PAYMENT PROCESSING

CS 537P Distribution of all Payments other than Discounted Settlements and Federal Tax Intercept Payments

06/99 Revised 05/07/18 Training Completed 06/02/17

42 U.S.C. 654b and 657; R527-330

 

 

Federal law (42 USC 654b and 657) and state rules (R527-330) dictate how the Office of Recovery Services/Child Support Services (ORS/CSS) must distribute and disburse payments.   

 

 

Levels of Distribution

 

To meet these requirements, the Office of Recovery Services Information System (ORSIS) has been programmed to automatically distribute and disburse, if appropriate, all payments. There are four levels of distribution within ORSIS, which is used for all payments except discounted settlements and Federal tax intercept payments.  The four levels of distribution are as follows:

 

1.                   Level 1 - Current Support Debts:  When a payment is received it is applied to the support due for the month the payment was received/ receipted in the State Disbursement Unit (SDU).  If a payment is received/receipted in a prior month and posted in another month, ORSIS applies the payment to the month the payment was received; e.g., the payment was received on July 26, 2003 and posted on August 3, 2003, the payment will be applied to the support due for the month of July 2003. 

 

ORSIS determines the amount of unpaid current support due for the month, pro-rates the payment, and applies it to the appropriate current support debt(s), which includes the following debt types:

a.                   CRS (current child support);

b.                  CSS (current spousal support);

c.                   CRF (current non-custodial parent {NCP} applicant payment processing fee); and,

d.                  CRW (current income withholding fee). 

 

This process continues with each payment received until all unpaid current support due has been paid for the month.  If the payment is posted with an override to the case number, it is distributed to the unpaid current support due for that case.

 

 

EXAMPLE:  This example illustrates how ORSIS pro-rates payments to current support debt(s) (after the payment is posted to the HLCI level).

·         NCP has two cases: 

o   Case #1:  AFDC CRS01 - $200.00;

o   Case #2:

§  NADC CRS01 - $125.00; and,

§  NADC CSS01 - $75.00. 

·         NCP pays $200.00 each week.

 

 

Payments:

Distributed to:

Case #1

Case #2

AFDC CRS01

Amt Due $200.00

NADC CRS01

Amt Due $125.00

NADC CSS01

Amt Due $75.00

Pmt Amt

Received

Amount applied

Debt Balance

Amount applied

Debt Balance

Amount applied

Debt Balance

September 2009

 

$200.00

 

$125.00

 

$75.00

$200.00

09/05/09

$100.00

$100.00

$62.50

$62.50

$37.50

$37.50

$200.00

09/12/09

$100.00

$0.00

$62.50

$0.00

$37.50

$0.00

October 2009

 

$200.00

 

$125.00

 

$75.00

$200.00

10/05/09

$100.00

$100.00

$62.50

$62.50

$37.50

$37.50

$200.00

10/12/09

$100.00

$0.00

$62.50

$0.00

$37.50

$0.00

 

·                     ORSIS prorates and distributes the payment to the current support debts as follows (see illustration above):

o        $100.00 to the AFDC CRS01;

o        $62.50 to the NADC CRS01; and,

o        $37.50 to the NADC CSS01.

 

2.                   Level 2 - Arrears Debts with Monthly Amounts Due at the Debt Level):   After current support has been paid, ORSIS looks for and identifies all debt(s) that are coded for an arrears payment.  The payment is then pro-rated among all qualifying debts until the AMT DUE is met.   

 

3.                   Level 3 – Arrears Debts for Pay Off:  After the current support debts and arrears debts with monthly amounts due at the debt level have been paid, ORSIS will determine if the case the payment is intended for is a IV-A current support case.  If the case assistance type is:

a.                   “A” (Aid to Families with Dependent Children) – The payment will be applied to the arrears debts on that case from the oldest to newest based on the debt accrual start date.

