability of data Electronic acknowledgement enables state to know quickly whether IWO will be implemented, employee terminated, etc. 37

38 Resources Required by MEIJER Corp. IT resources = 300 hours Staff = 40 hours Some technical assistance = 15 hours No other company resources required 38

39 Resources Required by Labor Ready System Programmer = 50 hours Enhance existing system to accept IWOs from Colorado 39

40 Successes Minutes to process IWOs Minutes Manual OCR e-iwo Based on a batch of 244 withholding orders 40

41 Opportunities Payments received faster! Quicker e-iwo set up for employers! Time savings for all Cost savings 41

42 e-iwo Resources e-iwo Workgroup 31 states and 50+ employers Meets on a monthly call e-iwo Workplace Contains record layouts, minutes of previous meetings, business rules Contact tbillst Stuart tt to register and access the e-iwo Workplace 42

43 Contact Information Nancy Benner Phone Bill Stuart t william.k.stuart@lmco.com Phone