[Federal Register Volume 59, Number 221 (Thursday, November 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28317]


[[Page Unknown]]

[Federal Register: November 17, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration

42 CFR Parts 435 and 436

Medicaid

Administration for Children and Families

45 CFR Part 233

RIN 0970-AA07

 

Aid to Families With Dependent Children; Extension of Medicaid 
When Support Collection Results in Termination of Eligibility

AGENCIES: Administration for Children and Families (ACF) and Health 
Care Financing Administration (HCFA), HHS.

ACTION: Final rule.

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SUMMARY: These final rules interpret section 20 of the Child Support 
Enforcement Amendments of 1984, as amended by section 303(e) of the 
Family Support Act of 1988, and section 8003 of the Omnibus Budget 
Reconciliation Act of 1989. The 1984 law extended Medicaid coverage for 
a period of four months to certain dependent children and adult 
relatives who become ineligible for Aid to Families with Dependent 
Children (AFDC) as a result, wholly or partly, of the collection or 
increased collection of child or spousal support under title IV-D of 
the Social Security Act (the Act). The regulations are applicable to 
the AFDC and Medicaid programs in all jurisdictions.

EFFECTIVE DATE: November 17, 1994.

FOR FURTHER INFORMATION CONTACT:

AFDC: Mr. Mack Storrs, ACF/OFA 5th Floor, 370 L'Enfant Promenade S.W., 
Washington, DC 20447, telephone (202) 401-9289.
Medicaid: Mr. Marinos T. Svolos, HCFA Room 323, East High Rise 
Building, 6325 Security Boulevard, Baltimore, Maryland 21207, telephone 
(410) 966-4451.

SUPPLEMENTARY INFORMATION:

Statutory Authority

    Section 20 of the Child Support Enforcement Amendments of 1984 
(Public Law 98-378) amended both the AFDC and Medicaid titles of the 
Act. Title IV-A (AFDC) was amended by adding a new paragraph (h) to 
section 406 of the Act. This new paragraph provides that: ``[e]ach 
dependent child and each relative with whom such a child is living 
(including the spouse of such relative as described in subsection (b)), 
who becomes ineligible for aid to families with dependent children as a 
result (wholly or partly) of the collection or increased collection of 
child or spousal support under Part D, and who has received such aid in 
at least three of the six months immediately preceding the month in 
which such ineligibility begins, shall be deemed to be a recipient of 
aid to families with dependent children for purposes of title XIX for 
an additional four calendar months beginning with the month in which 
such ineligibility begins.''
    Section 20 of Public Law 98-378 also amended section 
1902(a)(10(A)(i)(I) to require Medicaid coverage of eligible 
individuals pursuant to section 406(h) of the Act. Both amendments 
apply only to those individuals who became ineligible for AFDC on or 
after August 16, 1984, the date of enactment of Public Law 98-378, and 
before October 1, 1988, and who received AFDC in at least three of the 
six months immediately preceding the month of ineligibility.
    Section 303(e) of the Family Support Act of 1988 (Public Law 100-
485) amended section 20 of the Child Support Enforcement Amendments of 
1984 to extend for one year, through September 30, 1989, the authority 
of this provision. Section 8003 of the Omnibus Budget Reconciliation 
Act of 1989 (Public Law 101-239) removed the sunset date for this 
section, thus making it a permanent provision of the Act.

Notice of Proposed Rulemaking (NPRM)

