The Employee Benefits Security Administration of the Department of Labor (DOL) issued a model notice (the CHIP Notice) on February 4, 2010, for employers to use to comply with the requirements of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA).
CHIPRA requires group health plans to offer special enrollment rights under the Health Insurance Portability and Accountability Act of 1996 for employees and dependents who lose eligibility for coverage under Medicaid or a Children’s Health Insurance Program (CHIP), or who become eligible for state premium assistance under Medicaid or CHIP. In order to be eligible for these special enrollment rights, an employee or dependent must request coverage within 60 days of termination of coverage under Medicaid or CHIP, or within 60 days of a determination of eligibility for premium assistance.
CHIPRA also requires employers that sponsor group health plans to notify employees of potential opportunities that are currently available in the states in which employees reside for premium assistance under Medicaid or CHIP toward an employer’s group health plan coverage. The model notice is intended to satisfy this requirement.
Employers Subject to the Notice Requirement
An employer is required to provide a CHIP Notice if it maintains an insured or self-insured group health plan under which it offers benefits in a state that provides a premium assistance subsidy under Medicaid or CHIP. As of March 3, 2010, the following states offer one or more programs that meet this standard:
An employer must provide the CHIP Notice to employees who reside in these states, regardless of the employer’s location or principal place of business (or the location or principal place of business of the group health plan, its administrator, its insurer or any other service provider affiliated with the employer or the plan). The DOL expects to update its website annually with the list of states that offer premium assistance programs.
Employees Entitled to Notice
An employer must distribute the CHIP Notice to each employee who resides in a state that offers a premium assistance program under Medicaid or CHIP, regardless of an employee’s enrollment status in the employer’s group health plan. For administrative ease, the employer is permitted to send the CHIP Notice to all employees – including employees who reside in states that do not currently offer a premium assistance program.
Form and Content of the Notice
The CHIP Notice must inform employees of potential opportunities that are currently available for premium assistance in the purchase of group health plan coverage. Because the model CHIP Notice is designed to cover many situations in which employees who reside in various states may be entitled to benefits, the model notice provides only a brief description of premium assistance and relies on state contact information to provide employees with state-specific program descriptions. Employers are permitted to customize the CHIP Notice to include more comprehensive state-specific information or to delete information about states in which no employees or dependents reside. Alternatively, an employer may choose to provide contact information for all of the states listed in the model notice, even if the employer has no employees in some of the states, to cover situations in which an employee’s dependent resides in a different state than the employee. The CHIP notice must be provided free of charge and written in a manner that is understandable to the average participant.
Timing and Delivery of Notice
Employers are required to provide an inital CHIP Notice by the later of either: (1) the first day of the first plan year after February 4, 2010, or (2) May 1, 2010. Accordingly, for plan years beginning between February 4, 2010, and May 1, 2010, employers must provide the CHIP Notice by May 1, 2010. For plans with plan years that begin after May 1, 2010, employers must provide the CHIP Notice by the first day of the upcoming plan year (i.e., January 1, 2011, for calendar year plans). After the intial CHIP Notice is distributed, employers must provide notice annually.
The CHIP Notice is not required to be provided in a separate mailing. Instead, employers may furnish the notice with other Plan materials (i.e., enrollment packets, open enrollment materials or the summary plan description), provided that the materials are distributed to all employees who are entitled to receive the notice. In addition, the CHIP Notice must appear as a separate and prominent document, so that an employee can be reasonably expected to appreciate the significance of the document.
Employers may distribute the CHIP Notice through first-class mail or electronically, provided that the DOL safe harbor requirements for electronic disclosures have been met.
You can view the model notice on the DOL website at http://www.dol.gov/ebsa/ chipmodelnotice.doc.