Alert May 11, 2010

Department of Labor Publishes Model Notice Regarding Eligibility For Premium Assistance Under Medicaid or CHIP

The Children’s Health Insurance Program Reauthorization Act of 2009 (the “Act”) has expanded the availability of health care assistance for children and some adults and has imposed new obligations on employers, including the distribution of a notice regarding assistance available under Medicaid or the State Children’s Health Insurance Program (“CHIP”).  The requirements of the Act were highlighted in the Goodwin Procter’s March 30, 2009 Employee Benefits Update, “Children’s Health Insurance Program Reauthorization Act Imposes New Group Health Plan Enrollment Rights and Obligations on Employers.”

On February 4, 2010, the DOL published a model notice for employers to use to satisfy this requirement and issued an updated model notice on April 16, 2010.  The model notice is available here.  Highlighted below are details of this new notice requirement.

Notice Requirement 

The Act requires employers that provide medical coverage to employees who reside in states participating in premium assistance programs under Medicaid or CHIP to send a special notice to employees regarding the availability of state premium assistance opportunities (the “CHIP Notice”).  The CHIP Notice must be provided to all employees eligible for coverage in the employee’s group health plan and residing in a participating state (even if the employee is not enrolled in the plan).  The most recent model notice lists the 40 states that are currently participating in preliminary assistance programs under Medicaid or CHIP.  While the notice is required to be delivered only to employees residing in participating states, for administrative simplicity, employers may choose to send it to all eligible employees.  The location of the employer or its health plan service providers is not relevant in determining whether the employer must provide the notice.

Effective Date

The CHIP Notice requirement is effective for the first plan year beginning after February 3, 2010.  For health plans with plan years beginning between February 4, 2010 and April 30, 2010, the notice must be provided by May 1, 2010.  For employers whose next health plan year begins on or after May 1, 2010, the notice must be provided by the first day of such plan year.  (January 1, 2011 is the deadline for calendar year plans.) 

Distribution Methods

The CHIP Notice may be distributed with other plan materials, such as an open enrollment package or a summary plan description, as long as:

  • It is a separate document the importance of which is made evident
  • The materials are provided by the applicable distribution deadline for the CHIP Notice
  • It is distributed to all eligible employees 

Delivery may be by first-class mail, or electronically if the DOL requirements regarding electronic delivery are satisfied.

Annual Requirement 

The CHIP Notice must be provided annually.  As the DOL expects to update the notice and related information periodically, employers should check the DOL website each year before distributing the notice.

Penalty for Non-Compliance

Employers may be assessed penalties of $100 a day for failure to comply with the notice and disclosure requirements of the Act.  The $100 penalty applies for each violation per participant or beneficiary.