    A NPRM was published in the Federal Register on November 27, 1992 
(57 FR 56294), amending 45 CFR Part 233 and 42 CFR Parts 435 and 436 to 
set forth the circumstances under which individuals become eligible for 
the four-month period of extended Medicaid coverage because they have 
lost AFDC as a result (wholly or partly) of the collection or increased 
collection of child or spousal support. The proposed rules interpreted 
the statute to require either the new receipt of, or an increase in, 
the collection of child or spousal support which renders the family 
ineligible for AFDC.
    As required by statute, the proposed rules provide that individuals 
must have received AFDC in at least three of the six months immediately 
preceding the month in which AFDC ineligibility begins in order to 
qualify for the extended Medicaid coverage. As we pointed out in the 
preamble to the proposed rules, individuals who do not actually receive 
an AFDC payment for any month because of the rounding of the payment 
amount to zero, the recoupment of an overpayment, or the elimination of 
payments for those who are eligible for amounts less than $10 are 
deemed to be AFDC recipients for that month for purposes of determining 
eligibility for continued Medicaid coverage under this provision.
    Also under the proposed rules, continued Medicaid under this 
provision ends for any individual family member who moves to another 
State. In the preamble to the proposed rules, we stated that Medicaid 
ends effective with the month following the month the individual moves 
to the new State. Although benefits end when an individual moves to 
another State, eligibility can be reinstated in the State in which he 
or she was entitled to the extended coverage if the individual re-
establishes residence there before the end of the four-month period. It 
was the Department's view that extended Medicaid benefits are available 
only in the State in which the family became ineligible for AFDC 
benefits. For example, if a family moved to another State in March, the 
first month of the extended period, and moved back in May, the third 
month of the extended period, they would be eligible for extended 
Medicaid benefits for the months of May and June.
    The preamble to the proposed rules recognized that States require 
collection of support made by absent parents and spouses to be paid 
directly to the IV-D agency. Nevertheless, AFDC recipients occasionally 
receive child or spousal support directly. Because current regulations 
require that these payments must be turned over to the IV-D agency, we 
consider direct payments which are properly turned over to the IV-D 
agency to be collections of support for the purposes of this provision. 
Thus, extended Medicaid coverage will be provided when collections of 
child or spousal support are received by the eligible assistance unit 
and are turned over to the IV-D agency if these payments result (wholly 
or partly) in the loss of AFDC.
    The proposed rules indicated that section 406(h) of the Act 
provides certain individuals with extended Medicaid if they lose AFDC 
eligibility ``as a result (wholly or partly) of the collection or 
increased collection of child or spousal support * * *'' (emphasis 
added). They separately specified the circumstances under which AFDC 
ineligibility would be considered to be due ``wholly'' to a collection 
and when they would be considered to be due ``partly'' to a support 
collection. They also discussed at length examples of cases in which 
the child or spousal support collection ``wholly'' or ``partly'' 
affected the family's AFDC eligibility and made a clear distinction 
between the ``wholly'' or ``partly'' cases.
    Our interpretation of Congressional intent as it relates to the 
term ``wholly'' or ``partly'' limits the Medicaid extension under this 
provision to cases where ineligibility can be attributed, at least 
partly, to the initiation of or an increase in the amount of a child or 
spousal support collection. The proposed and final regulations both 
reflect our position that the collection of support must actually cause 
or actively contribute to ineligibility for AFDC, even if there are 
other factors which also contribute to ineligibility or could 
simultaneously cause it.
    The proposed rules provided that extensions of Medicaid eligibility 
pursuant to expiration of the earnings disregards as set forth in 45 
CFR 233.20(a)(14) or pursuant to section 303(a) of the Family Support 
Act of 1988 (P.L. 100-485) are not affected by this provision. Thus, if 
a family is entitled to extended Medicaid as a result of earned income 
under section 303(a) and is also simultaneously entitled to extended 
Medicaid as a result of the initiation of or a change in the amount of 
the child or spousal support collection, the assistance unit would be 
entitled to the full twelve-month extension of Medicaid available under 
the section 303(a) transitional provision if it meets the requirements 
of section 1925 of the Act. However, the periods run concurrently so 
that one extended period cannot be delayed until the end of the other 
extended period.

Response to Specific Individual Comments

    We received five comments on the proposed rules. Three were from 
State government agencies, one was from an advocacy group and one was 
from a health services organization. A discussion of these comments and 
our responses follows.
    Comment: One advocacy group requested that the Department clarify 
the definition of support collections which would trigger entitlement 
to extended Medicaid coverage. It recommended that the change must be 
in the amount of support collected. The advocacy group was concerned 
that the language in the discussion of the proposed regulations 
referring to an increase in the ``ongoing support payment'' may be read 
as referring to an increase in the amount the absent parent has to pay, 
rather than an increase in the amount which is collected in a given 
month.
    Response: We have eliminated any reference to an increase in an 
``ongoing support payment.'' We believe this will eliminate any 
confusion between support ordered and support collected. The amount of 
support ordered is not material when establishing eligibility for 
extended benefits. This eligibility is based on the amount of support 
which is collected.
    Comment: One State agency recommended a change in the definition of 
``collection'' of child or spousal support to cover situations where 
collections of child or spousal support contribute to a loss of 
eligibility but no initiation of or increase in collections occurred. 
Another State agency believed that the proposed definition is more 
restrictive than the wording of the statute and that there was no 
legislative history presented to conclude that Congress intended to 
define the entitlement as narrowly as proposed.
    Response: As a condition of extended Medicaid coverage, the final 
regulations continue to require that ineligibility for AFDC must result 
from a change in support collection; that is, either the new receipt 
of, or an increase in, the amount of a child or spousal support 
collection. As we stated in the preamble to the proposed rules, we 
believe that the Conference Report, H.R. Rep. No. 925, 98th Cong., 2d 
Sess. (1984), contemplates a change in the amount of the child or 
spousal support collection. In describing the House bill, the 
Conference Report states that ``[i]f a family loses AFDC eligibility as 
the result (wholly or partly) of increased collection of support 
payments * * *, the State must continue to provide Medicaid benefits * 
* *.'' Id. at 55 (emphasis added). The Conference Agreement followed 
the House bill, but with an amendment limiting the application of the 
provision to families who become ineligible for AFDC before October 1, 
1988.
    Similarly, the Report of the Committee on Ways and Means, H.R. Rep. 
No. 527, 98th Cong., 1st Sess. at pages 11, 23, 52, and 56 refers 
repeatedly to either an ``increase in child support payments'' or to 
``a change in child support levels.''
    Comment: Two State agencies believed that the definition of 
``collection'' was convoluted, unnecessarily complex, and difficult to 
administer. One agency believed the definition would make automation 
more difficult and expensive.
    Response: We believe that any difficulty in the proposed definition 
stemmed from our attempt to interpret the law broadly. The 
interpretation requires States to compare the different possible causes 
for the loss of AFDC, but was designed to allow continued eligibility 
under a number of different circumstances.
    We could have interpreted section 406(h) to mean that continued 
eligibility is available only when changes in support collections alone 
lead to a loss of AFDC. Extended coverage would not have been available 
if any other factors contributed to or caused ineligibility. We instead 
chose to cover individuals who lose AFDC under any circumstances in 
which the change in support either causes or contributes to the loss of 
AFDC. This interpretation, by its nature, has increased the complexity 
of the rule.
    We have attempted in the final regulation to express these concepts 
more simply and concisely. We have done so by removing the emphasis in 
the proposed regulation on the distinction between the loss of AFDC 
which results ``wholly'' instead of ``partly'' from support 
collections. Instead, we have placed the emphasis on extended Medicaid 
whenever a support collection has either caused or actively contributed 
to the loss of AFDC. As in the proposed regulation, a family can 
qualify for extended Medicaid when the support collection alone causes 
ineligibility for AFDC or when the support collection, in conjunction 
with other changes in income or family circumstances, contributes to 
ineligibility. The following examples demonstrate these concepts, as we 
have revised them. They are keyed to the regulations at 
Secs. 435.115(h)(1), 436.114(h)(1) and 233.20(a)(15)(iii)(A).
    An example of how the final rule would apply in 
Secs. 435.115(h)(1)(i), 436.114(h)(1)(i) and 233.20(a)(15)(iii)(A)(1) 
is an assistance unit which receives $250 in countable child support 
collections monthly. The applicable standard of need is $375. In the 
next month the countable child support collection increases to $400. In 
this example, the resulting ineligibility is due to the collection of 
child support, and the Medicaid extension would apply.
    Another illustration includes a situation which conforms to 
Secs. 435.115(h)(1)(i), 436.114(h)(1)(i) and 233.20(a)(15)(iii)(A)(1) 
of the final regulations. An assistance unit receives $200 in countable 
child support collections and $100 in title II benefits monthly. The 
applicable standard of need is $325. In the next month both the child 
support collection and title II increase by $75, for a total increase 
of $150 a month. Here, the resulting ineligibility is due to the child 
support collection because the change in support by itself, when added 
