Client Alert

On February 4, 2009, the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) was enacted, which reauthorizes and expands the state children’s health insurance program (“SCHIP”). SCHIP provides matching funds to states who offer health insurance premium subsidies for children whose families are too poor to pay for insurance, but who earn too much to qualify for Medicaid. The new law increases the funds available and makes it easier for states to provide subsidies for children under group health plans. CHIPRA provides for new special enrollment events, as well as new notice and disclosure obligations for employers that maintain group health plans.

I. Special Enrollment Rights

HIPAA requires that employers allow enrollment in their group health plans mid-year in certain circumstances. Effective April 1, 2009, CHIPRA amends ERISA, the Internal Revenue Code, and the Public Health Service Act to provide that group health plans must permit employees and dependents who are eligible for but not enrolled in coverage to enroll mid-year in two additional circumstances: (1) the employee's or dependent’s Medicaid or SCHIP coverage is terminated as a result of loss of eligibility and the employee requests coverage under the plan within 60 days after the termination; or (2) the employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or SCHIP, and the employee requests coverage under the plan within 60 days after eligibility is determined. The 60-day period for requesting coverage under CHIPRA is greater than the 30-day period applicable to other special enrollment events. These new special enrollment rights are applicable to group health plans subject to ERISA and the PHSA, but not health FSAs. Employers should review their group health plan documents to ensure that they are in compliance with the changes made by CHIPRA, or do not contain any language that conflicts with the provisions of CHIPRA, and make changes if necessary.

II. Notice and Disclosure Requirement

CHIPRA requires employers who maintain a group health plan to notify participants of premium assistance programs. CHIPRA directs the Department of Health and Human Services and the Department of Labor to develop national and state-specific model notices by February 4, 2010. Employers must provide participants with the notice by the first day of the first plan year that begins after the model notices are issued.

CHIPRA also requires employers to disclose information to applicable state(s) regarding the participants and beneficiaries that are covered under the employer’s health plan and Medicaid or SCHIP. CHIPRA directs HHS and the DOL to develop model notices for this purpose, and no state may request such information until the first plan year that begins after the model notices are issued.

The law provides for a penalty of up to $100 per day for failure to comply with the notice and disclosure requirements.

If you have questions regarding the effect of CHIPRA on your group health plan, please contact Elisa A. Cawood or James E. Daniel, the principal authors of the alert. You may also contact the Womble Carlyle attorney with whom you usually work, one of our Employee Benefits attorneys.

Womble Carlyle Sandridge & Rice Employee Benefits Lawyers

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