Children’s Health Insurance Program Reauthorization Act of 2009: New Special Enrollment Rights Effective April 1, 2009
By Ryan T. Neumeyer
Recently, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which extends the State Children’s Health Insurance Program (CHIP) (i.e. in Ohio such a program is called Healthy Start) was enacted. Ohio’s Healthy Start program provides health coverage for children and pregnant women whose income levels are, at the most, 200% over the federal poverty level; and families which are, at the most, 90% over the poverty level. You might be asking yourself what this has to do with employers. However, as with many recent laws passed by the new government, CHIPRA puts new obligations on employers. The first obligation concerning special enrollment discussed in Section A. below is effective immediately. The second and third obligations discussed in Section B. concerning State CHIP subsidies will be effective at a later date.
A. Special Enrollment. Beginning on April 1, 2009, CHIPRA requires a group health plan to permit an employee who is eligible, but not enrolled, for coverage under the plan (or a dependent of such an employee if the dependent is eligible, but not enrolled for coverage) to enroll if either of the following conditions are met:
- the employee or dependent covered under Medicaid or CHIP has coverage terminated as a result of loss of eligibility, and the employee requests coverage under the group health plan within 60 days after such termination; or
- the employee or dependent becomes eligible for Medicaid or CHIP assistance if the employee requests coverage within 60 days after the eligibility determination date.
This special enrollment period is different than the existing special enrollment rules for loss of private plan coverage and changing family status because of birth or marriage under HIPAA, as those rules provide for only a 30 day period in which to request coverage due to a change in status. HIPAA regulations require group health plans to furnish a notice of special enrollment rights at or before the time an employee is initially offered the opportunity to enroll in the group health plan*. These notices, as well as any other plan documents your company produces as the plan administrator should be updated to reflect the CHIPRA special enrollment period.
As explained below the portions of CHIPRA regarding the subsidy do not apply to certain plans. However, this is not the case with the special enrollment provisions. Although flexible spending arrangements (FSA’s), or Flexible Spending Accounts, as they are commonly called, that are exempt from HIPAA’s portability provisions will most likely also be exempt from the special enrollment provisions, this cannot be certain until further regulations clarify the matter. Therefore, unless further regulatory clarifications suggest otherwise, we recommend that regardless of what type of plan your company may have, that it begin to fulfill CHIPRA’s requirements in regards to special enrollment. Going forward employer’s should do the following:
- as stated above, employer plan documents regarding enrollment will need to be amended to reflect the 60 day special enrollment period; and
- employees or dependents who are eligible and not enrolled and meet either of the two conditions discussed above should be allowed to enroll.
B. State Subsidy for Employee Coverage Costs. As stated above, the obligations discussed below are not yet effective. Under CHIPRA, a State CHIP program, such as Ohio’s Healthy Start, may elect to offer premium assistance to subsidize employer-provided coverage for eligible low-income children and families. The amount of the subsidy is equal to the difference between the employee’s share of the cost for employer-provided single coverage and the cost of the employee plus child or family coverage. Section 125 FSA’s, high deductible health plans, and plans under which the employer pays less than 40% of the premium are excluded.
Each state will choose whether or not it will implement this optional subsidy (Ohio has not yet so chosen to implement this subsidy, but it is expected that it will). Each State will then decide whether the subsidy will be paid: (i) directly to employees as a reimbursement of their portion of the group health plan premium and other out-of-pocket expenditures; or (ii) directly to employers on behalf of the employees. In the latter instance, an employer may opt out of receiving the premium assistance subsidy so that the subsidy would be paid directly to the employee. This opt-out will permit the employer to continue to withhold the employee’s full premium obligation and avoid direct involvement with the subsidy program.
The following are the obligations under the Subsidy portion of CHIPRA, which are not yet effective:
- Notice of Subsidies. Plan sponsors that maintain group health plans in states that provide Medicaid or CHIP assistance in the form of premium assistance subsidies will be required to provide written notices to their employees, informing them of the potential opportunities for premium assistance. CHIPRA directs Health and Human Services to develop national and state-specific model notices by February 4, 2010. These notices will then be used by employers to satisfy their disclosure obligations. Employers must begin distributing notice the first plan year after model notice is published. These model notices have not yet been issued and thus employers are not yet obligated to send notice. Ross, Brittain and Schonberg will keep you informed if and when such notice is required to be sent.
- Disclosure to State Agencies. CHIPRA requires that the plan administrator of the group health plan shall disclose to the State, upon request, information about the benefits available under the group health plan in sufficient specificity so as to permit the State to make a determination concerning the cost-effectiveness of the State providing medical or child health assistance through premium assistance for the purchase of coverage under the employer’s health plan. The law directs Health and Human Services and the Department of Labor to develop model disclosure forms. Employer’s will not be required to make disclosures until the first plan year that begins after the model form is made available. Again, these model notices have not yet been issued and thus employers are not yet obligated to make such disclosures. Ross, Brittain and Schonberg will keep you informed if an when such notice is required to be sent.
Penalties. Employers may be fined $100 per day for failure to comply with the employee notice requirement or failure to disclose required information to the state. The $100 penalty applies for each violation per participant or beneficiary.
- Begin offering special enrollment to those employees who are eligible as a result of the new special enrollment rules effective April 1, 2009.
- Your company’s plan documents or any open enrollment notification materials should be updated to provide notice of the new special enrollment rights under CHIPRA.
- Remember that the notice provision concerning the subsidy is not yet effective, and may never be effective if the State of Ohio, or the state your company is located in, does not elect to take part in the program. If Ohio does elect to take part in the subsidy program under CHIPRA, employers will not have to comply with the notice requirements until the first plan year following the release of the model notice by Health and Human Services.
- Disclosure to state agencies will not be required until the first plan year after Health and Human Services and the Department of Labor release model disclosure forms.
If you need any further information, please contact Ryan Neumeyer.
*The HIPAA regulations provide the following model notice:
“If you are declining enrollment for yourself or your dependents (including your spouse) because of other health insurance or group health plan coverage, you may be able to enroll yourself and your dependents in this plan if you or your dependents lose eligibility for that other coverage (or if the employer stops contributing towards your or your dependents' other coverage). However, you must request enrollment within [insert "30 days" or any longer period that applies under the plan] after your or your dependents' other coverage ends (or after the employer stops contributing to-ward the other coverage).
In addition, if you have a new dependent as a result of marriage, birth, adoption, or placement for adoption, you may be able to enroll yourself and your dependents. However, you must request enrollment within [insert "30 days" or any longer period that applies under the plan] after the marriage, birth, adoption, or placement for adoption.”