to the unchanged title II benefit, would cause ineligibility. Thus, the 
Medicaid extension would apply.
    An example of how the definition of ``collection'' applies in 
combination with other changes in family circumstances, as indicated in 
Secs. 435.115(h)(1)(ii), 436.114(h)(1)(ii) and 
233.20(a)(15)(iii)(A)(2), would be as follows. An assistance unit 
received $275 in countable child support collections and the applicable 
standard of assistance was $375. In the next month, the countable child 
support collection increased to $325 and at the same time one of the 
older children left home. As a result, the applicable standard of 
assistance was reduced to $300. The countable child support collection 
of $325 exceeded the new standard of $300 and resulted in the 
assistance unit's ineligibility.
    Under the clarified definition of ``collection'' in the final 
regulation, the family would be eligible for extended Medicaid, since 
the collection of child support increased and contributed to the 
ineligibility. In this instance, the reduction in the standard of 
assistance worked in combination with the increased collection of 
support to cause the ineligibility. It thus contributed to the family's 
ineligibility. Neither change would have caused ineligibility by 
itself.
    However, suppose that in this example the $275 received by the 
assistance unit was raised to $325 and the $375 standard of assistance 
was reduced to $250. In this case, the increase in child support would 
have no effect on eligibility for AFDC. That is because the change in 
the standard of assistance would have caused ineligibility even before 
the child support collection was raised from $275 to $325. Because the 
change in the support collection neither caused nor contributed to 
ineligibility for AFDC, the family would not be eligible for extended 
Medicaid.
    Thus, under the definition included in the final rule, other 
changes affecting eligibility and occurring in conjunction with a 
change in the amount of the support collection would not negate the 
family's entitlement to extended Medicaid, as long as the support 
collection contributes to ineligibility for AFDC.
    Comment: One State questioned the discussion of payments made by 
absent parents directly to the AFDC recipient. The State asserted that 
if these payments are turned in as required, the money flows through 
the child support mechanism as would money collected by the State 
directly from the absent parent. As such it represents a ``collection'' 
under title IV-D. If the money is not forwarded to the State agency, it 
is budgeted accordingly (as income to the family), and penalties (for 
non-cooperation) are imposed as appropriate. The regulations are silent 
on the issue of monies not forwarded so the State assumes there is no 
intent to provide the extension when the support causes ineligibility 
when budgeted, since to provide such an extension in this case would be 
contrary to the statute.
    Response: There is no intent to provide the extension in such 
situations. The State is correct that monies not forwarded to the State 
agency would not constitute a ``collection'' under title IV-D, as 
required by the statute. Such monies would be budgeted as income to the 
family in a IV-A income State, with sanctions for non-cooperation 
imposed as appropriate. In a IV-D recovery State, the IV-D agency must 
recover all such payments. The IV-D agency would enter into a repayment 
agreement with the custodial parent in accordance with 45 CFR 303.80. 
We have revised the regulation in several places in order to make it 
clear that support collections must be child or spousal support 
collected under title IV-D.
    Comment: One State agency commented that, given the erratic nature 
of child support payments, the proposed policy could result in 
disparate treatment for clients with equal amounts of child support. 
Another State agency expressed concern that the application of the 
proposed regulations may provide an incentive for an absent parent not 
to pay child support when a child is approaching the age of majority or 
some other income change is expected to occur.
    Response: Because of the sporadic nature of the receipt of support 
payments and other changes in family circumstances, it would be 
difficult to determine when such a situation might occur. Nevertheless, 
it is true that, in some cases, an increase in support collection would 
coincide with other circumstances affecting AFDC eligibility. The 
statute places no special requirements on the circumstances which 
resulted in the increased support collection which, in turn, triggered 
the four-month period. If a family receives a change in support 
payments which in some way causes that family to lose AFDC, regardless 
of the circumstances, then that family is entitled to four extra months 
of Medicaid coverage. The statute places no relevance on the regularity 
or timing of payments.
    Comment: Two commenters suggested that extended Medicaid should be 
continued when a family or individual moves out of the State and is no 
longer a resident of the State. One commenter suggested that the State 
where the individual was originally eligible for extended Medicaid 
should be responsible for providing any remaining months of extended 
Medicaid, particularly where the individual was enrolled in a managed 
care organization. The other commenter suggested that the new State 
should be automatically responsible for paying for the remaining months 
of the extended period.
    Response: In the preamble to the notice of proposed rulemaking, 
HCFA took the position that ``[c]ontinued Medicaid under this provision 
ends for any individual who moves to another State.'' The preamble 
further provided, however, that eligibility could be reinstated if the 
individual returns to the State and the individual would be entitled to 
any remaining months of extended benefits. We believe that it is 
