On February 4, 2009, the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) was signed into law by President Obama. CHIPRA allows states to subsidize premiums for employer-provided group health coverage for eligible children, but it also imposes certain requirements on plan sponsors. First, plan sponsors must notify employees of a new special enrollment opportunity. Second, plan sponsors must provide disclosure to their employees. Third, plan sponsors must provide disclosure to state agencies. CHIPRA applies to both fully insured and self-insured group health plans. The most pressing of these three obligations is the special enrollment changes, which are effective April 1, 2009.
Many states provide coverage to uninsured children whose family income falls under a certain level. These programs are known as the state’s Child Health Insurance Program (CHIP). Under CHIPRA, a state CHIP program now may elect to offer premium assistance to subsidize employer-provided coverage for eligible low-income children and families. The subsidy can either be provided directly to the employee or paid to the employer.
Effective April 1, 2009, a plan sponsor of a group health plan must permit employees and dependents who are eligible but not enrolled for coverage to enroll in that coverage under two scenarios:
The employee's or dependent's Medicaid or CHIP coverage is terminated as a result of loss of eligibility
The employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP
An employee must request this special enrollment within 60 days of the loss of coverage in the first scenario, and within 60 days of when eligibility is determined in the second scenario.
Disclosure to Employees
Plan sponsors that maintain group health plans 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. Plan sponsors will receive some assistance with respect to this disclosure since CHIPRA directs Health and Human Services (HHS) to develop national and state-specific model notices by February 4, 2010. These notices will then be used by plan sponsors to satisfy their disclosure obligations.
Such disclosure may be included in the employer’s open enrollment materials, as part of a summary plan description, or in materials notifying an employee of his or her health plan eligibility. For employers that provide group health coverage to employees in a number of states, this obligation may become cumbersome. The notice requirement is not effective until the plan years beginning after the date on which model notices are first issued by HHS.
Disclosure to State Agencies
CHIPRA requires plan sponsors to provide disclosure information to the states 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 assist states in determining the cost-effectiveness of providing the premium assistance subsidies. The law directs HHS and the U.S. Department of Labor 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.
Penalties for Failure to Comply
CHIPRA provides for civil penalties of up to $100 a day for failure to comply with the new notice and disclosure requirements.
What Should Plan Sponsors Do?
Plan sponsors should notify their employees with regard to their special enrollment rights as soon as possible, but no later than April 1, 2009. They should provide disclosures to employees once HHS issues its model notice, and provide disclosure to state agencies once HHS and the Department of Labor issue model forms.