Final Rule: Treatment of Assigned Support Received by AFDC Applicants or Recipients
Sept. 18, 1985
Child Support Enforcement Program and Aid to Families With Dependent Child Program
September 18, 1985
TO: STATE AGENCIES ADMINISTERING CHILD SUPPORT ENFORCEMENT PLANS UNDER TITLE IV-D OF THE SOCIAL SECURITY ACT AND OTHER INTERESTED INDIVIDUALS
SUBJECT: Child Support Enforcement Program and Aid to Families With Dependent Children Program; Treatment of Assigned Support Payments Received Directly and Retained by AFDC Applicants or Recipients
REGULATION REFERENCE: 45 CFR Parts 232, 233, 302 and 303
ATTACHMENT: Attached are final regulations which provide IV-A and IV-D agencies with procedures for handling assigned support payments that are received directly and retained by AFDC applicants and recipients. To codify joint AFDC and child support enforcement policy for handling those situations in which an AFDC recipient receives and retains child support payments from an absent parent, we published final regulations with a comment period on October 5, 1982 (47 FR 43953). This document responds to comments received on those regulations. One change was made to the final regulation as a result of the comments. In addition, one technical change was made as a result of enactment of section 173 of P.L. 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, which amends section 454(5) of the Social Security Act.
We wish to point out a typographical error in this document. On page 34694, first column, under "2. IV-D Recovery Method," line 11, the citation should read 233.20(a)(3).
DATE: August 27, 1985.
RELATED REFERENCES: Joint Action Transmittal - Program Instruction SSA-AT-81-7 (OFA); OCSE-AT-81-7, dated March 27, 1981; OCSE-AT-82-13, dated October 18, 1982.
INQUIRIES TO: OCSE Regional Representatives.
Office of Child Support
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Child Support Enforcement
Social Security Administration
45 CFR Parts 232, 233, 302, add 303
Child Support Enforcement Program, and Aid to Families with Dependent Children Program; Treatment of Assigned Support Payments Received Directly and Retained by AFDC Applicants or Recipients
AGENCY: Office of Child Support Enforcement (OCSE), and Social
Security Administration (SSA), HHS.
ACTION: Final rule.
SUMMARY: The Child Support Enforcement program under title IV-D of the Social Security Act (the Act) is charged with establishing paternity and securing support on behalf of recipients of Aid to Families with Dependent Children (AFDC) under title IV-A of the Act. As a condition of eligibility for AFDC, applicants and recipients must assign to the State the support rights of any person on whose behalf aid is sought or received. Assigned support collections are used, in part, to reimburse the assistance payments provided by the State and Federal governments, and generally do not affect the amount of the AFDC grant.
Another condition of eligibility for AFDC is that the applicant or recipient "cooperate with the State . . . in obtaining support payments." Current AFDC regulations at 45 CFR 232.12(b)(4) specify that cooperation includes "paying to the child support agency any [assigned] child support payments received from the absent parent". In some cases, however, recipients fail to forward these payments to the IV-D agency, and as a result have the use of the payments as income. To codify joint AFDC and Child Support Enforcement policy for handling those situations in which an AFDC recipient receives and retains child support payments from an absent parent, we published final regulations with comment period on October 5, 1982. (See Volume 47 of the Federal Register, pages 43953-43957.) This document responds to the comments received on those regulations.
EFFECTIVE DATE: This document is effective August 27, 1985.
FOR FURTHER INFORMATION CONTACT: Marianne Rufty, 0CSE, Policy Branch, 6110 Executive Blvd., Rockville, MD 20852, (301) 443-5350; or Gary Ashcraft, SSA, Office of Family Assistance, Office of Policy, Transport Building, 2100 Second Street S.W., Washington, D.C. 20201, (202) 245-3284.
When an assignment of support rights has been made by an AFDC applicant or recipient under section 402(a)(26)(A) of the Act (42 U.S.C 602(a)(26)(A)) it is the responsibility of the IV-D agency under section 454(4) of the Act (42 U.S.C. 654(4)) to establish, enforce, and collect a support obligation for anyone covered by that assignment. Section 454(5) of the Act (42 U.S.C. 654(5)) specifically requires the IV-D agency to ensure that assigned payments "shall be made to the State for distribution pursuant to section 457 [with one exception] and shall not be paid directly to the family." Section 457 provides the method for assigned support collections to be either distributed among the State and Federal governments or given to the family.