reasonable to allow States to terminate families who become residents 
of other States during the extended Medicaid period.
    Nothing in section 406(h) explicitly requires a State to continue 
extended benefits for an individual who has moved to another State. In 
addition, our interpretation of this provision conforms with the 
longstanding policy that States are only required to provide Medicaid 
to their own residents. The Medicaid statute establishes a framework of 
cooperative federalism in which each state develops a plan for 
providing medical assistance for its residents. The statute establishes 
a general framework for the State's Medicaid program; however, States 
have some flexibility to tailor the program to meet the particular 
needs of their residents. As a result, each State plan is different.
    From the outset of the Medicaid program, State residency has been 
an important aspect of Medicaid eligibility. Section 1902(b)(2), 42 
U.S.C. section 1396a(b)(2), prohibits the Secretary from approving a 
plan which imposes any residency requirement which excludes individuals 
who reside in the State, regardless of whether or not the residence is 
maintained permanently or at a fixed address. On the other hand, there 
has never been any general statutory requirement that a State cover 
individuals who are not its residents or continue to cover those who 
are no longer its residents. Indeed, section 1902(b)(2) implicitly 
recognizes that States may limit Medicaid coverage to their own 
residents.
    Moreover, the statute requires the State plan to include provisions 
for furnishing medical assistance under the plan ``to individuals who 
are residents of the State but are absent therefrom'' (section 
1902(a)(16); 42 U.S.C. section 1396a(a)(16)). This provision recognizes 
a State's continued responsibility for its Medicaid eligible residents 
during temporary periods of absence in another jurisdiction, but only 
as long as they remain residents. In light of these rules, we have for 
many years taken the position that the Secretary is permitted to 
approve a plan which limits eligibility to all State residents and 
consequently denies medical assistance to individuals who do not reside 
in the State. It is our understanding that most States expressly 
require individuals to be residents of the State in order to receive 
medical assistance under the State plan, although they could choose to 
cover non-residents.
    The right to continued receipt of Medicaid normally ends when an 
individual establishes residency in a new State. If an individual seeks 
medical assistance in the new State, eligibility is determined based on 
the State plan of the new State. If Congress had intended in section 
406(h) a major departure from this traditional role of States under the 
Medicaid statute, we believe this would have been clear from either the 
statute or legislative history. Our review of the statute and the 
legislative history for section 406(h) does not reflect that Congress 
intended this result.
    We also do not believe that section 406(h) requires an individual's 
new State of residence to provide continued Medicaid coverage. This 
provision simply deems an individual to be an AFDC recipient for 
Medicaid purposes for an additional four calendar months; that is, as 
an add-on to the period of coverage the individual has already received 
under the State plan of his or her original State. HCFA does not regard 
section 406(h) as creating a portable status that entitles the 
individual to different Medicaid coverage in a different State.
    The fact that an individual is an AFDC recipient in State A does 
not get that individual Medicaid benefits in State B. Similarly, the 
fact that an individual is deemed to be an AFDC recipient in State A 
would not necessarily get that individual Medicaid benefits in State B 
(unless State B chooses to cover the individual or has an interstate 
agreement which does so). If the individual is deemed to be an AFDC 
recipient for Medicaid purposes for an additional four months, the 
individual should therefore receive extended Medicaid only in the State 
in which he or she lost AFDC status and was granted the four months of 
extended coverage.
    One commenter also raised the question of whether our policy has 
constitutional implications because the commenter believes that it 
violates an individual's right to interstate travel. The commenter 
points out that other residents in the new State would be eligible for 
extended benefits while the newly arrived individuals with exactly the 
same circumstances would not be eligible. We believe that the commenter 
is incorrect in assuming that the individual who has moved is equally 
situated with other residents of the new State who are receiving the 
additional four months of Medicaid. The individual's former State may 
well have had a higher AFDC eligibility standard than the new State, 
which enabled the individual to get Medicaid in the old State before he 
or she lost AFDC because of a support payment. In the new State, the 
individual may never have been eligible for AFDC even without the 
increased collection.
    We do not believe the residency requirement for extended Medicaid 
has any significant effect on managed care. Ordinarily, an HMO will 
lose an enrollee when he or she has moved to another State, because 
HMOs have defined service areas and provider networks. In most cases, 
when a recipient enrolled in an HMO moves to another State, he or she 
would no longer be in the service area of the HMO. As such, the 
recipient would no longer be qualified to remain in the HMO, regardless 
of the residency requirement. In addition, the effect of the residency 
requirement on recipients of extended Medicaid is no different from the 
effect of the residency requirement on any Medicaid eligible HMO 
recipient who moves from the State.

