ON FEBRUARY 4, 2009, the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA") was signed into law. CHIPRA extended the State Children's Health Insurance Program (“SCHIP,” later known more simply as the Children’s Health Insurance Program or “CHIP”), established under the Social Security Act. Under CHIPRA, states may elect to subsidize premiums for employerprovided group health coverage for low-income employees who want to change their single coverage to family coverage in order to cover a CHIP- or Medicaid-eligible dependent. CHIPRA also amended the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) to provide for special enrollment rights, new notice and disclosure obligations and penalties for noncompliance under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). A model notice was published in the Federal Register on February 4, 2010.
Employers are required to provide this notice by the latter of the first day of the first plan year after February 4, 2010 or May 1, 2010. Accordingly, for plan years beginning from February 4, 2010 through April 30, 2010, the notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the notice must be provided by the first day of the next plan year (which would be January 1, 2011, for calendar year plans). Failure to comply could result in a civil penalty of $100 for each day of noncompliance multiplied by the number of plan beneficiaries.