On Feb. 4, 2009, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) was signed into law by the President. CHIPRA extends and expands the State Children’s Health Insurance Program. This new law:
· Allows states to subsidize premiums for qualified employer-sponsored coverage for State Children’s Health Insurance Program (SCHIP) eligible children, if the parent elects to receive the subsidy. (Eligible children are under age 19 and entitled to Medicaid).
· Allows the state to make subsidy payments directly to the employee or to the employer.
· Provides new special enrollment rights for group health plans.
· Enacts new notice and disclosure obligations for employers that maintain group health plans.
CHIPRA applies to both small and large group medical coverage for fully insured and self-insured group health plans. A health flexible spending account (FSA) and a High Deductible Health Plan (HDHP) are not eligible, as they are not considered qualified employer-sponsored coverage.
The most significant impact is the special enrollment change, which is effective April 1, 2009.
Premium Assistance Subsidy
States may elect to provide premium assistance subsidies to low-income employees. The subsidy can be provided directly to the employee or can be paid to the employer.
Special Enrollment Rights
Effective April 1, 2009, group health plans must permit employees and dependents who are eligible but not enrolled for coverage to enroll in that coverage under two circumstances:
· The employee’s or dependent’s Medicaid or CHIP coverage is terminated as a result of loss of eligibility. The employee must request this special enrollment within 60 days of the loss of termination; or
· The employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP. The employee must request coverage within 60 days after eligibility is determined.
Notice to Employees
Employers maintaining a group health plan in states that provide Medicaid or CHIP assistance in the form of premium assistance subsidies are required to provide written notices to their employees, informing them of the potential opportunities for premium assistance.
The new law requires the Department of Health and Human Services (HHS) to develop national and state-specific model notices by February 4, 2010. These notices will then be used by employers in their open enrollment materials, as part of a summary plan description, or in materials notifying an employee of his or her health plan eligibility.
The notice requirement is not effective until the plan years beginning after the date on which model notices are first issued by HHS. Plan year is the calendar, policy or fiscal year designated by the employer sponsoring the plan to keep plan records. It is generally a 12-month period, although a shorter period is sometimes used for specific reasons (e.g., very first year, final year, change of plan year, etc.). For example, if the model notice is issued 2/1/2010, and the plan is a:
· Calendar-year plan, the notice requirement applies 1/1/2011.
· Fiscal-year plan, the notice requirement applies 7/1/2010.
· Policy-year plan, and the policy year begins 3/1/2010, the notice requirement applies 3/1/2010.
Disclosure to States
CHIPRA requires employers/plan sponsors to disclose information to the state about when a plan participant or beneficiary is covered under the company’s group health plan and Medicaid or CHIP. This disclosure is designed to help states determine the cost-effectiveness of providing the premium assistance subsidies. The HHS and the Department of Labor must establish a work group to develop a model disclosure form for this purpose. States may not request this information until the first plan year that begins after the date on which the model form is first issued.
Penalty for Non-Compliance
Employers will face civil penalties of up to $100 a day for failure to comply with the new notice and disclosure requirements.