The Children’s Health Insurance Program

The Children's Health Insurance Program Reauthorization Act Of 2009

On February 4, 2009, President Obama signed into law the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which extends and maintains health insurance coverage for millions of uninsured American children provided for by the State Children’s Health Insurance Plan (established under Title XXI of the Social Security Act). The new law, which took effect on April 1, 2009, amends the Employee Retirement Income Security Act of 1974 (ERISA) to expand enrollment rights and subsidize premiums for group health plans. Accordingly, employers sponsoring group health plans will be required not only to amend their group health plans but also to provide additional notice to employees of the availability of the expanded coverage provided under the Act. The following is a summary of the expanded enrollment rights, premium subsidy, and enhanced notification requirements imposed by CHIPRA.

Historically, employees have been permitted to enroll in group health plans sponsored by their employers only during defined open enrollment periods or upon specified events such as marriage, the birth or adoption of a child, and divorce. CHIPRA, however, provides expanded enrollment options, entitling employees and their dependents to enroll in an employer sponsored group health plan when: (1) the employee or dependent was covered under a Medicaid plan or state child health insurance plan but becomes ineligible under that plan, and (2) the employee or dependent becomes eligible to receive premium assistance for Medicaid or a state child health insurance plan. To enroll under these special enrollment provisions, the employee or his or her dependent must request coverage under the plan not later than 60 days after the eligibility determination date.

Under CHIPRA, the states providing coverage to uninsured children under a state children’s health insurance program may elect, but are not required, to offer insurance premium subsidy assistance to mitigate the cost of such coverage for eligible low-income children and families. The subsidy, if a state chooses to provide one, may be paid either directly to the employee as a reimbursement of his or her portion of the group health plan premium or directly to the employer. Should the state choose to pay the subsidy to the employer, there is an opt-out provision, under which the employer may opt-out of receiving the subsidy and instead direct that it be paid directly to the employee. The amount of the subsidy will be equal to the difference between the employee’s share of the cost of the coverage and the cost of the employee plus child or family coverage.

CHIPRA further requires plan administrators to report to the state, upon request, information about the benefits available under the group health plan with specificity sufficient to permit the state to make a determination concerning the cost-effectiveness of the state’s provision of premium subsidy assistance.

In addition to the expanded enrollment provisions and potential premium subsidies, CHIPRA requires employers that maintain a group health plan in states providing medical assistance under a state Medicaid plan or health insurance under a state children’s health insurance program to provide written notice to each employee informing the employee of the available insurance opportunities, expanded enrollment options, and the potential premium assistance opportunities which exist for the employee and his or her dependents. Such notices must be provided at or before the time employees become eligible to enroll in the group health plan. While the new law does not specifically provide for how employers must inform their employees and their dependents of the new special enrollment rights, the Department of Labor and the Department of Health and Human Services are required by the Act to establish, within one year of the Act’s enactment, national and state specific model notices to be used by employers. Significantly, employers and group health plan administrators that fail to provide the notice required under the Act may incur a fine of up to $100 a day for each day following eligibility, with each employee who does not receive the required notice being treated as a separate and distinct violation.

What must employers sponsoring group health plans do to ensure compliance with the expanded requirements imposed by CHIPRA? First, employers should amend their group health plan policies and procedures to ensure the special enrollment rights of their employees are acknowledged and properly administered. Next, employers must amend plan documents and notices to employees to accurately describe the special enrollment rights and potential premium assistance availability. On February 4, 2010, the Department of Labor issued a model notice for employers to use in drafting their annual CHIPRA notice. Employers should employ this notice, where applicable, in the states in which they do business. The model notice can be found at http://www.dol.gov/ebsa/pdf/chipmodelnotice.pdf.