Earlier this year, President Obama signed into law the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which extends and expands the Children's Health Insurance Program (CHIP). CHIPRA includes provisions that affect all employer-sponsored group health plans.
CHIPRA created a new 60-day special enrollment period for employer sponsored group health plans. Group health plans must permit an employee or dependent to enroll if: (1) the employee or dependent loses coverage under Medicaid or CHIP as a result of a loss of eligibility; or (2) the employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP (described below). In either case, the employee has 60 days to request coverage under the group health plan. Because this provision became effective on April 1, 2009, employers need to revise their plan documents, Summary Plan Description and current notices of special enrollment to describe the new Medicaid/CHIP provisions, including the 60-day period to request enrollment. Employers should include updated notices in enrollment materials for newly eligible employees and may wish to issue a special notice informing all current employees about their new special enrollment rights.
CHIPRA also permits (but does not require) individual states to provide premium assistance to qualifying children (and, in some cases, their employed parents) to help pay “qualified employer-sponsored coverage” premiums. Qualified employer-sponsored coverage is defined as group health plan or health insurance coverage offered through the employer which meets the following requirements:
- The coverage must be “creditable coverage” for Health Insurance Portability and Accountability Act (HIPAA) purposes;
- The employer contribution toward the cost of any premium for the coverage must be at least 40%; and
- The coverage must be available to individuals in a manner that would be considered nondiscriminatory under Internal Revenue Code rules.
Health Flexible Spending Accounts, Medical Reimbursement Accounts and high deductible health plans are all excluded from qualified employer-sponsored coverage.
Prior to CHIPRA, some states (including Illinois) already had a premium assistance program in place. These states are permitted to keep their current programs or expand them to reflect the new CHIPRA premium-assistance laws. At this time, none of the states with premium assistance programs have changed their programs to comply with CHIPRA, and it is not clear whether any will. It is also not known which states will elect to begin offering premium assistance.
Nonetheless, employers in states that offer premium assistance will need to notify employees of the availability of state premium assistance and respond to state agency requests for information about an employee’s or a family member’s plan coverage. The Departments of Labor and Health and Human Services must jointly develop and issue model notices within one year of CHIPRA's enactment (by February 4, 2010). Employers must begin providing the notice to employees starting with the first plan year beginning on or after the date the model notices are issued in final form. Employers that fail to provide the required employee notice may be subject to a penalty of $100 per day for each violation, and the penalty is calculated with each employee who does not receive the notice considered a separate violation. Additionally, plan administrators that do not respond to state information requests face similar penalty assessments.
Even if your state chooses to provide premium assistance, employers are allowed to opt-out of being reimbursed for the premium subsidy. If an employer chooses to opt-out, the employer is effectively removed from the subsidy process, and the state will then make its reimbursement for the subsidy directly to the employee. This opt-out option will allow the employer to continue to withhold the full amount of the employee contribution required for coverage of the employee and the low-income child under the employer’s group health plan.