Legal Updates

Model Employer CHIP Notice Issued By Department Of Labor

March 2010 by Sara Goldsmith Schwartz

The United States Department of Labor (“DOL”) has published a model notice to assist employers in complying with the Children’s Health Insurance Program Reauthorization Act (“CHIPRA”).

Under this statute, employers maintaining group health plans must provide an annual notice to employees of potential opportunities to receive premium assistance under Medicaid or the Children’s Health Insurance Program (“CHIP”) for health coverage of the employee or the employee’s dependents. This is known as the “Employer CHIP Notice.”

DOL’s model Employer CHIP Notice is available on its website and can be accessed through the following link: http://www.dol.gov/ebsa/chipmodelnotice.doc. A summary of employer obligations relative to the Employer CHIP Notice is set forth below.

Employees Who Must Be Given The Employer CHIP Notice

The Employer CHIP Notice must be provided to all employees who reside in any of the 40 states that provide premium assistance through employer-based plans, regardless of the physical location or principal place of business of the employer, the group health plan, or its carrier.

The 10 states that do not currently offer premium assistance are Connecticut, Delaware, Hawaii, Illinois, Maryland, Michigan, Mississippi, Ohio, South Dakota and Tennessee. However, as noted, employers located in these states must nonetheless provide the Employer CHIP Notice to any and all employees who reside in states that do offer such assistance.

An employer with one or more covered employees may send the model notice to all employees if it is administratively easier to send the notice to all than to distinguish between employees based on residency. Alternatively, “[a]n employer which is not facing multi-State complexities and who wants to provide more comprehensive State-specific information to its workforce may modify the Model Employer CHIP Notice,” provided that the modified notice does not omit any of the applicable state contact information.

When The Employer CHIP Notice Must Be Provided

Many employers will be required to provide their first annual Employer CHIP Notice as early as May 1, 2010. The notice deadline is determined by reference to the first day of the first plan year after February 4, 2010, when the model Employer CHIP Notice was issued. Specifically, employers whose plan year begins between February 4, 2010 and April 30, 2010 must provide the Employer CHIP Notice by May 1, 2010. Employers whose next plan year begins on or after May 1, 2010 must provide the Employer CHIP Notice by the first day of the next plan year (e.g., January 1, 2011 for calendar year plans).

How The Employer CHIP Notice Must Be Provided

The Employer CHIP Notice may be provided by first-class mail, electronically (if DOL’s electronic disclosure safe-harbor regulations, which appear at 29 C.F.R. § 2520.104b-1(c), are satisfied), or concurrently with other administrative materials. If this third alternative is chosen, the notice must appear as a “separate, prominent document.”

Penalties For Noncompliance

Civil penalties of up to $100 per day may be assessed against employers for failure to comply with CHIPRA’s notice requirements. Significantly, each violation related to any single employee or beneficiary is treated as a separate violation.

Recommendations For Employers

Employers should plan now to meet their CHIPRA notice requirements by taking the following actions:

Determine which employees reside in a state that provides premium assistance under Medicaid or CHIP for health coverage of the employee or the employee’s dependents;
Determine the due date for the first annual Employer CHIP Notice (e.g., May 1, 2010 or later in the year);
Download the model Employer CHIP Notice from DOL’s website (at http://www.dol.gov/ebsa/chipmodelnotice.doc); and
Determine whether to use the model notice “as is” or to voluntarily modify it by including more comprehensive state-specific information.

Please contact us if you have questions about CHIPRA or your organization’s potential notice requirements under this statute.