Regulatory Procedures

Executive Impact Analysis

    These regulations have been reviewed pursuant to Executive Order 
12866 to ensure their consistency with the priorities and principles 
set forth in that Executive Order. An assessment of the costs and 
benefits of available regulatory alternatives (including not 
regulating) demonstrated that the approach taken in the regulation is 
the most cost-effective and least burdensome while achieving the 
regulatory objectives.

Paperwork Reduction Act

    There will be no reporting or record keeping requirements imposed 
on the public or States which would require clearance by the Office of 
Management and Budget.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (Pub. L. 96-354) requires the 
Federal government to anticipate and reduce the impact of regulations 
and paperwork requirements on small businesses. The primary impact of 
these final rules is on State governments and individuals. Therefore, 
we certify that these rules will not have a significant economic impact 
on a substantial number of small entities because they affect benefits 
to individuals and payments to States. Thus, a regulatory flexibility 
analysis as provided in Public Law 96-354, the Regulatory Flexibility 
Act (RFA), is not required.
    Section 1102(b) of the Social Security Act requires the Secretary 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. Such an analysis must conform to the provisions of 
section 603 of the RFA. For purposes of section 1102(b) of the Act, we 
define a small rural hospital as a hospital which is located outside of 
a Metropolitan Statistical Area and has fewer than 50 beds.
    We are not preparing a rural impact statement since we have 
determined, and the Secretary certifies, that this final rule will not 
have a significant economic impact on the operations of a substantial 
number of small rural hospitals.

List of Subjects

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, reporting and record keeping, Supplemental Security Income 
(SSI), Wages.

42 CFR Part 436

    Aid to Families with Dependent Children, Grant programs--health, 
Guam, Medicaid, Puerto Rico, Supplemental Security Income (SSI), Virgin 
Islands.

45 CFR Part 233

    Aliens, Grant programs--social programs, Public assistance 
programs, Reporting and record keeping requirements.

(Catalog of Federal Domestic Assistance Program No. 13.714, Medical 
Assistance Program: 13.780, Assistance Payments Maintenance 
Assistance.)

    Dated: April 4, 1994.
Mary Jo Bane,
Assistant Secretary for Children and Families.

    Dated: April 24, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Approved: November 4, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.

    For the reasons set forth in the preamble, parts 435 and 436 of 
chapter IV, title 42 and part 233 of chapter II, title 45, Code of 
Federal Regulations, are amended as set forth below:

Health Care Financing Administration

42 CFR Chapter IV

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

    1. The authority citation for Part 435 continues to read as 
follows:

    Authority: Section 1102 of the Social Security Act (42 U.S.C. 
1302).

    2. Section 435.115 is amended by adding new paragraphs (f), (g), 
and (h) to read as follows:


Sec. 435.115  Individuals deemed to be receiving AFDC.