The distribution requirements cannot be implemented when support payments are permitted to flow directly from the absent parent to the family for several reasons: first, the statutory requirements for distribution of assigned collections by the IV-D agency cannot be carried out when the IV-D agency does not receive the collection; second, the enforcement function of the IV-D agency is hampered because the agency cannot monitor payments by the absent parent. It is, therefore, a primary responsibility of the IV-D agency to take prompt action to redirect payments which are being received by the family so that these payments flow from the absent parent to the IV-D agency and not to the family. However, there are circumstances, such as a backlog of cases or the need to change the payee of a court-ordered support obligation, in which the AFDC recipient continues to receive support payments directly from the absent parent for some time after the case has been referred to the IV-D agency. For this reason, as noted above, AFDC regulations require that direct support payments be paid by the recipient to the IV-D agency, as a condition of AFDC eligibility.
A problem arises when a recipient fails to forward to the IV-D agency assigned support payments received directly from an absent parent (direct payments). For this reason, the Office of Family Assistance (OFA) and the Office of Child Support Enforcement (OCSE) issued a joint Action Transmittal program Instruction (SSA-AT-81-7 (OFA) and OCSE-AT-81-7, dated March 27, 1981) to provide Federal policy on treatment of support payments received and retained by AFDC applicants or recipients until publication of final regulations on this subject. The Action Transmittal also provides for the application of the sanction for failure to cooperate for retention of past as well as current support payments.
We published final regulations with a comment period in the Federal Register on October 5, 1982 to codify the policy contained in the Action Transmittal. This document responds to comments received on those regulations. One change was made to the final regulations as a result of the comments. In addition, one technical change was made as a result of enactment of Section 173 of Pub. L. 97-248, the Tax Equity and Fiscal Responsibility Act of 1982, which amends section 454(5) of the Act.
Provisions of the Final Regulations
States must implement on a Statewide basis one of two methods for the treatment of retained direct support payments. We emphasize that the two methods for treatment of retained direct support payments are not intended to preclude or restrict the prosecution for fraud under applicable State civil or criminal law where warranted. In addition, we want to remind States of the recently revised sections 4O2(a)(8)(A) and 457(b) of the Act which require that the first $50 collected on a monthly support obligation be paid to the AFDC family. Despite the fact that retained amounts must be repaid in accordance with either of the methods described below, the individual who retains a direct payment is entitled to the first $50 of the monthly support obligation. Therefore, regardless of whether the State is a IV-A income or a IV-D recovery State, the State must take into account the $50 payment to the AFDC family when determining the amount of retained support that is owed by an individual.
1. IV-A Income Method
Before publication of the regulations on October 5, 1982, AFDC regulations at 45 CFR 233.20(a)(1) and (3) required that the IV-A agency treat assigned support payments retained in the current month as income in determining need and amount of the assistance payment. An overpayment of assistance occurs for each month in which a direct support payment is retained by the recipient and not counted by the IV-A agency to reduce the AFDC payment. Under the IV-A income method, a State must implement the IV-A plan provisions of 45 CFR 233.20(a)(13) for recovering these overpayments.
After publication of the October 5, 1982 regulations, States that treated retained direct payments as income were not required to change. Under the IV-A income method of accounting for retained support payments, the role of the IV-D agency is essentially limited to: (1) Contacting the recipient in the month in which a payment is due to be forwarded to the IV-D agency to secure the release of that payment if it is in the possession of the recipient, and (2) informing the IV-A agency when it discovers that a recipient is retaining or has retained directly paid support.
Notwithstanding these provisions for IV-A agencies to account for retained direct support payments, recipients must still forward directly received support payments to the IV-D agency as a condition of eligibility under 45 CFR 232.12. If, in a IV-A income State, a recipient receives and retains a support payment in one month and consequently receives an overpayment of assistance for that month, the IV-A agency will implement recovery procedures consistent with the IV-A State plan.
