Employers Must Notify Employees Annually of Possible Premium Assistance from CHIP

If you sponsor a calendar-year group health plan, don’t forget to send all eligible employees a CHIP Notice before January 1 annually – not just to plan participants but also to each employee who is or might become eligible for employer group health benefits. (See further clarification below.). Noncompliance could result in a penalty from the Department of Labor (DOL) of $100 per day per non-notified employee. The CHIP Notice informs eligible employees of their possible right to receive financial assistance through Medicaid and the Children’s Health Insurance Program (CHIP) to pay for premiums for health coverage under the employer’s plan, if such assistance is currently available in the states in which employees reside. You can include this annual notice as part of your Open Enrollment packet. The DOL provides a model notice, which it updates periodically (most recently as of January 31, 2017). The current model notice is at: http://www.dol.gov/ebsa/chipmodelnotice.doc.

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) was enacted on February 4, 2009, and reauthorized the federally-mandated State Children’s Health Insurance Program (SCHIP) which is partially funded under state law. CHIPRA not only imposed an annual notice requirement on employers who sponsor group health plans, it also required plans to offer a 60-day “special enrollment” period (rather than the prior 30-day period under HIPAA) for employees and/or dependent children who either lose coverage under, or become eligible for group health premium assistance under, a Medicaid plan or a state CHIP plan.

What’s in the Model Notice?
The model notice includes contact information for the Medicaid and/or CHIP programs in each state that provides premium assistance (38 states as of July 31, 2011). Employers can provide the entire 3-page model notice to all employees, or may instead wish to shorten the notice and provide state-specific information only for those states in which employees reside.

Who Gets the CHIP Notice?
The law itself actually says the employer must send the Notice to “each employee” but it goes on to say the annual notice may be provided when notifying an employee of health plan eligibility, concurrent with materials provided at open enrollment, or concurrent with furnishing the summary plan description, and these circumstances apply only to eligible employees. Additionally, the Notice itself applies only to employees who are or become eligible for employer health coverage.

Who Must Send the CHIP Notice?
The law requires that the CHIP Notice be sent by each employer that maintains a group health plan in a State that provides premium assistance under a State Medicaid plan, the Social Security Act, or a State child health plan. This notice requirement applies even if the employer’s location or principal place of business is not in one of the states listed in the model notice.

The CHIP Notice may be mailed to eligible employees by first-class mail or distributed electronically in compliance with the DOL’s electronic notice distribution rules. These rules generally allow electronic distribution without prior consent to employees who have work-related computer access to the employer’s electronic information system; but require affirmative prior consent from employees with no work-related computer access.

The CHIP Notice may be included with open enrollment materials or sent separately. If it is not sent before the first day of your plan year, it should be sent as soon as possible thereafter, to avoid potential penalties from the DOL of $100 per day per employee who should be sent a notice and is not.

*This is not a substitute for legal advice and should not be used as such. Do not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider.