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Special Compliance Alert: CHIPRA

Children's Health Insurance Program Reauthorization Act of 2009

As many of you know, on February 4, 2009, President Obama enacted the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). This program, now known as CHIP, was previously referred to as the State Children's Health Insurance Program (SCHIP). CHIPRA made several changes to SCHIP, including changes to the 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 must comply with HIPAA's portability/special enrollment rules, which includes fully insured and self-funded health plans, but would not include a governmental plan, a one-person plan, or a specified limited purpose plan, among other things.

What does CHIPRA require?
CHIPRA has three major components that employers and plan administrators should know about. Below is a summary of those 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 unable to afford their portion of the premium. (The premium assistance will not be available for health FSAs and high-deductible health plans.) If an employer is located in a state that has elected to offer premium assistance, employers may require that payment be made directly to the employee, as opposed to the employer, thus eliminating the need for employers to track down payment from the states. Employers may 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 health plan 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 the plan must be sought within 60 days of either (1) losing eligibility to participate in Medicaid or CHIP or (2) within 60 days of being notified that an individual is eligible for premium assistance from the state in which they reside. Coverage would become effective the first day of the following month. Employers should take note of this 60 day election period, as this differs from the 30 day election period employers currently allow for special enrollment rights due to involuntary loss of coverage or acquiring 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 elects to offer premium assistance to low-income children and their families will be required to send written notices to employees who reside in a state that is offering to assist with premiums. 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, open enrollment materials or through the Summary Plan Description (SPD).
2. Notification to State Agencies.  In addition to notifying employees, there is a requirement that plan administrators disclose certain information about plan benefits to states that have elected to offer premium assistance in their state to individuals covered under Medicaid or CHIP 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 operationally be in compliance by April 1, 2009 with regards to the two new special enrollment rights identified above. Keep in mind that because each individual state will have to elect to either offer premium assistance or not, as of April 1st, employers and plan administrators only need to concern themselves with making sure they do not deny someone a special enrollment opportunity if they are seeking enrollment in the plan because they lost eligibility under Medicaid or CHIP. Many cafeteria plans have already allowed someone to come onto the plan as a result of losing eligibility for Medicaid. Therefore, allowing these new special enrollment rights will not be that different from what most plans do now.

Employers do not have to issue the required notification to employees until the first plan year beginning after the date on which model notices are issued which 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.

How does this Act impact employers and/or plan administrators?

There are a few things that employers/plan administrators should do as soon as practicable:

• Review enrollment procedures to make sure HR staff and other benefit representatives are aware of these new special enrollment rights that were created.
• Update notices of special enrollment rights that are given to employees on or prior to enrolling in the plan so that the notices include the two new rights above.
• 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.*
• Follow the state law of where participants reside, to determine whether or not the plan has to comply with any added employer notifications.

*The Meritain Health Plan Document Team will be sending out CHIPRA amendments for all groups for whom Meritain Health prepares their plan documents.  Meritain Health is suggesting to our clients 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 a group would like their plan document amended prior to automatically receiving an amendment, please contact your Client Relationship Manager (CRM) to initiate this process.