2. IV-D Recovery Method
The final regulations published on October 5, 1982 amended IV-D State plan requirements at 45 CFR 302.31 by adding paragraph (a)(3) to provide a second method for treatment of retained direct payments whereby the IV-D agency elects to recover the retained amounts through a repayment agreement with the recipient. This required an exception to 45 CFR 223.20(a)(3) which had provided that retained support payments covered by an assignment be counted as income by the IV-A agency. When a State IV-D agency elects the IV-D recovery method in its State plan, the IV-A agency will not count any retained direct support payments as income to meet need, except when a sanction for failure to cooperate is applied under 45 CFR 232.12(d). The procedures for IV-D recovery are specified at 45 CFR 302.31(a)(3) and 303.80.
If a State elects the IV-D recovery method, the IV-D agency will establish a repayment plan with the AFDC recipient in accordance with the requirements of §303.80. Section 303.80 provides specific procedures and limitations for repayment agreements between IV-D agencies and AFDC recipients. First, the IV-D agency must document that directly paid support has been retained and the amounts. Second, the IV-D agency must provide the recipient prior written notice of its intent to recover the retained amounts and the proposed method for recovery. The specific elements of this notice are specified at §303.80(c)(2)(i) through (iv).
In addition to the written notice of intent to recover, the IV-D agency must provide the AFDC recipient with the opportunity for an informal meeting for the purpose of resolving any differences regarding repayment of the directly received retained support. The requirements for this meeting are specified in §303.80(c)(3). At this meeting, the IV-D agency will explain the nature and amount of the recipient's debt. The recipient can submit documentation to rebut any part of the State's claim.
After these requirements have been met, the recipient enters into a repayment agreement with the IV-D agency subject to the requirements of §303.80(d). This subsection provides that the repayment agreement must be individually structured so as to account for both the recipient's ability to repay and the size of the debt. Under the repayment agreement, a recipient may pay out-of-pocket in one payment or on an installment basis or through voluntary vendor payments pursuant to 45 CFR 234.60(a)(14). We believe that an individualized agreement is essential to avoid both undue hardship on the recipient and unreasonably long repayment periods in relation to the amount of retained support.
Under §303.80(e), when a recipient does not enter into or comply with the terms of a repayment agreement with the IV-D agency, the IV-D agency must refer the case to the IV-A agency with evidence of failure to cooperate. Section 303.8O(f) requires the IV-D agency to notify the IV-A agency when the recipient begins to cooperate. Cooperation is restored under §303.8O(f)(1) when a recipient, who initially refused to enter into an agreement, signs a repayment agreement with the IV-D agency and, under §303.80(f)(2), when a recipient who defaults on a repayment agreement begins making regularly scheduled payments according to that agreement. Section 303.8O(f)(2) further provides that the resumption of payment in the case of a default does not mean payment of past due amounts which went unpaid during the period of default. Rather, cooperation is restored when the recipient makes a current, regularly scheduled payment according to the terms of the agreement. Amounts due from any period of default simply extend the duration of the repayment agreement by the number of months in which payments were not made. We also specify at §303.80(f)(2) that repayment agreements may not include provisions for balloon payments or an acceleration clause as a condition for restoring cooperation in the case of a default.
We also made a technical change in the regulations published October 5, 1982 which amended 45 CFR 233.20(a)(3)(vi) to delete the first full sentence. This section incorrectly provided that support from legally responsible relatives, in addition to an absent parent, can be sought for purposes of income to an AFDC assistance unit. Under section 402(a)(26) of the Act and 45 CFR 232.11, assigned support from any individual whom the State holds legally responsible must be paid to the IV-D agency and, with one exception, cannot be counted in the determination of the amount of the assistance payment. The remaining two sentences in this subparagraph remained unchanged.
Changes to Final Regulations
This document makes one change as a result of a comment received in response to the regulations published in the Federal Register on October 5, 1982.
