|What: Children’s Health Insurance Program (CHIP) was signed into law in 2009. CHIP allows states to subsidize premiums for employer-provided group health coverage for eligible children.
Who: Employers are required to issue the CHIP notice annually. The U.S. Department of Labor (DOL) has updated its model notice for employers to provide information on eligibility for premium assistance under the Medicaid or the Children’s Health Insurance Program (CHIP). CHIP notice requirements apply to both fully insured and self-insured group health plans.
When: The updated model notice includes information on how employees can contact their state for additional information and how to apply for premium assistance, with information current as of January 31, 2018. Employers may use the new CHIP notice prospectively.
CHIP Background Information:
Many states provide coverage to uninsured children whose family income falls under a certain level or who do not have access to other insurance. These programs are known as the state’s Child Health Insurance Program (CHIP). Under CHIP, a state CHIP program may elect to offer premium assistance to subsidize employer-provided coverage for eligible low-income children and families. The subsidy can either be provided directly to the employee or paid to the employer.
An employer may opt-out of receiving the premium assistance subsidy so that the subsidy would be paid directly to the employee. This opt-out will permit the employer to continue to withhold the employee’s full premium obligation and avoid direct involvement with the subsidy program.
More on the Annual Notice Requirements:
Employers that provide health insurance coverage in states with premium assistance through Medicaid or CHIP must notify all employees of premium assistance opportunities in the state where the employee resides. Employees must be provided with the CHIP notice annually before the start of each plan year. An employer can choose to provide the notice on its own or concurrent with the furnishing of:
- Materials notifying the employee of health plan eligibility;
- Materials provided to the employee in connection with an open season or election process conducted under the plan; or
- The summary plan description (SPD).
Penalties for Failure to Comply:
CHIP provides for civil penalties of up to $100 a day for failure to comply with the notice and disclosure requirements.