* * * * *
    (f) The State must deem an individual to be receiving AFDC if a new 
collection or increased collection of child or spousal support under 
title IV-D of the Social Security Act results in the termination of 
AFDC eligibility in accordance with section 406(h) of the Social 
Security Act. States must continue to provide Medicaid for four 
consecutive calendar months, beginning with the first month of AFDC 
ineligibility, to each dependent child and each relative with whom such 
a child is living (including the eligible spouse of such relative as 
described in section 406(b) of the Social Security Act) who:
    (1) Becomes ineligible for AFDC on or after August 16, 1984; and
    (2) Has received AFDC for at least three of the six months 
immediately preceding the month in which the individual becomes 
ineligible for AFDC; and
    (3) Becomes ineligible for AFDC wholly or partly as a result of the 
initiation of or an increase in the amount of the child or spousal 
support collection under title IV-D.
    (g)(1) Except as provided in paragraph (g)(2) of this section, 
individuals who are eligible for extended Medicaid lose this coverage 
if they move to another State during the 4-month period. However, if 
they move back to and reestablish residence in the State in which they 
have extended coverage, they are eligible for any of the months 
remaining in the 4-month period in which they are residents of the 
State.
    (2) If a State has chosen in its State plan to provide Medicaid to 
non-residents, the State may continue to provide the 4-month extended 
benefits to individuals who have moved to another State.
    (h) For purposes of paragraph (f) of this section:
    (1) The new collection or increased collection of child or spousal 
support results in the termination of AFDC eligibility when it actively 
causes or contributes to the termination. This occurs when:
    (i) The change in support collection in and of itself is sufficient 
to cause ineligibility. This rule applies even if the support 
collection must be added to other, stable income. It also applies even 
if other independent factors, alone or in combination with each other, 
might simultaneously cause ineligibility; or
    (ii) The change in support contributes to ineligibility but does 
not by itself cause ineligibility. Ineligibility must result when the 
change in support is combined with other changes in income or changes 
in other circumstances and the other changes in income or circumstances 
cannot alone or in combination result in termination without the change 
in support.
    (2) In cases of increases in the amounts of both support 
collections and earned income, eligibility under this section does not 
preclude eligibility under 45 CFR 233.20(a)(14) or section 1925 of the 
Social Security Act (which was added by section 303(a) of the Family 
Support Act of 1988 (42 U.S.C. 1396r-6)). Extended periods resulting 
from both an increase in the amount of the support collection and from 
an increase in earned income must run concurrently.

PART 436--ELIGIBILITY IN GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS

    1. The authority citation for Part 436 continues to read as 
follows:

    Authority: Section 1102 of the Social Security Act (42 U.S.C. 
1302).

    2. Section 436.114 is amended by adding new paragraphs (f), (g), 
and (h) to read as follows:


Sec. 436.114  Individuals deemed to be receiving AFDC.

* * * * *
    (f) The State must deem an individual to be receiving AFDC if a new 
collection or increased collection of child or spousal support under 
title IV-D of the Social Security Act results in the termination of 
AFDC eligibility in accordance with section 406(h) of the Social 
Security Act. States must continue to provide Medicaid for four 
consecutive calendar months, beginning with the first month of AFDC 
ineligibility, to each dependent child and each relative with whom such 
a child is living (including the eligible spouse of such relative as 
described in section 406(b) of the Social Security Act) who:
    (1) Becomes ineligible for AFDC on or after August 16, 1984; and
    (2) Has received AFDC for at least three of the six months 
immediately preceding the month in which the individual becomes 
ineligible for AFDC; and
    (3) Becomes ineligible for AFDC wholly or partly as a result of the 
initiation of or an increase in the amount of a child or spousal 
support collection under title IV-D.
    (g)(1) Except as provided in paragraph (g)(2) of this section, 
individuals who are eligible for extended Medicaid lose this coverage 
if they move to another State during the 4-month period. However, if 
they move back to and reestablish residence in the State in which they 
have extended coverage, they are eligible for any of the months 
remaining in the 4-month period in which they are residents of the 
State.
    (2) If a State has chosen in its State plan to provide Medicaid to 
non-residents, the State may continue to provide the 4-month extended 
benefits to individuals who have moved to another State.
    (h) For purposes of paragraph (f) of this section:
    (1) The new collection or increased collection of child or spousal 
support results in the termination of AFDC eligibility when it actively 
causes or contributes to the termination. This occurs when:
    (i) The change in support collection in and of itself is sufficient 
to cause ineligibility. This rule applies even if the support 
collection must be added to other, stable income. It also applies even 
if other independent factors, alone or in combination with each other, 
might simultaneously cause ineligibility; or
    (ii) The change in support contributes to ineligibility but does 
not by itself cause ineligibility. Ineligibility must result when the 
change in support is combined with other changes in income or changes 
in other circumstances and the other changes in income or circumstances 
cannot alone or in combination result in termination without the change 
in support.
    (2) In cases of increases in the amounts of both the support 
collections and earned income, eligibility under this section does not 
preclude eligibility under 45 CFR 233.20(a)(14) or section 1925 of the 
Social Security Act (which was added by section 303(a) of the Family 
Support Act of 1988 (42 U.S.C. 1396r-6)). Extended periods resulting 
from both an increase in the amount of the support collection and from 
an increase in earned income must run concurrently.

