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Federal CHIP Bill Requires Special Insurance Enrollment Period

Recent federal legislation effective April 1 requires employers to provide a new HIPAA special enrollment period for employees and/or dependents who lose coverage under Medicaid or the Children’s Health Insurance Program (CHIP), or who become eligible for a state’s premium assistance program.  Medicaid operates under the name MassHealth in Massachusetts. The new requirement is part of the Children’s Health Insurance Program Reauthorization Act (CHIPRA) that extended and expanded CHIP, a federal/state program designed to provide health insurance for uninsured children and some adults.

Key points:

• The most common reason for individuals to lose coverage under Medicaid and/or CHIP is that their income and/or family circumstances change so they no longer meet the eligibility rules. When this happens to individuals who are otherwise eligible for an employer’s group plan, a special enrollment period must now be provided.
• Under a state premium assistance program, it may be determined that it is more economical for the state to subsidize the cost of employer-sponsored group coverage to which an individual is eligible instead of paying the cost of coverage through Medicaid or CHIP. When this happens, a special enrollment period will entitle the individual(s) to enroll in the employer’s plan outside the normal open enrollment opportunity.
• The special enrollment periods created under CHIPRA are 60 days. All other HIPAA special enrollment periods are 30 days.
• Employees must notify the employer about a loss of coverage under Medicaid or CHIP and request enrollment in the group plan within 60 days of the loss of coverage.
• Employers must immediately revise their HIPAA notice materials to include CHIPRA information.  Under HIPAA, employees must be notified of their special enrollment rights at or before the time they become eligible to enroll in the group health plan. The information is typically included in new-hire packets, benefits enrollment materials, or summary plan descriptions.
• While not required by the new law, AIM recommends that employers notify all current employees by providing the revised notice described in the prior bullet or, at a minimum, notice of the additional special enrollment situations. This helps to ensure that potentially affected employees have “reason to know” of their obligation to provide notice to the employer and to request enrollment within the 60-day duration of the special enrollment period.
• Self-insured plans with stop-loss coverage should ensure that their carriers will cover individuals entitled to these new enrollment periods.
  

Another Notice Requirement is Coming

CHIPRA makes employers responsible for notifying employees that state premium assistance may be available to them and requires that state-specific information be provided. This means multi-state employers may need to prepare multiple versions of the notice.

The U.S. Departments of Labor (DOL) and Health and Human Services (HHS) are required to work together to develop model national and state-specific notices by February 4, 2010. Employers will be required to furnish notices to employees the first plan year beginning after the date the final model notices are issued. For example, if the notices are finalized in October 2009, the notice requirement for calendar-year plans is effective January 1, 2010.

Employer-sponsored group plans will also be required to cooperate with state agencies that request information about coverage provided to specific employees and family members. A working group has been established to develop a model form that employers may use to respond to requests for information, but that group is not bound by a specific deadline. In the interim, employers should be prepared to provide reasonable information in response to a request from a state agency. Failure to respond carries the potential penalty of $100 per day.

AIM will follow the development of model notices.  As always, contact our HR Hotline at 800-470-6277 for answers to all of your HR questions.