While Economic Stimulus legislation garnered most of the media attention last year for new legislation, President Obama signed another new bill into law in 2009 expanding special enrollment rights under employer group health plans. The bill (The Children’s Health Insurance Program Reauthorization Act of 2009, or CHIPRA) made other changes relevant to state children’s health insurance programs, and these changes affect employer group health plans.
On Feb. 4 of this year, the U.S. Department of Labor issued a model Employer CHIP Notice to inform employees of opportunities available in their state of residence for group health plan premium assistance under Medicaid or the Children’s Health Insurance Program.
Special Enrollment Rights
As of last year, in two circumstances, group health plans must permit non-enrolled employees and dependents who are eligible for coverage to enroll outside the normal open enrollment period for coverage under the plan.
Enrollment must be permitted if either the employee’s or dependent’s coverage under Medicaid or CHIP is terminated as a result of loss of eligibility, and the employee requests coverage under the plan within 60 days after such termination. In addition, enrollment must be permitted if the employee or dependent becomes eligible for a Medicaid or CHIP premium assistance subsidy and the employee seeks coverage under the plan within 60 days after eligibility is determined.
Premium Assistance Subsidy
Pursuant to CHIP, states may elect to offer a premium assistance subsidy to qualifying low-income children under age 19 for “qualified employer-sponsored coverage,” in the form of a reimbursement to the employee, or as a direct payment to the employer.
“Qualified employer sponsored coverage” is defined by the Act as a group health plan or health plan insurance (other than health FSAs or HDHPs), offered through an employer, that qualifies as creditable coverage under the PHSA, for which the employer contribution toward any premium is at least 40 percent, and which is offered to all participants in a nondiscriminatory manner. Health Flexible Spending Account and high-deductible health plan benefits are specifically excluded from this definition. An employer can notify a state that it elects to opt out of receiving the direct payment; if an employer chooses this option, the employer will withhold the amount of the employee contribution required to enroll the employee and the employee’s child, and the state will pay the premium assistance subsidy directly to the employee.
Notice to Employees
Employers that maintain group health plans in states electing to provide the premium assistance subsidy are required to provide written notice to their employees, informing them of the potential opportunities for premium assistance in the states where they reside. As stated earlier, the U.S. Department of Health and Human Services has developed national and state-specific model notices as of this month. The notice requirement is effective for plan years beginning on or after the date on which the model notices are first issued. The notice can be provided with other plan materials informing an employee of health plan eligibility, or with open enrollment materials.
Disclosure to States
CHIPRA requires plan administrators to disclose information about plan benefits to the states upon request. The information will help states determine whether it’s efficient to provide the premium assistance subsidy in order to obtain coverage for the child and his or her family under the employer group health plan rather than providing coverage under a state CHIP. The information is also intended to assist the states in determining whether it is necessary to provide supplemental coverage.
CHIPRA authorizes civil penalties up to $100/day for failure to comply with the employee notice and state disclosure requirements.