New Annual Requirement
Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA)
Last month we discussed some of the new requirements for benefit plans as a result of recent legislation. One of the subjects last month was on CHIRPA or the Children's Health Insurance Program Reauthorization Act of 2009. It was a short discussion of the act and I am reproducing it below:
Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA)
The passage of CHIPRA last year created special enrollment rules, effective April 1, 2009, that require employers to amend their plans to allow special enrollment rights (similar to a qualifying event under HIPAA) for individuals who become eligible for state-paid coverage under CHIP or lose their CHIP eligibility.
I want to dig deeper this month and discuss the specific requirements to comply. President Obama signed the Children's Health Insurance Program Reauthorization Act on February 04, 2009 (CHIPRA, Pub. L.111-3). The "ACT" extends premium assistance programs under Medicaid and the Children's Health Insurance Program (CHIP). As part of CHIPRA, employers will now be required to provide an annual notice to employees. A model notice has been issued by the Dept. of Labor (DOL) and is available for use by employers. The model notice can accessed by clicking on the Model Notice link located at http://www.dol.gov/ebsa/.
Employers Subject to the Employer CHIP Notice Requirement
For purposes of the Employer CHIP Notice requirement, an employer providing benefits (directly or through insurance, reimbursement, or otherwise) for medical care in a State is considered to maintain a group health plan in that State. If that State provides medical assistance under a State Medicaid plan, or child health assistance under a State child health plan, in the form of premium assistance for the purchase of group health plan coverage, the employer is required to provide the Employer CHIP Notice. The Department of Health and Human Services, in consultation with State Medicaid and CHIP offices, has informed the Department that, as of January 22, 2010, the following States offer one or more programs that meet this standard:
Alabama, Alaska, Arizona, Arkansas,California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey,
New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Accordingly, if a group health plan provides benefits for medical care directly (such as through a health maintenance organization); or through insurance, reimbursement or otherwise to participants, beneficiaries, or providers in one of these States, the plan is required to provide the Employer CHIP Notice, regardless of the employer's location or principal place of business (or the location or principal place of business of the group health plan, its administrator, its insurer, or any other service provider affiliated with the employer or the plan). This principle is illustrated by the following example:
Facts - An employer in Texas sponsors a group health plan that provides reimbursement for medical care to plan participants or beneficiaries residing in Texas, Virginia, Maryland, West Virginia, Delaware, and Pennsylvania.
Conclusion - The plan is considered maintained in all six States. Because at least one of these States offers a premium assistance program, the employer is subject to the Employer CHIP Notice requirement.
Employees Entitled to Notice
An Employer CHIP Notice must inform each employee, regardless of enrollment status, of potential opportunities for premium assistance in the State in which the employee resides. The State is which the employee resides may or may not be the same as the State in which the employer, the employer's principal place of business, the health plan, its insurer, or other service providers are located. This principle is illustrated by the following example:
Facts - Same facts as above.
Conclusion - In this Example , employees residing in Texas, Virginia, West Virginia, and Pennsylvania are entitled to receive the notice because those four States offer premium assistance programs. Of course, the employer may send the notice to all employees if the employer chooses (for example, if it is administratively easier to send the notice to all than to distinguish between employees based on residency).
Form and Content of Notice
The Model Employer CHIP Notice was designed as a template to cover an array of situations where employees may be entitled to notice and may reside (or their families may reside) in States across the nation. Employers may use the model template as a national notice to fulfill their employer notice disclosure obligation under ERISA section 701(f)(3)(B)(i), and the parallel provisions of section 2701(f)(3)(B)(i) of the PHS Act and section 9801(f)(3)(B)(i) of the Code. The notice is required to be provided automatically, free of charge.
In consultation with State Medicaid and CHIP offices, some States suggested significant modifications to the template and more detailed descriptions of their own State programs. Of course, the Model Employer CHIP Notice is just a model and States may wish to include additional information on their Web sites and in their own compliance assistance materials that would encourage further disclosure of any individual State premium assistance program. Nonetheless, because employees (and their families) may reside in different States than their employer, its principal place of business, their health plan, its insurer, or its other service providers that may distribute the notice on behalf of the employer, the approach of the Model Employer CHIP Notice is to provide a very brief description of premium assistance and rely on State contact information for State-specific program descriptions. An employer which is not facing multi-State complexities and who wants to provide more comprehensive State-specific information to its workforce may modify the Model Employer CHIP Notice to its employees. However, employers should be mindful of the requirement to include at least the minimum relevant State contact information for any employee residing in a State with premium assistance.
The employer CHIP disclosure requirement in ERISA, the PHS Act, and the Code requires that the notice inform employees of potential opportunities for premium assistance ``currently available.'' CHIPRA section 311(b)(1)(D) requires the Department of Labor to provide ``initial'' model notices within one year of CHIPRA's enactment. Employers are required to provide ``initial annual notices beginning with the first plan year after the date on which such initial model notices are first issued.'' The Department, working with the Departments of Health and Human Services and the Treasury, and the States, intends to update its Web site annually to reflect any changes in the number of States offering premium assistance programs (or the contact information for those States), to help enable employers to meet their CHIP disclosure requirements.
Timing and Delivery of the Notice
Employers are required to provide these notices by the date that is the later of (1) the first day of the first plan year after February 4, 2010; or (2) May 1, 2010. Accordingly, for plan years beginning between from February 4, 2010 through April 30, 2010, the Employer CHIP notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the Employer CHIP notice must be provided by the first day of the next plan year (January 1, 2011 for calendar year plans).
The Employer CHIP notice is not required to be provided in a separate mailing. Plans may combine information to reduce administrative costs, if the other requirements of this Notice are met. Thus, the Employer CHIP Notice may be furnished concurrent with enrollment packets, open season materials, or the plan SPD, provided that (1) such materials are provided no later than the date determined above, (2) such materials are provided to all employees entitled to receive the Employer CHIP Notice, and (3) the Employer CHIP Notice appears separately and in a manner which ensures that an employee who may be eligible for premium assistance could reasonably be expected to appreciate its significance.
Accordingly, an employer may provide the Employer CHIP notice concurrent with other materials (including, for example, enrollment packets, open season materials, or the plan SPD) that may be provided in advance of the upcoming plan year.
* from February 24th post to the TCO Compliance Blog at http://tcomail.n-vision.com/b2/blogs/blog1.php
How does Carter's Benefits help ?
For our existing clients, we will provide the required notices as a part of the enrollment process. Carter's Benefits will begin to immediately incorporate this notice in the annual Employee Handbook we provide our employers or in a separate format that can be distributed to the employees for those employers not utilizing the Employee Handbook.
If your would like more information or assistance in compliance with this new requirement, please contact me for additional information.