New Premium Assistance Notice Requirement for Group Health Plans
As described more extensively in our March 2009 issue of Employee Benefits Update, the Children’s Health Insurance Program Reauthorization Act of 2009 (“CHIPRA”) allows states to offer premium assistance subsidies to pay for coverage under an employer-sponsored group health plan for low-income children and their parents. States may either reimburse employees the amount paid for employer group health coverage or pay employers directly.
Employers that maintain a group health plan for employees residing in states offering premium assistance through Medicaid or CHIP must inform employees of potential opportunities for assistance in obtaining health coverage. Currently, only the following 10 states do not provide premium assistance—Connecticut, Delaware, Hawaii, Illinois, Maryland, Michigan, Mississippi, Ohio, South Dakota and Tennessee. Accordingly, employers that maintain a group health plan for employees residing in any other state (regardless of where the employer does business) must provide a CHIPRA notice prescribed by the U.S. Department of Labor (“DOL”).
The DOL recently released a modifiable model notice (available at http://www.dol.gov/ebsa/chipmodelnotice.doc) for this purpose.
Employers must provide an initial premium assistance notice to employees by the later of (1) the first day of the first plan year after February 1, 2010; or (2) May 1, 2010. Accordingly, for plan years beginning between February 1, 2010 and April 30, 2010, the initial notice must be provided by May 1, 2010. For plan years beginning on or after May 1, 2010 the initial notice must be provided by the first day of the next plan year (January 1, 2011 for calendar year plans).
Employers must provide a premium assistance notice annually thereafter. Currently, it is unclear when such annual notice must be provided. Given this uncertainty, employers should consider providing such notice within 30 days prior to the beginning of each subsequent plan year pending additional guidance from the DOL.
The notice may be provided at the same time as other materials (e.g., open enrollment materials) but cannot be embedded in the group health plan’s summary plan description. The notice may be provided electronically in compliance with applicable DOL regulations.
If you have any questions on the subject of this article or would like more information, you may contact the authors or another Snell & Wilmer attorney at 602.382.6000.
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