CHIPRA

Under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), group health plans and group health insurance issuers must offer special enrollment opportunities to employees or dependents who lose Medicaid or Children’s Health Insurance Program (CHIP) coverage by losing eligibility or become eligible for Medicaid or CHIP assistance with group health plan premiums. The employee has 60 days from the event (loss of Medicaid of CHIP coverage, or eligibility for state premium assistance) to exercise the special enrollment rights provided in CHIPRA.

Overview

Plans and issuers must permit employees and dependents who are eligible for, but not enrolled in, a group health plan to enroll in the plan upon:

• losing eligibility for coverage under a State Medicaid or CHIP program, or
• becoming eligible for State premium assistance under Medicaid or CHIP.

Special Enrollment Timing:

The employee or dependent must request coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance. Please note that this is longer than the 30 days normally required by HIPAA’s Special Enrollment rules.

Premium Assistance:

States may elect to offer a premium assistance subsidy to help subsidize the purchase of group health coverage for children (and in some circumstances, family members) who have access to employer-sponsored coverage, but may need assistance in paying for their share of the premiums. The State may provide a premium assistance subsidy either as reimbursement to an employee for out-of-pocket expenditures or (if the employer agrees) directly to the employer. The employer-sponsored coverage must meet certain minimum requirements, including a requirement that the employer pay at least 40% of the cost of coverage. Premiums assistance is not available for health FSAs or high-deductible health plans

Notice and Disclosure Requirements

The U.S. Department of Labor issued a model federal Notice (the “Employer CHIP Notice”) for employers to use to notify employees regarding eligibility for premium assistance under Medicaid or CHIP in the employee’s state of residence.

What Must the Notice Say?

The Employer CHIP Notice, or a similar notice containing the state-specific disclosures required by CHIPRA, must inform employees of the potential availability of premium assistance in the state in which the employee resides. Employers are not required to use the Employer CHIP Notice issued by the Department of Labor. However, employers should rely on the DOL’s model notice (see the Sample Documents section) when drafting their notice, especially if the employer has employees who reside in multiple states. The model notice contains premium assistance information and contacts for every state in the United States that provides any type of qualifying assistance under CHIPRA, and will be updated annually. The fact that the DOL will permit employers to meet the CHIPRA notice obligations with a single notice referencing all states in which premium assistance is available, as evidenced by the Employer CHIP Notice, significantly simplifies the administrative burden for employers with employees residing in multiple states. The Employer CHIP Notice may be customized to meet the needs of a specific employer if necessary. Please note that it is the individual employee’s or beneficiary’s responsibility to determine whether he or she is eligible for Medicaid or CHIP premium assistance and may use the information provided on the notice to contact the appropriate State agency if assistance in determining eligibility is needed.

What Employers Must Provide a Notice?:

CHIPRA imposes a notice requirement on employers who maintain a group health plan with participants or beneficiaries (employees, dependents, COBRA qualified beneficiaries, etc.) residing in one or more states that provide medical assistance under either a state Medicaid plan (under Title XIX of the Social Security Act, or child health assistance under a state child health insurance program (under Title XXI of the Social Security Act), in the form of premium assistance for the purchase of coverage under a group health plan. Because the state in which the employee resides may or may not be the same as the state in which the employer, the health plan, its insurer, or other service providers are located, employers should take care in determining whether they are obligated to provide the notice, and may want to take the cautious approach of providing the notice to all employees.

Who Should Receive the Notice?:

All employees who reside in a state providing a premium assistance subsidy under Medicaid or CHIP must be provided an Employer CHIP Notice or similar notice containing the required state-specific disclosures. It is important to note that the notice must be provided to all employees, not just those employees who are eligible or elect to participate in the employer’s group health plan. As noted in the sections above:

• Employers may want to consider providing this notice to all employees to avoid missing any otherwise eligible employees.
• It is the individual employee’s or beneficiary’s responsibility to determine whether he or she is eligible for Medicaid or CHIP premium assistance.

How Should the Notice Be Provided?:

The notice required by CHIPRA must be sent on an annual basis, free of charge. The notice must be provided as a separate document but can be furnished along with other plan materials, such as in an open enrollment packet or Summary Plan Description (SPD), provided that:

• the materials are provided no later than the date specified under the “When Must the Notice Be Sent?” heading;
• the materials are provided to all employees entitled to receive the Employer CHIP Notice; and,
• the Employer CHIP Notice appears separately and in a manner which ensures that an employee who may be eligible for premium assistance could reasonably be expected to appreciate its significance.

See the Delivery Methods compliance activity for additional information for distributing disclosures required by ERISA and other applicable law.

When Must the Notice Be Sent?: The CHIP notice may be distributed at any time during the plan year.

Additional Disclosures: In order for States to evaluate an employment-based plan to determine whether premium reimbursement is a cost effective way to provide medical or child health assistance to an individual, plans are required to provide, upon request, information about their benefits to State Medicaid or CHIP programs. Remember to also include this new special enrollment opportunity in your disclosure about HIPAA Special Enrollment in your Summary Plan Description.