b.                  “N” (No assistance) or “M” (Medicaid Only Assistance) – The payment is applied to the arrears debts on the case from oldest to newest arrears debt(s), based on the debt accrual start date found on the 408 screen within the following debt group order:

i.                     NADC (Non-IV-A);

ii.                   DCNS (Day-Care Non-State paid);

iii.                  MNMC (Non-IV-A medical);

iv.                 COND (Non-IV-A conditionally assigned);

v.                   FSCN (Non-IV-A foster care);

vi.                 YCOR (Youth Corrections);

vii.                FDHS (DHS Custody);

viii.              CSUP (Child Support – Child in Care);

ix.                 PARM (Parent Responsibility Medical – State Hospital);

x.                   PARS (Parental Responsibility – State);

xi.                 TEMP (Temporarily Assigned Arrears);

xii.                AFDC (IV-A);

xiii.              MDMC (IV-A Medical Support);

xiv.              DCST (Day-Care State paid);

xv.               FSCA (IV-E Foster Care);

xvi.              YCOA (IV-E Youth Corrections);

xvii.            UDAA (Non-IV-A Unassigned During Assistance);

xviii.           FEES;

xix.              FSMN (Non-IV-E Foster Care Medical);

xx.               YCMN (Youth Corrections Medical); and,

xxi.              FSMA (IV-E Foster Care Medical).

 

When the pro-rated amount exceed the balance owing on the case, the remaining amount is pro-rated equally among the other cases (except NIVD cases – see Level 4) until the payment is fully applied or all debts are paid. 

 

EXAMPLE 1:  Assignment during October 1, 1997 through September 30, 2009.

·                     Family applies for and receives TANF beginning September 1, 2009;

·                     Current support is $300.00; and,

·                     NCP owes $600.00 in arrears (TEMP debt).

 

 

Payments:

Distributed to:

Case 01 – AFDC 09/01/2009

AFDC CRS01

$300.00

TEMP AUO

$600.00

AFDC AUO01

Pmt

Amt

Date

Rcvd

Amt Applied

Debt

Bal

Amt

Applied

Debt

Bal

Amt

Applied

Debt

Bal

No pmt in September

 

 

 

$600.00

 

$300.00

October 2009

 

 

 

 

 

 

$400.00

10/05/09

$300.00

$0.00

$100.00

$500.00

 

 

$400.00

10/15/09

 

 

$400.00

$100.00

 

 

$400.00

10/25/09

 

 

$100.00

$0.00

$300.00

$0.00

 

·                     September 2009 – NCP does not make a payment.  The $300.00 CRS balance rolls to the AFDC AUO01 debt.

·                     October 5, 2009 – NCP pays $400.00.  $300.00 distributes to the AFDC CRS01 debt and $100.00 distributes to the TEMP AUO01 debt.

·                     October 15, 2009 – NCP pays $400.00.  $400.00 distributes to the TEMP AUO01 debt.

·                     October 25, 2009 – NCP pays $400.00.  $100.00 distributes to the TEMP AUO01 debt and $300.00 distributes to the AFDC AUO01 debt.

 

NOTE:  If the payment is RWD (Receipt Income Withholding), RBP (Receipt Bill Pay), or RMA (Receipt Military Allotment), it can only distribute to arrears debts that have been included in the income withholding order.  For more information on income withholding payments, refer to “Distribution of Income Withholding Payments” below.

 

EXAMPLE 2:  Assignment after September 30, 2009.

·                     Family applies for and begins receiving TANF October 1, 2009;

·                     Current support is $300.00; and,

·                     NCP owes $600.00 in NADC arrears.

 

 

 

Payments:

Distributed to:

Case 01 – AFDC 09/01/2009

AFDC CRS01

$300.00

AFDC AUO

 

NADC AUO01

$600.00

Pmt

Amt

Date

Rcvd

Amt Applied

Debt

Bal

Amt

Applied

Debt

Bal

Amt

Applied

Debt

Bal

No pmt in October

 

 

 

$300.00

 

$600.00

November 2009

 

 

 

 

 

 

$400.00

11/05/09

$300.00

$0.00

$100.00

$200.00

 

$600.00

$400.00

11/15/09

 

 

$200.00

$0.00

$200.00

$400.00

$400.00

11/25/09

 

 

 

 

$400.00

$0.00

 

·                     October 2009 – NCP does not make a payment.  The $300.00 CRS balance rolls to the AFDC AUO01 debt.

