DOL Publishes Model Notice for HIPAA Special Enrollment Rights Under CHIPRA
The Department of Labor recently released a model notice for employers to use to inform employees of potential premium assistance available under the Children's Health Insurance Program ("CHIP") or medical assistance available under Medicaid for employees' or their dependents' health coverage (the "Model CHIP Notice"). This Client Advisory will explain the new Model CHIP Notice and how this document can be used to satisfy an employer's disclosure requirements under ERISA, the Public Health Service Act and the Internal Revenue Code.
In February 2009, President Obama signed legislation reauthorizing the State Children's Health Insurance Program ("CHIP" formerly known as "SCHIP") in the form of the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA"). Under CHIP, states may receive federal matching funds in order to provide subsidies to insure low-income children who are ineligible for Medicaid but who cannot afford private insurance. CHIPRA requires that group health plans provide special enrollment rights for children who lose Medicaid or CHIP coverage, as well as for participants or dependents who become eligible for assistance under Medicaid or CHIP. In addition, CHIPRA imposes new notice and disclosure requirements on group health plans. Additional information about the requirements of CHIPRA can be found in our original Client Advisory regarding the law.
Failure to comply with the new notice and disclosure obligations under CHIPRA will result in penalties on the employer of up to $100 per participant, per day.
The CHIP Notice must be provided annually and at no charge, beginning by the later of (1) the first day of the first plan year beginning after February 4, 2010, or (2) May 2010. For a calendar year plan, this means that the notice must be provided no later than January 1, 2011.
If a state adopts a premium assistance program under CHIP or a medical assistance program under Medicaid, each employer maintaining a group health plan in that state is required to give employees notice about the state program. An employer is subject to the notice requirement based upon where the participants in its group health plan reside, regardless of the employer's location or principal place or business. Colorado is one of the 40 states, as of January 22, 2010, that offer such assistance.
An employer whose health plan provides medical care in a state that offers premium or medical assistance is required to provide the CHIP Notice automatically to each employee who resides in that state (regardless of whether the employee is enrolled in the employer's health plan). If no opportunities for premium or medical assistance exist in an employee's state of residence, the employer is not required to provide the CHIP Notice to that employee.
Employers are not required to use the Model CHIP Notice, but the model notice is intended to be used by an employer to satisfy its notice obligations on a national level by providing a brief description of premium assistance and contact information for state-specific programs.
The CHIP Notice does not have to be provided in a separate mailing, and can be included with enrollment packets, open enrollment materials, or the plan's summary plan description, as long as it is timely provided to all employees entitled to receive the notice, and the notice appears separately and in a manner intended to ensure that an employee who may be eligible for the premium assistance could reasonably be expected to understand the notice's importance. The CHIP Notice can be provided either by first-class mail or electronically if certain requirements are met.
Some employers may have included their CHIP Notice with the HIPAA Special Enrollment Rights Notice that has been required to notify employees of their rights to enroll due to loss of other health coverage or the addition of a new dependent. However, based on current guidance, employers should use two separate notices for these requirements, due to the different timing requirements for the notices and the specific requirement that the CHIP Notice be separate. The CHIP Notice also should be maintained as a document separate from a plan's summary plan description, based on this guidance.
The DOL's model notice can be found here: http://www.dol.gov/ebsa/chipmodelnotice.doc
Attorneys in our Employee Benefits practice will continue monitoring developments in the CHIPRA requirements and are available to answer any questions you may have.
If you have any questions about this Client Advisory, please contact any member of our Employee Benefits Team.
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