New Law Establishes Special Enrollment Rights, Possible Subsidy for Children’s Health Insurance Program
A new law signed by President Obama on February 4, 2009, makes several new provisions in relation to the Children’s Health Insurance Program (CHIP) that will have varying effects on employers. The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) actually expands CHIP and creates two new HIPAA group health plan special enrollment rights that employers must allow effective April 1, 2009.
HIPAA Special Enrollment Provisions
As of April 1, 2009, a group health plan must now permit enrollment in two new situations for employees and dependents that are eligible but not already enrolled in the plan. These new situations are as follows:
- The employee or dependent’s Medicaid or CHIP coverage is terminated as a result of loss of eligibility, and the employee requests coverage under the plan within 60 days after termination; OR
- The employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP, and the employee requests coverage under the plan within 60 days after eligibility is determined.
Premium Assistance
CHIPRA also extends and expands CHIP so that states may elect to offer a premium assistance subsidy to eligible low-income children and their families for certain qualified employer-sponsored coverage. Benefits provided under Health FSAs and high-deductible health plans are specifically excluded. The subsidy may be in the form of a reimbursement to the employee or as a direct payment to the employer, and would allow those eligible for Medicaid and CHIP to purchase qualified employer coverage through premium assistance in lieu of enrolling in Medicaid or CHIP. The premium assistance is optional, and states will not be able to require families and children to receive coverage through an employer in lieu of Medicaid or CHIP.
Each state must determine whether the premium assistance will be offered. In states where premium assistance is available, employers will be required to provide written notices to employees. The Department of Health and Human Services is to provide model notices by February 4, 2010, and the notice requirement is effective for plan years beginning after the date on which the model notices are first issued.
Notice and Disclosure Requirements
In addition, CHIPRA requires group health plan administrators to disclose plan benefit information to states upon request when a participant or beneficiary is covered under Medicaid or CHIP in order to allow the states to determine the cost-effectiveness of providing premium assistance. The HHS and DOL are to provide a model coverage coordination disclosure form for plans to use to make this disclosure. States may not request the model disclosure form until the first plan year that begins after the date on which the form is first issued. Civil penalties of up to $100 a day can be assessed for failure to comply with CHIPRA’s notice and disclosure requirements.
SPECIAL NOTICE
Employers should note that North Carolina currently does not offer a premium assistance program and must pass legislation in order to offer the program. We will keep you updated if legislation is passed providing for the premium assistance. In the meantime, employers should take steps to identify all states where their employees reside and determine whether those states provide a premium assistance program.
For further information on CHIPRA, please contact our office at (919) 403-1986.
Important Notice: Hill, Chesson & Woody does not engage in the practice of law, accounting, or medicine. Therefore, the contents of this communication should not be regarded as a substitute for legal, tax, or medical advice.
March 30, 2009
Hill, Chesson & Woody Employee Benefit Services
194 Finley Golf Course Rd, Suite 200,
Chapel Hill, NC 27517
Phone: 919.403.1986
Fax: 919.869.2063
www.hcwbenefits.com