·                     November 5, 2009- NCP pays $400.00.  $300.00 distributes to the AFDC CRS01 debt and $100.00 distributes to the AFDC AUO01 debt.

·                     November 15, 2009 – NCP pays $400.00.  $200.00 distributes to the AFDC AUO01 debt and $200.00 distributes to the NADC AUO01 debt.

·                     November 25, 2009 – NCP pays $400.00.  $400.00 distributes to the NADC AUO01 debt.

 

4.                   Level 4 - Arrears Debts on NIVD (Team 59) Cases for Pay-Off:  After the current support debts, arrears debts with monthly amounts due at the debt level, and arrears have been paid, ORSIS applies any remaining money/payments to NIVD (Non-IV-D Team 59) cases as long as the case is coded with the correct payment source.

 

If there is not a NIVD case or the arrears have been paid in full, the payment appears on the funds remaining report (may be a future support payment).  The worker must refund the payment to the NCP. 

 

 

Distribution of Income Withholding Payments

 

ORSIS distributes income withholding payments and military allotments to the appropriate case(s) included in the Notice to Withhold Income for Child Support: Earned Income Withholding Packet or the appropriate cases included in the APW (Automatic Payment Withdrawal) agreement.  ORSIS verifies which cases were included in the notice and distributes the money according to 42 U.S.C. 657(a).

 

 

Distribution of Fees

 

1.                   Annual Fee For Child Support Services – ORS will collect an annual $25.00 user collection fee on each IVDS case where the custodial parent has never received cash assistance (i.e., TANF or AFDC).  The fee is paid by the custodial parent and is retained from child support collected on behalf of the custodial parent after $500.00 has been disbursed within a one-year period.  The one-year period is measured from October 1 through September 30 each year, beginning October 1, 2006 (federal fiscal year). 

 

2.                   Payment-processing Fees:

a.                   Custodial parents (CP) applicant – 6% of the payment amount is withheld from each payment disbursed (up to $12.00 per month) to the family, when the applicant code in ORSIS is “C” (Custodial Parent) and the family is NOT receiving financial assistance or MEDICAID.  The fee is not charged on any payment amounts that distribute to a State owed debt group.  The fee is automatically deducted from the disbursement check before it is sent or electronically transferred to the CP.

 

NOTE:  If the case is Non-IV-A and the NCP is paying an income withholding fee, the CP may be reimbursed for part ($3.50) of the payment-processing fee.  The income withholding fee will not be disbursed to the CP when the payment amount applies to a State owed debt group.

b.                  NCP applicant – 6% of each payment amount that is allocated to a case is charged to the NCP (up to $12.00 per month), when the applicant code in ORSIS is “N” (Non-Custodial Parent) and the family is NOT receiving financial assistance or MEDICAID.  The payment processing fee amount is deducted before the payment is applied to the balance due by using a CRF (Check Fee) debt.  A payment processing fee amount is not deducted for payment amounts that distribute to a State owed debt group.

 

3.                   Convenience Fees – When an NCP uses the Online Payment (OLP) Web Application or calls the ORS Employer/Agency Customer Service Unit (EACSU) to make a payment using a credit card, debit card, or e-check, a convenience fee is assessed for these services.  The fee of $2.00 for OLP processing or $6.00 for phone payment processing is added to the NCP’s payment as a FEES transaction.

 

4.                   Income Withholding Fees – If the NCP is paying by income withholding AND is subject to an income-withholding fee, AND the CP is NOT receiving TANF or Medicaid, you must manually add income withholding fees debts to the obligation. The income withholding fee will not be disbursed to the CP when the payment applies to a State owed debt group. 

 

 

Funds Remaining

 

When a payment is not able to distribute and/or disburse, it appears on the Funds Remaining Report.  Because payments must be disbursed to the CP within two business days, in accordance with 42 U.S.C. 654b (see above), you must work the Funds Remaining Report daily.