President Obama signed a new law, H.R 2, on February 4, 2009 known as the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA). The new law is designed to expand medical coverage for uninsured children via state programs (such as Medi-Cal). However, there is one provision in the law that can affect employer offered health care plans.

CHIPRA contains a new state option to subsidize employer-sponsored health coverage that includes children. Employer sponsored plans are required to offer a new special enrollment to employees or dependent children who

1. Lose coverage under Medicaid (Federal Plan) or a State Plan (such as California's Medi-Cal) or
2. Become eligible for group health premium assistance under the Medicaid Plan or a State plan. Coverage must be requested no later then sixty (60) days after the qualifying event.
   

Example: Your employee has a child that is eligible for coverage under California's Healthy Families program (a state CHIP program). If the parent requests the CHIP subsidy for the employer plan, the state CHIP program will pay the difference between the employee contribution required for employee-only coverage and the employee contribution required for employee and child coverage under the employer coverage, less any applicable premium cost-sharing applied under the state's health plan.

The state may pay the premium assistance subsidy as a reimbursement to the employee for out-of-pocket expenses or directly to the employer. Employers may opt-out of direct payment from the state, allowing direct payment to the employee. The employer could then charge the employee the full cost of coverage.


Notice Requirements:
The U.S. Department of Labor (DOL) will create model notices that employers who offer group health coverage must provide to employees notifying them of the premium assistance to Medicaid eligible persons. This notice must be given as of the first plan year, can be included in open enrollment/new enrollment materials or with the Summary Plan Description (SPD). Failure to supply the notices could result in a fine of $100 per day. Each employee or their beneficiary would be treated as a separate violation. Also, employers must provide notification to the state about their group health plans, including eligibility criteria, employer/employee cost sharing amounts, benefit plan coverage provisions, etc. This information is used to determine premium assistance and establish the level of state sponsored assistance required. Failure to provide information to the state could result in a fine of $100 per day.

Employer's To-do List:

1. Work with your insurance carriers/brokers to amend existing group health plans to include the new special open enrollment rights and to assure they will pay benefits which are secondary to any Medicaid or State CHIP Plans when the plan participant receives premium assistance.
2. Provide the required notification to all employees.