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Children's Health Insurance Program Reauthorization Act of 2009

NOTE: The following is derived from an April 7, 2009 Special Compliance Alert.

On February 4, 2009, President Obama signed the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). This program, now known as CHIPRA, was previously referred to as the State Children's Health Insurance Program (SCHIP).

CHIPRA made several changes to SCHIP, including changes to special enrollment provisions under a group health plan. CHIPRA is a shared federal and state program that provides health insurance coverage to lower income pregnant women and children who do not otherwise qualify for Medicaid but fall within the federal poverty level.

To whom does CHIPRA apply?
CHIPRA applies to all plans that are required to comply with HIPAA's portability/special enrollment rules. These plans include fully insured and self-funded health plans, but not to governmental plans, one-person plans, or specified limited purpose plans.

What does CHIPRA require?
CHIPRA has three major components of which employers and plan administrators should be aware. Below is a summary of the three components:

Premium assistance available at the state level for income-eligible participants
States may elect, but are not required, to offer premium assistance to low-income children and their families who are eligible for qualified employer-sponsored coverage but are unable to afford their portion of the premiums. (Premium assistance will not be available for health FSAs and high-deductible health plans.)

If an employer is located in a state that offers premium assistance, the employer may require that payment be made directly to employees rather than to the employer. This eliminates the need for employers to track down payments from states. However, employers may also elect to receive reimbursement directly from the state.

Two additional special enrollment rights under HIPAA
Group health plans must now permit eligible employees and their dependents to enroll in the plans if:

1. An employee or dependent loses their eligibly status to participate in Medicaid or CHIP.
2. An employee or dependent qualifies for premium assistance under Medicaid or CHIP at the state level.

Coverage under a plan must be sought within 60 days of either (1) losing eligibility to participate in Medicaid or CHIP or (2) being notified of eligibility for premium assistance from the state in which the individual resides. Coverage would become effective the first day of the following month.

It is important for employers to take note of this 60-day election period, as it differs from the 30- day election period employers currently allow for special enrollment rights when the employee involuntary loses coverage or acquires a new dependent through birth, marriage or adoption.

Two additional employer notification requirements

1. Notification to Employees. Employers who provide coverage in a state that offers premium assistance to low-income children and their families are required to send written notices to employees who reside in the state. Model notices are expected to be issued by February 4, 2010 by Health and Human Services (HHS). This notice requirement can be satisfied by providing this information with other plan information, in open enrollment materials, or through the Summary Plan Description (SPD).
2. Notification to State Agencies. In addition to notifying employees, plan administrators are required to disclose certain information about plan benefits to states that have elected to offer premium assistance to individuals covered under Medicaid or CHIP. This is applicable upon request from the state. HHS and the Department of Labor must form a workgroup to develop a model form plan administrators can use to disclose this information to the states.

When is compliance required?
Groups must be operationally compliant with the two new special enrollment rights identified above by April 1, 2009. Each state must elect to either offer premium assistance or not as of April 1st. For this reason, employers and plan administrators only need to concern themselves with making sure they do not deny a special enrollment opportunity to an individual if the individual is seeking enrollment in the plan due to loss of eligibility under Medicaid or CHIP. Many cafeteria plans already allow individuals to come onto plans due to loss of l eligibility for Medicaid. Therefore, allowing these new special enrollment rights will not be different from what many plans already do.

Employers do not have to issue the required employee notification until the first plan year beginning after the date on which model notices are issued but are not slated to be issued until February 4, 2010. The notification to state agencies will not be required until the first plan year after a model notice is released.

What impact does this Act have on employers and/or plan administrators?
Employers and Plan Administrators should do the following as soon as practicable:

• Review enrollment procedures to make sure HR staff and other benefit representatives are aware of the newly created special enrollment rights.
• Update special enrollment rights notices that are given to employees on or prior to their enrolling in the plan so that the notices include the two new rights.
• Issue Summary of Material Modifications to individuals already enrolled in the plan within 210 days after the plan year ends. 
• Update Plan Document and Cafeteria Plan Documents to include the new special enrollment rights.*
• Based on the laws of the state in which participants reside, determine whether or not the plan is required to comply with any added employer notifications.

*The Meritain Health Plan Document Team will be sending out CHIPRA amendments for all groups for which Meritain Health prepares plan documents. Meritain Health is suggesting to our clients that amendments be executed prior to December 31, 2009. For groups that renew between April and December 2009, amendments will be issued at renewal. For groups that renew between January and March 2010, amendments will be issued before the end of the year.

If an employer would like its plan documents to be amended prior to the applicable dates outlined above, please contact your Client Relationship Manager to initiate the process.

Compliance Quarterly is being provided as an informational tool. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this publication and any attachments, Meritain Health is not exercising discretionary authority over the plan and is not assuming a plan fiduciary role, nor is Meritain Health providing legal advice.