The Children’s Health Insurance Program Reauthorization Act (“CHIPRA”) extends the existing Children’s Health Insurance Program (CHIP) through 2013. CHIPRA expands and preserves health insurance coverage for low-income uninsured children who do not qualify for Medicaid.
Special Enrollment Rights
Group health insurance plans are now required to permit nonenrolled employees and their eligible dependents to enroll in the plan outside of the annual open enrollment period if either of the following qualifying events occurs:
- Termination of the employee’s or dependent’s Medicaid or CHIP coverage due to loss of eligibility; or
- The employee or dependent becomes eligible for either Medicaid or CHIP premium assistance subsidies under the employer’s group health plan.
In either circumstance, the employee must request coverage within 60 days of the qualifying event. Employers should note that this 60-day period is longer than the existing special enrollment period of 30 days. Plan sponsors must take action immediately to implement these new special enrollment rights which will require updates to existing notice, enrollment materials, plan documents and summary plan descriptions.
Additional Coverage and Enrollment
CHIPRA expands both the type of coverage offered and who may enroll. First, CHIPRA requires that CHIP enrollees have dental coverage. If a CHIP-eligible child has private insurance that does not include dental coverage, he or she can receive this benefit through CHIP. CHIPRA also expands coverage to pregnant women. Further, legal immigrants are no longer subject to a 5-year waiting period to apply for CHIP benefits.
State-Funded Premium Assistance Subsidy to Employers or Employees
CHIPRA authorizes states to elect to subsidize some or all of the premiums for qualified employer-sponsored coverage for eligible low-income children and their families. States can reimburse the employer or the employee the difference in cost between the state plan and the employer’s plan. Employers can choose to opt out of directly receiving the subsidy payment by notifying the state, in which case the state would reimburse the employee directly. Presently, only a few states have assistance programs, but it is expected that CHIPRA will spur an increase in such programs.
Sponsors of group health plans in states that offer medical assistance under state Medicaid or a premium assistance subsidy through a state child health plan will have to give written notice to employees of the subsidy. These notices can be included with the initial hiring materials or offered during the annual open enrollment period along with the Summary Plan Description. In addition, the state may request from employers with participants covered under Medicaid or CHIP certain information about the group health plans benefits. Model notices for both requirements should be available from the Department of Labor in 2010. The deadline to comply with the notice requirements is the first plan year after the model notices are issued. The DOL may assess civil penalties for failure to comply. In the meantime, state-specific model notices can be used for notifying employees.
The general effective date for CHIPRA is April 1, 2009. For the reasons stated above, the effective date of the new notice and state disclosure forms has been delayed until 2010.
Plan sponsors should ensure that plan documents, summary plan descriptions and notices are in compliance with the two new special enrollment rights and, if these documents have not been amended yet, should take immediate action.