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 
