any country can have," according to Winston Churchill. The U.S. Congress would no doubt agree. Two new pieces of legislation, both enacted this year, expand access to health care for terminated workers and for children.
These new laws also create additional notification requirements for employers that sponsor group health plans.
The American Recovery and Reinvestment Act of 2009 requires that employers provide notices regarding certain aspects of the enhanced COBRA continuation rules. The Children's Health Insurance Program Reauthorization Act of 2009 also imposes notification requirements on sponsors of group health plans.
In some cases, failure to provide a required notice can result in a sizeable civil penalty, so it's important to understand the new requirements.
American Recovery and Reinvestment Act of 2009 (ARRA)
ARRA enhanced the COBRA continuation rules that allow terminated workers to continue their group health insurance, for a time, at their own expense. You are subject to the COBRA rules if you're a private-sector employer and maintain a health care plan with 20 or more employees, employee organizations, or state or local governments.
Under the new provision, qualified persons receive a premium subsidy―equal to 65 percent of the cost of the premium and administrative fee―for the first nine months of COBRA coverage.
In March, the U.S. Department of Labor (DOL) published four model notices regarding the new premium subsidy. As the sponsor of a group health plan, you must provide these notices, as follows:
General Notice (Full Version)
If you're the sponsor of a plan subject to COBRA, you must send this notice to all qualified beneficiaries―not just covered employees―who experienced a qualifying event at any time from September 1, 2008 through December 31, 2009, if the person has not received an election notice or was provided an election notice on or after February 17, 2009 that did not include the additional information required by ARRA.
General Notice (Abbreviated Version)
You may send this notice, rather than the full version, to a person who experienced a qualifying event on or after September 1, 2008―if the person elected COBRA coverage and is still making use of it.
Notice in Connection with Extended Election Periods
You must send this notice to any assistance-eligible person―or any person who would be eligible for assistance if a COBRA continuation election were in effect―that experienced a qualifying event from September 1, 2008 through February 16, 2009 and did not elect COBRA continuation coverage or elected and subsequently discontinued COBRA
This notice must be provided by April 18, 2009.
Alternative Notice
Insurance issuers that provide group health insurance coverage must send this notice to those persons who became eligible for continuation coverage under state law.
You can download Microsoft Word® versions of the DOL's model notices at
http://www.dol.gov/ebsa/COBRAmodelnotice.html
Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA)
This Act extends and expands the Children's Health Insurance Program and allows states to subsidize premiums for employer-provided group health coverage.
If you are a plan sponsor of a group health plan in a state that provides Medicaid or CHIP premium assistance―and Washington State does―you must comply with CHIPRA's new notice requirements, as described below.
Notification of Special-Enrollment Rights
CHIPRA created two special-enrollment rights which, in turn, impose new employee-notification requirements on plan sponsors. Effective April 1, 2009, the sponsor of a group health plan must permit employees and dependants who are eligible-but-not-enrolled for medical coverage to enroll under either of the following two circumstances:
― Medicaid or Children's Health Insurance Program (CHIP) coverage for an employee or dependent is terminated as a result of loss of eligibility
― an employee or dependent becomes eligible for a premium assistance subsidy under Medicaid or CHIP
Under either circumstance, employees have a 60-day window to request enrollment.
If you haven't already notified your employees, in writing, of the two new special-enrollment rights, you should do so immediately. You should also update any forms or plan documents that describe enrollment rights. Plan sponsors who fail to comply with the new notice and disclosure requirements are subject to civil penalties of up to $100 per day.
Notification of Possible Premium Assistance
Also under CHIPRA, you must notify employees, in writing, of the potential availability of premium assistance. The notification can be implemented through open enrollment materials, as part of a summary plan description, or through materials notifying employees of their eligibility to join the group health plan.
State Notification of Plan Participants
The last obligation that you, as a plan sponsor, must fulfill under CHIPRA is a disclosure to the state regarding plan participants or beneficiaries that are covered under a group health plan and Medicaid or CHIP.
This disclosure aids states in determining the cost-effectiveness of providing premium assistance. HHS and the Department of Labor will release model notices for this purpose and you will not be required to provide this disclosure until after the model notice has been issued.
For More Information
The U.S. Department of Labor has published detailed information on the COBRA continuation rules at
http://www.dol.gov/ebsa/COBRA.html.
To learn more about the Children's Health Insurance Program Reauthorization Act, refer to
http://finance.senate.gov/sitepages/2009%20CHIPRA.html and
http://www.cms.hhs.gov/LowCostHealthInsFamChild/01_Overview.asp.
Information about Washington State's children's health insurance program is available online at
http://fortress.wa.gov/dshs/maa/chip/.
If you missed our previous articles explaining significant tax provisions in the American Recovery and Reinvestment Act of 2009, they're available online as follows:
provisions affecting individuals and families
http://www.bizactions.com/index.cfm/ba/e116/en/102298933G1023J630868/