Section 303.8O(f)(2) stated that the IV-D agency must notify the IV-A agency when "the recipient who defaulted on repayment agreement begins making regularly scheduled payments according to the agreement." This paragraph further explains that "resumption of regularly scheduled payments cannot be interpreted to mean payment of amounts which were not paid during the period of default, nor amounts which could be categorized as balloon payments or which would be due as a result of an acceleration clause." Based on a comment received concerning the term "regularly scheduled payment," we revised §303.8O(f)(2) to include a definition of this term and to clarify how the IV-D agency is to recover amounts which were not paid during the period of default. The new §303.80(f)(2) defines a "regularly scheduled payment" as a payment made in the current month for the amount specified in the initial repayment agreement between the IV-D agency and the recipient. It also provides that, in order to recover amounts which were not paid during the period of default, the IV-D agency must extend the duration of the repayment agreement.
We are also making a technical change to the final regulations. Under the current §308.80(b), a direct payment which is used by the IV-A agency to determine an assistance unit ineligible for continued assistance is exempt from being recovered from the family. As of October 1, 1982, section 173 of Pub. L.97-248 amended section 454(5) of the Act to require that a support payment used to determine the assistance unit ineligible for AFDC be retained by the State to reimburse it for assistance paid to the family. Since this payment is no longer paid to the family, the exception currently under §308.80(b) is not applicable and any support payment retained by the family which causes ineligibility must be recovered by the IV-D agency. Therefore, this document deletes reference to that exception.
State Plan Amendments
We required amendments to both the IV-A State plan and the IV-D State plan to indicate whether a given State elects the IV-A income method or the IV-D recovery method. OCSE issued the necessary preprint page as part of the revised State Plan Preprint via Action Transmittal OCSE-AT-82-11 on September 21, 1982. OFA issued the necessary preprint page via Action Transmittal SSA-AT-82-32 on December 13, 1982. States are currently in the process of submitting the preprint pages for approval.
Response to Comments
We received five letters from State agencies response to the final rule published on October 5, 1982. A discussion of the comments contained in these letters and our responses follow.
Comment: One commenter stated that these regulations do not clearly define how the IV-A agency is to handle lump sum arrearage payments when an AFDC applicant or recipient receives the lump sum and retains it.
Response: Regardless of whether the State has decided to recover directly received and retained support payments through the IV-A income or the IV-D recovery method, Federal regulations at 45 CFR 233.20(a)(3)(ii)(D) apply to applicants who received a lump sum arrearage payment in the month of application. Applicants whose income in the month of application exceeds the need standard because of the receipt of lump sum income, regardless of the source, must be considered ineligible for assistance for the period computed by the IV-A agency under that regulation.
In IV-A income States only, lump sum arrearage support payments that are received directly and retained by an AFDC recipient must also be treated in accordance with 45 CFR 233.20(a)(3)(ii)(D). (See Section II. A. of SSA-AT-81-7(OFA), March 27, 1981.)
Comment: Several State commenters felt that they were being forced to be IV-D recovery States because of the fiscal sanctions under the quality control system. However, they felt that reductions in assistance payments under title IV-A are the most efficient and effective way of recovering support payments that are received directly and retained by an AFDC recipient. One State believed that retained support payments should not be counted in computing a State's IV-A quality control error rate. Similarly, another recommended that State agencies be allowed to implement the IV-A income method without fear of fiscal sanction.
Response: One State which has chosen to be a IV-D recovery State has a productive idea for increasing the collection of retained support under that method. In addition to permitting recipients who have retained support to pay out-of-pocket in a single payment or on an installment basis, they will also permit the use of voluntary vendor payments authorized by section 406(b)(2) of the Social Security Act and implemented under 45 CFR 234.60(a)(14) as a way of meeting the terms of the repayment agreement. Under this optional provision, a recipient could voluntarily request that vendor payments be made by the IV-A agency to the IV-D agency or its designee for repayment of retained support. States whose title IV-A State plan does not now provide for this option must amend their plan if they elect to offer this method of repayment. A state may limit its use of this option solely to repayment of retained support by so stating in its State plan.
There are no plans to eliminate the review of directly received and retained support payments from the quality control system and the related fiscal sanctions in either IV-A income States or IV-D recovery States.
Comment: One commenter asked if the IV-A agency will make the determination of cooperation if a recipient refuses to enter into a repayment agreement or fails to make a payment under the repayment agreement. The commenter also asked if this determination will be straightforward or involve other considerations.
