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DOL Releases Model CHIP Notice

As we reported in our February 2009 article, the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) directed the Department of Labor (“DOL”) to draft model notices by which sponsors of employer group health plans could notify their employees of the premium assistance made available under both CHIP and Medicaid. The DOL has now issued a model notice that may be used for this purpose.

For the first time, CHIPRA gave states the option of using CHIP and/or Medicaid funds to subsidize premiums for coverage under employer health plans. Although not all states have chosen to take advantage of this option, 40 states have now done so (all but Connecticut, Delaware, Illinois, Indiana, Maryland, Michigan, Mississippi, Ohio, South Dakota, Tennessee, and the District of Columbia). Employers offering health coverage to employees living in any of the 40 states that offer this premium assistance must provide those employees with either this model notice or one tailored to the state or states in which those employees live.

The model notice is relatively short, containing only a brief overview of the premium assistance program and contact information for all 40 states in which the assistance is available. Although the DOL’s intent in drafting this single notice was to allow employers to avoid issuing separate notices to employees living in different states, the DOL has made clear that employers with employees in only a few states should feel free to supplement the notice with information specific to those states. Employers may use the contact information contained in the model notice to learn if states have additional language they suggest be included.

This notice must be provided automatically and at no cost. Moreover, this is yet another annual notification obligation. The first notice is due by the first day of the first plan year beginning after February 4, 2010 (when the notice was issued). Thus, calendar-year plans must provide the notice by January 1, 2011. Plans with plan years beginning before May 1, 2010, need not provide the notice before that date.

This notice may be provided concurrently with other materials, such as enrollment packets, open season materials, or the plan’s summary plan description. Many employers will no doubt choose the open enrollment option. Those employers should keep in mind, however, that this notice must go to all eligible employees residing in any of the 40 states that offer premium assistance, regardless of whether those employees are actually enrolled in the employer’s health plan. Moreover, if this notice is combined with other materials, the notice must appear separately and in a manner which ensures that employees who may be eligible for the premium assistance could reasonably be expected to appreciate its significance.

Although sponsors of calendar-year plans need not take immediate action to comply with this notification requirement, they will want to ensure that this model notice (or some variation thereof) is provided to all of the required employees in advance of the January 1, 2011, deadline.