Administration for Children and Families

45 CFR Chapter II

PART 233--COVERAGE AND CONDITIONS OF ELIGIBILITY IN FINANCIAL 
ASSISTANCE PROGRAMS

    1. The authority citation for Part 233 continues to read as 
follows:

    Authority: 42 U.S.C. 301, 602, 606, 606 note, 607, 1202, 1302, 
1352 and 1382 note; sec. 6 of Pub. L. 94-114, 89 Stat. 579; Part 
XXIII of Pub. L. 97-35, 95 Stat. 843; Pub. L. 97-248, 96 Stat. 324; 
Pub. L. 99-603, 100 Stat. 3359; and sec. 1883 of Pub. L. 99-514, 100 
Stat. 2916.

    2. Section 233.20 is amended by adding a new paragraph (a)(15) to 
read as follows:


Sec. 233.20  Need and amount of assistance.

    (a) * * *
    (15) For Medicaid eligibility only, pursuant to section 406(h) of 
the Act:
    (i) Each dependent child and each relative with whom such a child 
is living (including the eligible spouse of such relative pursuant to 
section 237.50(b) of this chapter) who becomes ineligible for AFDC 
wholly or partly because of the initiation of or an increase in the 
amount of a child or spousal support collection under title IV-D will 
be deemed to be receiving AFDC, but only for purposes of this paragraph 
(a)(15), for a period of four consecutive calendar months beginning 
with the first month of AFDC ineligibility. To be eligible for extended 
Medicaid coverage pursuant to this paragraph (a)(15), each dependent 
child and relative must meet the following conditions:
    (A) The individual must have become ineligible for AFDC on or after 
August 16, 1984; and
    (B) The individual must have received AFDC in at least three of the 
six months immediately preceding the month in which the individual 
becomes ineligible for AFDC; and
    (C) The individual must have become ineligible for AFDC wholly or 
partly as a result of the initiation of or an increase in the amount of 
a child or spousal support collection under title IV-D.
    (ii)(A) Except as provided in paragraph (a)(15)(ii)(B) of this 
section, individuals who are eligible for extended Medicaid lose this 
coverage if they move to another State during the 4-month period. 
However, if they move back to and reestablish residence in the State in 
which they have extended coverage, they are eligible for any of the 
months remaining in the 4-month period in which they are residents of 
the State.
    (B) If a State has chosen in its State plan to provide Medicaid to 
non-residents, the State may continue to provide the 4-month extended 
benefits to individuals who have moved to another State.
    (iii) For purposes of paragraph (i) of this section:
    (A) The new collection or increased collection of child or spousal 
support results in the termination of AFDC eligibility when it actively 
causes or contributes to the termination. This occurs when:
    (1) the change in support collection in and of itself is sufficient 
to cause ineligibility. This rule applies even if the support 
collection must be added to other, stable income. It also applies even 
if other independent factors, alone or in combination with each other, 
might simultaneously cause ineligibility; or
    (2) The change in support contributes to ineligibility but does not 
by itself cause ineligibility. Ineligibility must result when the 
change in support is combined with other changes in income or changes 
in other circumstances and the other changes in income or circumstances 
cannot alone or in combination result in termination without the change 
in support.
    (B) In cases of increases in the amounts of both the support 
collections and earned income, eligibility under this section does not 
preclude eligibility under paragraph (a)(14) of this section or section 
1925 of the Social Security Act (which was added by section 303(a) of 
the Family Support Act of 1988 (42 U.S.C. 139r-6)). Extended periods 
result from both an increase in the amount of the support collection 
and from an increase in earned income must run concurrently.
* * * * *
[FR Doc. 94-28317 Filed 11-16-94; 8:45 am]
BILLING CODE 4184-01-M