March 15, 2010
Employee Notice about CHIP/Medicaid Programs Now Required
The Department of Labor (DOL) has published the model form that employers that provide health benefits may use to notify employees about the availability of premium-assistance programs under Medicaid and/or the Children's Health Insurance Program (CHIP) in their state.1 The DOL was required to release this model form by the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which was signed into law in February 2009.2 Employers that maintain group health plans are required to provide employees with their first annual CHIPRA notice no later than the first day of the first plan year after February 4, 2010. For calendar-year plans the deadline is January 1, 2011.
State Premium-Assistance Programs
Many states offer premium-assistance programs as part of their Medicaid and/or CHIP programs. Under these programs, states can pay the employee's share of the premium for certain group health plan coverage for low-income children (and, in some cases, coverage for the parent and other family members as well).3 In some cases, these programs might also assist with cost-sharing and other out-of-pocket expenses and provide benefits that supplement the coverage provided by the group health plan. The DOL, in consultation with the Department of Health and Human Services (HHS) and state Medicaid agencies, has determined that 40 states offer some type of premium-assistance program at this time.
Generally, only children in low-income families would be eligible for premium assistance. Typically, this means children in families with income up to 200 percent of the Federal Poverty Limit (FPL) ($36,620 for a family of three in 20094). For the parent of such a child to be eligible for coverage, annual family income usually must be less than half that amount ($18,310 for a family of three). In some states, like New York and Illinois, these income thresholds are higher.5 However, in today's economic environment, families with a worker employed in a job that may have provided an income in excess of the FPL could at some point become eligible for a state premium-assistance program if the worker loses his or her job during the year. In fact, the Kaiser Family Foundation just released an analysis that reported that Medicaid enrollment has increased to a record 46.8 million people.6
CHIPRA Notice Requirements
CHIPRA contained several provisions applicable to group health plans, including:
- A special enrollment requirement that, effective April 2009, allows individuals who become eligible for a premium-assistance program, or who lose eligibility for CHIP or Medicaid, to enroll in the program,
- A requirement that employers that provide health benefits notify individuals about the premium-assistance programs available in their state, and
- A requirement, not yet in effect, that plan sponsors share specific information with state agencies in order to promote coordination of benefits with state premium-assistance programs.
The model CHIPRA notice implements the second CHIPRA requirement: that employers that provide health benefits notify individuals about premium-assistance programs in their state. The three-page model notice lists each of the 40 states that offers a premium-assistance program and provides contact information for each program (Web site and phone number), as well as contact information for the DOL and HHS.
Employers Subject to the Requirement
Under the guidance issued with the model notice, the duty to provide a notice hinges on the state of residence of the employer's group health plan participants and beneficiaries, regardless of the employer's location(s) or principal place of business. If an employer sponsors a plan that covers individuals in any one of the 40 listed states, that employer is subject to the notice requirement.
Employees Entitled to Receive the Notice
Under the guidance issued with the model notice, the employer must provide a notice to every employee who resides in a state listed on the notice, whether or not the employee is enrolled in the employer's group health plan. The model notice alerts employees of their right to special enrollment in the program if they are determined to be eligible for a state premium-assistance program (but they must seek special enrollment within 60 days of the eligibility determination). Employers may choose to send the notice to every employee if that is easier than distinguishing between employees based on their state of residence.
Timing and Manner of Notice
Employers that provide health benefits must provide the first annual notice no later than the first day of the first plan year beginning after February 4, 2010. Employers with calendar-year plans will therefore have to provide the notice by January 1, 2011. However, under the rules, employers with plan years that begin on March 1, April 1 or May 1 will have to provide the notices by May 1, 2010.7
The notice may be sent to employees along with other information, such as open enrollment information, provided they are sent to every employee entitled to notice regardless of enrollment status under the plan. According to the guidance, the notice must appear separately, in a manner that ensures that employees could reasonably be expected to appreciate its significance. It may be provided by first-class mail. It may also be provided electronically, provided the criteria for electronic notices set out in existing DOL regulations are met.8 In general, this would permit electronic notice to employees who have the ability to access documents electronically at the location where the employee works and for whom access to the employer's electronic information system is an integral part of the employee's duties.
Employers could use this model nationwide notice as is. This will likely appeal to employers with employees living in various parts of the country. Employers with employees in only one or two states could choose to provide information only about those specific state programs.
Action Steps for Employers
First, employers should review the needs of their workforce and determine whether to use the CHIPRA model notice or to create one of their own. Factors in this decision could include whether:
- The employer has a multi-state benefit plan, which may mean reproducing the DOL notice makes sense,
- The employer is only providing benefits in one state, in which case a simplified version may be appropriate,
- Premium-assistance programs are already being used by the employer's workforce, in which case it may be appropriate to provide additional details about the programs,
- There are significant numbers of low-income employees with children who may qualify for the premium-assistance programs, in which case the notice may need to be provided in a prominent manner.
Next, employers should determine whether they will provide the notice to all employees, regardless of their state of residence, or send the notice only to those employees who live in one of the 40 listed states.
Finally, employers should determine how to provide the notices. Options include mailing it along with other printed materials as part of annual open enrollment, sending it as a separate mailing, or, for those workforces that use computers as a regular part of their job duties, providing the notice electronically.
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As with all issues involving the interpretation or application of laws and regulations, employers should rely on their attorneys for authoritative advice on the interpretation and application of CHIPRA. Sibson Consulting can be retained to work with plan sponsors employers and their attorneys to amend plan documents, SPDs and enrollment material to provide for the new special enrollment period.
- The guidance discussing the form was published in the February 4, 2010 Federal Register. The form is posted on the DOL's Web site. (Click on the following text to return to the Capital Checkup.)
- For information about this law, Pub. Law 111-3, see Sibson Consulting's February 2009 Bulletin, "CHIP Reauthorization Requires Fast Action by Group Health Plans." (Click on the following text to return to the Capital Checkup.)
- Some states, such as New York, also cover certain childless adults. (Click on the following text to return to the Capital Checkup.)
- The FPL for 2010 will not be announced until March. (Click on the following text to return to the Capital Checkup.)
- See the Kaiser Family Foundation Commission on Medicaid and the Uninsured's 2009 50-state survey of eligibility rules for Medicaid and CHIP. (Click on the following text to return to the Capital Checkup.)
- This report is available on the Kaiser Family Foundation's Web site. (Click on the following text to return to the Capital Checkup.)
- Before sending future notices, employers should check the DOL's Web site to see if there have been changes in the states offering premium-assistance programs or in the contact information listed for each state. (Click on the following text to return to the Capital Checkup.)
- Requirements for electronic notice are set out in 29 C.F.R. § 2520.104b-1(c). (Click on the following text to return to the Capital Checkup.)
Capital Checkup is Sibson Consulting's periodic electronic newsletter summarizing activity in Washington with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.