President Obama signed into law early last year the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). CHIPRA allows states to subsidize premiums for employer-provided group health coverage for eligible children, but it also imposes certain obligations on plan sponsors (employers). Many states provide coverage to uninsured children whose family income falls under a certain level. These programs are known as the state’s Child Health Insurance Program (CHIP). Under CHIPRA, a state CHIP program now may elect to offer premium assistance to subsidize employer-provided coverage for eligible low-income children and families. The subsidy can either be provided directly to the employee or paid to the employer.
Disclosure Notice to Employees
Under CHIPRA, any employer who offers group health coverage to employees must provide notice to all employees (regardless of their participation status) of state health insurance premium assistance for dependents that employees may be eligible for.
This notice must be provided by the later of:
- The first day of the first plan year after February 4, 2010; or May 1, 2010. Accordingly, for plan years beginning between February 4, 2010 and April 30, 2010, this notice must be provided no later than May 1, 2010.
- For plan years beginning on or after May 1, 2010, the notice must be provided by the first day of the next plan year (January 1, 2011 for calendar-year plans).
Such notice is not required to be provided in a separate mailing. Plans may combine information to reduce administrative costs and may be included concurrently in the Plan’s open enrollment materials, as part of a summary plan description, or in materials notifying an employee of his or her health plan eligibility.
Civil penalties of up to $100 per day may be assessed on employers for each day that the notice is not provided.
The U.S. Department of Labor (DOL) released this month a model notice that plan sponsors can use.
This notice must be provided annually.
The notice must be provided in writing in a manner calculated to be understood by the average employee.
It may be provided by first-class mail. Alternatively, it may be provided electronically to the extent the criteria of the DOL's electronic disclosure safe harbor is satisfied.
Special Enrollment
As a reminder, effective April 1 of last year (2009), a plan sponsor of a group health plan must permit employees and dependents who are eligible, but not enrolled, for coverage to enroll in that coverage under two scenarios:
- The employee's or dependent's Medicaid or CHIP coverage is terminated as a result of loss of eligibility – An employee must request this special enrollment within 60 days of the loss of coverage in this scenario
- The employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP – An employee must request this special enrollment within 60 days of when the eligibility is determined in this scenario
Disclosure to State Agencies
CHIPRA also requires plan sponsors to provide disclosure information to the states when a plan participant or beneficiary is covered under the company’s group health plan and Medicaid or CHIP. This disclosure is designed to assist states in determining the cost-effectiveness of providing the premium assistance subsidies. The law directed the HHS and the U.S. Department of Labor to develop a model disclosure form for this purpose. As of the publication of this bulletin, the HHS and the DOL have not issued a model disclosure notice for this purpose. States may not request this information until the first plan year that begins after the date on which the model form is first issued.