Response: The determination of whether an applicant or recipient has cooperated in establishing paternity and securing support will be made by the IV-A State agency. This is a title
IV-A State plan requirement under section 402(a)(26) of the Act and 45 CFR 232.12. See the preamble to the regulations published on October 5 for explanation of how cooperation is determined.
Comment: One commenter recommended that States opting to implement the IV-D recovery method be allowed to recoup past support payments retained by the recipient by way of reduction of the recipient's AFDC grant.
Response: The regulations provide States with a choice between two methods. The elements of the two methods, however, are not interchangeable. There is no statutory or regulatory provision that authorizes a IV-D agency to reduce a recipient's AFDC grant. Therefore, the direct payment must be considered either as income to the recipient or an overpayment under title IV-A (IV-A income method), or as an amount owed to the State to be recovered by the IV-D agency (IV-D recovery method). If a State elects the IV-D recovery method, it may only recover direct payments using the recovery method authorized under §302.80. As stated in response to the second comment, an AFDC recipient may voluntarily make a written request for the IV-A agency to make vendor payments to IV-D agency in satisfaction of a repayment agreement.
Comment: One commenter asked if the informal meeting between the IV-D agency and the AFDC recipient who retained direct payments can be conducted by telephone when the recipient resides in a rural area.
Response: To clarify the AFDC recipient's responsibilities and to resolve differences regarding the repayment of retained direct payments, we strongly urge that a face-to-face meeting occur between the IV-D agency and the recipient. This meeting can take place at the IV-D agency or at the recipient's residence and may involve travel by either party to the selected site. We do recognize, however, that in some situations travel by either party would be unreasonable or costly. In these cases, telephone contact may be used in place of a face-to-face meeting.
Comment: One commenter asked for more specific guidance in the area of the repayment agreement; however, the commenter did not indicate what areas needed further clarification.
Response: We believe that this regulation is sufficiently clear with respect to the repayment agreement. For more specific details on developing a repayment agreement, we suggest that the State agency contact the appropriate OCSE Regional Office for technical assistance on this matter.
Comment: One commenter asked if the AFDC recipient who defaults on a repayment agreement must reply the amounts that went unpaid during the period of default before a payment is considered a "regularly scheduled payment." In addition, the commenter asked how to distinguish between a current, regularly scheduled payment and an AFDC recipient's effort to catch up on past due amounts which went unpaid.
Response: There is no need to distinguish between a current, regularly scheduled payment and the recipient's effort to catch up on past due amounts which went unpaid during default. In response to this comment, however, we revised §303.80(f)(2) of the final regulations to clarify the term "regularly scheduled payment" (See previous discussion under Changes to Final Regulations.) As provided in the new §303.80(f)(2), as soon as the recipient makes a payment according to the terms of the agreement, it is considered a current, regularly scheduled payment and cooperation is restored. Amounts due from any period of default simply extend the duration of the repayment agreement.
Comment: One commenter recommended that States be given flexibility to use both the IV-D recovery and the IV-A income methods to recoup retained direct payments, dependent on whether or not an individual was on public assistance. The commenter believes that the State would be most effective if its IV-A agency sought recovery while the individual was receiving assistance and its IV-D agency sought recovery after termination of assistance. In addition, because some States have sophisticated computer systems, the commenter recommended that these States be allowed to demonstrate to the Department that double recovery would be an unlikely result of combined IV-A and IV-D recoupment.
Response: In developing the final regulation, the Department felt that duplicate systems for recovering directly received and retained support payments would be administratively burdensome, create confusion for, and increase the possibility of duplicate recoveries from the AFDC recipient. Under the final regulation, a State cannot choose to be a IV-A income State while the responsible individuals are receiving AFDC and a IV-D recovery State after the case is closed. In a IV-A income State, the responsibility of the IV-A agency to collect overpayments of assistance does not end when the case is closed. Thus, it would be inconsistent with current regulations for the State to function as a IV-D recovery State once a case is closed. Similarly, the responsibility of the IV-D agency in a IV-D recovery State to collect retained support does not end when the AFDC case is closed. Therefore, to provide a uniform Federal policy that is workable and equitable to all States and to ensure equal treatment of AFDC recipients, the regulations require that each State select one of the two methods for treatment of retained direct payments and apply the procedures specified in that selected method to all recipients within the State.
