Congress recently passed the
Children's Health Insurance Program Reauthorization Act of 2009
("CHIP"). The new law, which expands eligibility for states'
existing children's health insurance programs, contains important provisions affecting employer-sponsored group health plans. The law becomes effective April 1, 2009
and includes new special enrollment rights for employees and their
dependents, a premium assistance plan for eligible low-income children
covered by an employer's group health plan, and new notice and
disclosure requirements.
New Special Enrollment Rights
CHIP creates two new special
enrollment rights for employees and dependents who are eligible for
coverage, but not enrolled in the employer's group health care plan:
(1) Employees or dependents who lose coverage under a state CHIP program or Medicaid may enroll in the company-sponsored health care plan within 60 days after their CHIP or Medicaid eligibility terminates.
(2) Employees or their
dependents who are covered under a state CHIP program or Medicaid and
who become eligible for a premium assistance subsidy under a group
health plan may enroll in the company-sponsored health plan within 60
days after their eligibility is determined.
Note that this 60-day
enrollment period is longer than the customary 30-day special
enrollment period under ERISA for employees who lose other health insurance coverage or acquire a dependent through marriage or birth. These special enrollment rights take effect April 1st.
Premium Assistance Subsidy
CHIP gives states the option to
offer a premium assistance subsidy to low-income children who are
eligible for coverage under a qualified employer-sponsored health
plan. Note that health flexible spending accounts
and high-deductible health plans are not considered qualified employer
plans under the new law. The subsidy assistance would be used to
help pay the premium under the employer's group health plan in place of
providing health coverage for low-income children through the existing state CHIP or Medicaid programs.
The state may provide the subsidy
payment directly to the employer or the employer can opt out of
directly receiving the payment and, instead, withhold the premium from
the eligible employee's paycheck and have the state reimburse the
employee directly. Employee participation in the premium subsidy
program is voluntary and an employee may elect not to receive the
subsidy.
California has not yet decided
whether to offer this subsidy, but bills are currently pending in the
Legislature that would enact the new CHIP provisions on the state
level. We will notify you if this legislation is passed.
Notice To Employees About The Premium Assistance Subsidy
Employers in states that choose to
provide the CHIP premium assistance subsidy must provide written notice
to each employee about the opportunities for state assistance in paying
health care plan premiums.
The model notice may be provided at the same time the employee receives
(1) materials about health plan eligibility, (2) materials about the
health plan's open enrollment, or (3) the plan's summary plan description.
The Department of Health and Human Services is charged with developing national and state-specific model notices by February 4, 2010.
Employers must provide the initial annual notices to their employees
starting with the first plan year beginning after the date the model
notices are first issued.
The new law imposes a civil penalty of up to $100 for failure to satisfy the notice requirements.
Disclosure To States About Employer Health Plan Benefits For Medicaid and CHIP Eligible Individuals
Plan administrators
with plans that cover Medicaid or CHIP eligible individuals must
disclose information to the state, upon request, about the benefits
available under the group health plan, as well as the plan premiums and
cost-sharing under the plan. The disclosure is intended to assist
the state in determining the availability and cost-effectiveness of the
group health plan coverage for employees with eligible family members
and to allow for coordination of coverage for the enrollees.
The Department of Labor and the Department of Health and Human Services are responsible for establishing a Working Group that will develop a model coverage coordination disclosure form no later than August 2010.
The model disclosure form will apply to state requests starting with
the first plan year beginning after the date the model coverage
coordination disclosure form is issued.
The new law imposes a civil penalty of up to $100 for failure to satisfy the disclosure requirements.
What Should Employers Do Now?
? Amend your group health
plan documents and summary plan descriptions, as necessary, to add the
new special enrollment requirements.
? Effective April 1, 2009,
be prepared to handle CHIP special enrollment requests from employees
meeting the new special enrollment requirements.
Your contact at the Firm is
ready to assist you if you have any questions about this new law or its
application to your workplace.
For more information, call us today at (818) 508-3700,
or visit us on the web, at www.brgslaw.com.
Sincerely,Richard S. RosenbergPartnerBRG&S, LLP 
