Resources
New Notice Requirement of Group Health Plan Sponsor CHIPRA Premium Assistance
March 8, 2010
The Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) imposes certain notice requirements on employers maintaining group health plans. Under CHIPRA, beginning in April 2009, employers sponsoring group health plans must provide notice of the new special enrollment rights CHIPRA affords.
DOL Publishes Model Notice
Under CHIPRA, the Departments of Labor (“DOL”) and Health and Human Services had to develop a model notice for employer-sponsors to use to inform each employee of certain premium assistance opportunities currently available in the employee’s state of residence.
The Employer CHIP Notice is a word-processing format so that it can be updated and customized. For model notice go to: http://www.dol.gov/ebsa/chipmodelnotice.doc
Who Must Receive Notice and When?
The Employer CHIP Notice is to be provided to employees residing in a state that provides medical assistance under a state Medicaid plan or child health assistance under the state’s child health plan, regardless of where the employer is located or where the plan is insured (if insured).
Each employer sponsoring a group health plan must provide the Employer CHIP Notice to applicable employees beginning with the first plan year that starts after February 4, 2010 – i.e., January 1, 2011, for group health plans that are on the calendar year. (If the plan year begins between February 4, 2010, and May 1, 2010, the initial Employer CHIP Notice must be provided by May 1, 2010.) The Notice may be given to employees together with the group health plan’s eligibility and enrollment information, open enrollment packets, or summary plan description as long as it appears as a separate notice and in a way that ensures employees will appreciate its significance.
How Can Employers Meet Multiple State Requirements?
The Employer CHIP Notice need not be customized for each state. Currently, 40 states offer one or more programs that provide state Medicaid assistance and/or state child health plan assistance. Thus, it may be easier administratively for most employers with employees residing in multiple states to send the same notice to each employee, regardless of the state in which the employee resides (e.g., using the same notice nationwide), although the notice will be longer because it must include contact information for each state. The DOL’s model notice is designed for nationwide use.
DOL Will Update Model Each Year
DOL states that it intends to update the model notice each year to reflect changes in contact information and the states offering state Medicaid assistance and/or state child health plan assistance. Therefore, employers should plan to update the Employer CHIP Notice annually.
Special Enrollment Rights Under Group Health Plans
The Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) requires group health plans to provide two new special enrollment rights as of 04/01/09.
Current Special Enrollment Rights
The Health Insurance Portability and Accountability Act (“HIPAA”) already requires group health plans to permit individuals to enroll upon the occurrence of specified events instead of having to wait until the plans’ next open enrollment period. Generally, the special enrollment rights are triggered when an individual with other health coverage loses that coverage or when a person becomes a new dependent through marriage, birth, adoption or placement for adoption.
When Are New Rights Triggered?
The new special enrollment events occur when an employee or dependent child –
loses eligibility for coverage under Medicaid or a State Children’s Health Insurance Program (acronym “CHIP”, for children whose families do not qualify for Medicaid); or
becomes eligible for premium assistance from Medicaid or CHIP allowing him or her to enroll in a group health plan.
What Must the Health Plan Do?
The group health plan must provide a special enrollment period of at least 60 days for these events. This is longer than the minimum 30-day period required for special enrollment events already available. The 60-day CHIPRA special enrollment period is measured from the date of coverage loss or eligibility for premium assistance, whichever applies.
Are Cafeteria Plans Affected?
If an employer sponsors a cafeteria plan that permits election changes to be made that correspond to special enrollment rights, the new CHIPRA special enrollment rights also could trigger election changes.
What Do Employers/Administrators Have to Do Now?
Review/Amend Plans
Sponsors and administrators should review, and, where needed, revise health plan documents, summary plan descriptions, and special enrollment right notices accordingly. If the plan is an insured plan, a PPO or HMO, check whether the insurer or other provider group has issued these amendments.
Notify Employees of Enrollment Rights
Group health plan sponsors should notify employees now about the new CHIPRA special enrollment rights. If the plan is an insured plan, PPO or HMO, coordinate notices with the carrier or other provider organization. These notices need to be provided by 04/01/09.
Does CHIPRA Impose Other Requirements on Sponsors and Administrators?
Notices to Employees-State Premium Subsidies
CHIPRA also imposes certain notice requirements on sponsors and administrators of group health plans to inform employees about the availability of state subsidies to help pay for low-income children’s coverage under group health plans. For model notice go to: http://www.dol.gov/ebsa/chipmodelnotice.doc. These notices can be provided as part of a plan’s enrollment materials and other disclosure materials.
Disclosure to States
The law requires plan administrators to disclose to states, upon request, information about plan benefits, if a participant or beneficiary is covered under Medicaid or CHIP. The DOL and HHS will develop a model form for this purpose; states may not request this disclosure until the plan year after the models are issued.
Is There a Penalty for Failure to Comply?
The law imposes civil penalties and excise taxes of up to $100 a day for failure to comply with the notice of state premium subsidies and disclosure of plan benefit requirements and the special enrollment rights.
Should you have any questions, please contact Sherrie Zenter at 818-933-2739 or szenter@mmibi.com.