Comment: One commenter expressed concern that, although this regulation states that the " . . . treatment of retained direct support payments are not intended to preclude or restrict the prosecution for fraud under applicable State, civil or criminal law where warranted," it does in fact restrict a State IV-D agency's obligation to notify the appropriate prosecutor.
Response: We believe that there are some instances where the direct payment is inadvertently retained by the AFDC recipient. In such cases where there is no criminal intent, there is no violation of criminal law. In cases where there is evidence of criminal intent, we believe that there is nothing in these regulations which preclude the caseworker from referring evidence of criminal activity to the local authorities.
In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-511), the revisions to the IV-A and IV-D State plans (§§ 232.12(b) (4), 233.20(a) (3) (v) and (vi) and 302.31(a)(3)) were approved by the Office of Management and Budget under existing OMB Nos. 0960-0252(OFA) and 0960-0253(OCSE).
Regulatory Impact Analysis
No significant costs will result from implementation of the final regulations because these regulations codified policy that is already in place in States. Therefore, the Secretary has determined that this document, which responds to the comments received on the final regulations, is not a major rule as described by Executive Order 12291. In addition, the Secretary certifies that for the reason stated above, these regulations will not have a significant economic impact on a substantial number of small entities and, therefore, will not require a regulatory flexibility analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act of 1980.
List of Subjects
45 CFR Part 232
Aid to families with dependent children, Child support (new term), Child welfare, Family assistance office, Grant programs-social programs.
45 CFR Part 233
Aid to families with dependent children, Aliens, Family assistance office, Public assistance programs, Reporting requirements.
45 CFR Parts 302 and 303
Child welfare, Grant programs/social programs.
1. The authority citation for Part 303 is revised to read as set forth below and the authority citations following all the sections in Part 303 are removed.
Authority: 42 U.S.C. 651 through 658, 660, 663, 664, 666, 667, 1302, 1396a(a)(25), 1396b(d)(2), 1396b(o), 1396b(p) and 1396(k).
2. The final regulations published in the Federal Register on October 5,1982 (47 FR 43953-43957) are confirmed as final rules with the following amendments: 45 CFR 303.80 (b) and (f)(2) are revised to read as follows:
§303.80 Recovery of Direct payments.
* * * * *
(b) Direct payments that must be recovered by the IV-D agency. In States that place the responsibility for recovery of direct payments with the IV-D agency under the State plan option at §302.31(a)(3)(ii) of this chapter, the IV-D agency must recover all such payments. The only exception is a direct payment retained by the recipient during the period when the sanction for failure to cooperate is in effect, as provided at 45 CFR 232.12(d).
* * * * *
(f) Subsequent notification to the IV-A agency as required. If the IV-D agency has referred a case to the IV-A agency with evidence of failure to cooperate for either of the reasons in paragraph (e) above, the IV-D agency must notify the IV-A agency when either of the following changes in circumstances occurs:
(1) The recipient who refused to enter into a repayment agreement consents to do so and signs the agreement; or
(2) The recipient who defaulted on an agreement begins making regularly scheduled payments according to the agreement. Under this paragraph, a regularly scheduled payment is a payment made in the current month for the amount specified in the initial repayment agreement between the IV-D agency and the recipient. The resumption of regularly scheduled payments cannot be interpreted to mean payment of amounts which were not paid during the period of default, nor amounts which could be categorized as balloon payments or which would be due as a result of an acceleration clause. To recover amounts due from any period of default, the IV-D agency must extend the duration of the repayment agreement.
(Sec. 1102 of the Social Security Act, 49 Stat. 647 (42 U.S.C. 1302))
(Catalog of Federal Domestic Assistance Program No. 13.679. Child Support Enforcement Program, and Program No. 13.761. Public Assistance-Maintenance Assistance (State Aid))
Dated: June 6, 1985.
Martha A. McSteen,
Acting Commissioner, Social Security
Dated: April 16, 1985.
Director, Office of Child Support
Approved: June 24, 1985.
Margaret M. Heckler,
[FR Doc. 85-20292 Filed 8-26-85; 8:45 am]
BILLING CODE 4190-11-M