Question:

Our company offers health insurance coverage to our employees and their dependents. In light of the last year’s legislation relating to the Children’s Health Insurance Program, are there any requirements imposed on employers?

Answer:

On February 4, 2009, President Obama signed the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”). CHIPRA expands the Children’s Health Insurance Program (“CHIP”) to provide additional access and benefits to children in need. In fact, CHIPRA sets aside billions of dollars of federal funds to help pay for health insurance coverage for children through fiscal year 2013. CHIP provides a capped amount of funds to states on a matching basis that is used to eliminate or subsidize premium payments and co-pays for children’s health insurance coverage.

As you may know, Medicaid is the predominate health insurance program for children in low-income families, while CHIP provides coverage for many children who do not qualify for Medicaid. However, millions of children in America remain uninsured although eligible for Medicaid or CHIP. As a result, CHIPRA was enacted in an attempt to reduce the rate of uninsured children by making enrollment easier, expanding eligibility income levels, and informing employees about the available programs. In addition, CHIPRA requires state programs to offer dental coverage as part of their plans. This new legislation also removes the previous CHIP requirement that imposed a five-year waiting period before federal funds could be used to match state expenditures to cover legal immigrants.

Pursuant to CHIPRA, employers who provide health insurance coverage for medical care, either directly, through insurance, reimbursement, or otherwise, must give notice to employees to inform them of the premium assistance programs that are available to help pay for insurance coverage. Importantly, the notice must be given regardless of enrollment status. The notice may be provided with enrollment packets, open season materials, or the summary plan description, but must appear “separately and in a manner which ensures that an employee who may be eligible for premium assistance could reasonably expect to appreciate its significance.” The notice must be provided in writing in a manner calculated to be understood by the average employee, and may be provided by first class mail or electronically, as long as the Department of Labor’s electronic disclosure “safe harbor” is satisfied. In essence, the “safe harbor” allows an employer to send the notice electronically to employees who have access to electronically furnished documents at work (typically through a computer on their desk or workstation), or who consent to receive the information electronically. Notably, employers who fail to issue these notices are subject to penalties of up to $100 per day per employee.

Although CHIPRA became effective last year, the notice requirement discussed above was not triggered until February 4, 2010 when the Department of Labor issued its model notice. Employers must provide the notice to employees annually, free of charge, starting with the first plan year beginning after February 4, 2010. Therefore, if your company’s next plan year begins in January 2011, you should send the notice out by January 1, 2011. However, if your company’s next plan year begins between February 4, 2010 and May 1, 2010, then you should send the notice out no later than May 1, 2010.

Employers may alter the model notice to include additional information about state-specific programs, but the notice must include the minimum relevant state contact information. The model notice is available as a modifiable Word document on the Department of Labor’s website at
http://www.dol.gov/ebsa/chipmodelnotice.doc.
In addition, the model notice is available in pdf format at
http://www.dol.gov/ebsa/pdf/chipmodelnotice.pdf.
– – – – – – – – – – – – – – – – – – – – – – – – – –
Back to Menu- Work Place Law 2010 Articles