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enacted a system of payments. Section 640 of the Act requires Federal Part C funds to be used as the payor of last resort. Providing an exception to parental consent when a State statute expressly provides specific cost protections is consistent with sections 632(4)(B) and 640 of the Act.

These statutory cost protections include providing that: (1) a child or parent would not experience a loss of benefits because of annual or lifetime caps under a policy when private insurance is used to pay for Part C services; (2) a child, parent, or family member's health insurance cannot be discontinued because the coverage was used to pay for early intervention services; and (3) health insurance premiums cannot be increased due to use of the health insurance to pay for Part C services.

We understand the commenters’ concerns about potential

litigation by families and the commenters’ question about

whether all private insurance policies in a State are

subject to that State’s statutory protections. The

exceptions to parental consent identified in proposed

§303.520(b)(2) apply only to the extent that the State

statute provides the protections in that section for private insurance policies in the State. Additionally, several State statutes that fall under this exception have