On February 4, 2009, The Children’s Health Insurance Program Reauthorization Act of 2009 was passed by the 111th Congress and signed by President Obama. The Act extends and expands the State Children’s Health Insurance Program (“CHIP”) which was enacted with bi-partisan support over a decade ago as part of the Balanced Budget Act of 1997 (BBA). CHIP, along with Medicaid, has helped reduce the rate of low-income uninsured children by expanding eligibility levels and simplifying enrollment procedures. This law affects employer-sponsored plans, so employers need to be aware of new special enrollment rights.
As of April 1, 2009, a new special enrollment period for employees and their dependents was established for the following events:
• Termination of Medicaid or CHIP coverage resulting from loss of eligibility
• Becoming eligible for premium assistance in the employer’s group health plan under a Medicaid or CHIP program
These events require a 60-day special enrollment period, whereas other qualifying events had a 30-day special enrollment period. This means an employee must request coverage within 60 days of termination or the date the parent or child is determined to be eligible for assistance, whichever applies.
CHIPRA also extends and expands the state CHIP to allow states to subsidize premiums for employer-provided group health coverage for eligible children and their families. The Act applies to both fully insured and self-insured plans, and imposes new notice and disclosure obligations on employers that maintain group health plans. This law also allows states an option to continue offering coverage through the state CHIP, where applicable, or to subsidize the employee contribution toward employer- provided coverage so that employees can cover their children through employer- sponsored health plans.
A state may provide assistance through either a reimbursement of expenses to the employee directly or directly to the employee’s employer. An employer may elect to opt out of being paid directly by the state, in which case the employer must withhold the total amount of the employee contribution required for enrollment of the employee and the child in the employer-sponsored coverage, and the state will pay the premium subsidy directly to the employee.
High-Deductible Health Plans, health Flexible Spending Arrangements and those plans from which the employee has to pay 60% or more of the cost are excluded.
Employers will eventually be required to provide notice to employees about the premium assistance opportunities available. Plan administrators will be responsible for reporting information to determine eligibility of participants and CHIP’s duty to provide supplemental benefits. However, these requirements will not begin until the Department of Health & Human Services and Department of Labor issue model forms. Penalties up to $100 per day per participant or beneficiary for failure to provide required notices will be imposed.
At this time, we do not know if Ohio will provide the subsidies described above, but will keep you advised as new information becomes available.
