How CHIP Premium Assistance Works With Your Group Plan
A state can pay part of an employee’s cost of your plan when that is cost-effective, and the family decides whether to take the help. This page explains the subsidy, who pays first and what the plan administrator may be asked.
Where The Money And The Duties Sit.
General information, not legal or tax advice.
CHIPRA Premium Assistance and CHIP Special Enrollment
The overview of the whole series, with the short version of the law.
The 60-Day CHIP Special Enrollment Window
The enrollment right that opens when a state finds an employee eligible for help.
The Employer CHIP Premium Assistance Notice
The annual notice that tells employees the help may exist.
What The State May Pay.
Under 42 U.S.C. 1397ee(c)(10), a state may elect to offer a premium assistance subsidy for qualified employer-sponsored coverage for children eligible for CHIP, but only if doing so is cost-effective. The statute describes the covered plan as a group health plan or health insurance coverage offered through an employer that meets creditable coverage rules under the Public Health Service Act, and it requires the employer to pay at least 40 percent of the premium.
The subsidy is the difference between the employee-only contribution and the contribution for employee-plus-child coverage, less any state premium cost-sharing. Medicaid has its own version in 42 U.S.C. 1396e-1, with a cost-effectiveness test and the same 40 percent employer-contribution condition.
Voluntary For The Family, Optional For You.
A child cannot receive a subsidy unless the child or parent voluntarily elects it, and the state cannot make that election a condition of receiving CHIP help. Under the Medicaid version, the state must let enrollees disenroll from the employer coverage in any month.
An employer may notify the state that it elects to opt out of being directly paid the subsidy. The statute then has the state pay the employee directly. We have summarized that paragraph, so read 42 U.S.C. 1397ee(c)(10)(C)(iii) before you rely on it for a payroll decision.
Secondary Payor And Wraparound Coverage.
The state is the secondary payor for services your plan covers that the state also covers. For each child in employer coverage, the state must cover items your plan does not cover or covers only in part, and must protect the child against cost-sharing above the program’s limits. In plain terms, your plan pays under its own terms and the state wraps around it.
The plan administrator has one duty of its own. ERISA section 701(f)(3)(B)(ii), 29 U.S.C. 1181(f)(3)(B)(ii), says that when a participant or beneficiary is covered under Medicaid or CHIP, the administrator must disclose to the state, on request, information about the benefits available under the group plan in enough detail to let the state judge cost-effectiveness and supply any supplemental coverage. The level of detail is set by HHS regulations. We did not review those regulations, so we cannot describe the form or deadline they set.
Getting Ready For A State Request.
Name one person who answers state requests and tell your carrier or administrator who that is.
Keep a current benefit summary and rate sheet that shows both employee-only and employee-plus-child contributions, because the subsidy calculation uses both figures.
Decide whether the state will pay you directly or pay the employee, and make sure payroll knows how each case changes deductions. Our payroll integration page explains how deduction changes reach carriers.
Related Rules And Tools.
Payroll and Benefits Integration
How enrollment, deductions and carrier files stay in step.
ERISA Part 7 Group Health Plan Requirements Checklist
The wider federal rules for group health plans.
Selecting and Monitoring Health Plan Service Providers
How to oversee the vendors who answer plan data requests.
Laws And Sources
Social Security Act Section 2105(c)(10), 42 U.S.C. 1397ee: The CHIP state option to pay a premium assistance subsidy for employer-sponsored coverage.
Social Security Act Section 1906, 42 U.S.C. 1396e-1: The Medicaid option to pay premiums for employer group health plans.
ERISA Section 701(f), 29 U.S.C. 1181: The statute text for the CHIP special enrollment right in paragraph (f)(3), the employer notice duty and the plan administrator disclosure to states.
DOL EBSA Fact Sheet, HIPAA Special Enrollment and CHIPRA: DOL’s summary of the two special enrollment events, the 60-day request period and the employer notice.
DOL EBSA, CHIPRA: The Department of Labor page for the Children’s Health Insurance Program Reauthorization Act and its employer topics.
General information, not legal or tax advice.
Quick Answers.
Short replies on the subsidy and the state’s role.
Does our plan have to meet a minimum employer contribution for premium assistance?
Under 42 U.S.C. 1397ee(c)(10), qualified employer-sponsored coverage requires the employer to pay at least 40 percent of the premium, and the plan must meet creditable coverage rules. The Medicaid statute at 42 U.S.C. 1396e-1 states a similar 40 percent condition.
Can an employee be forced to take the state subsidy?
No. The CHIP statute says a child may not receive a subsidy unless the child or parent voluntarily elects it, and the state may not require the election as a condition of child health assistance.
What will a state ask our plan administrator for?
On request, information about the benefits available under the plan in enough detail for the state to judge cost-effectiveness, as HHS regulations set. We have not reviewed those regulations, so confirm the form and timing with your carrier or counsel.
The Rest Of This Series.
CHIPRA Premium Assistance and CHIP Special Enrollment
The overview of the whole series, with the short version of the law.
The 60-Day CHIP Special Enrollment Window
The two events and the 60-day request period.
The Employer CHIP Premium Assistance Notice
Who sends the annual notice and the penalty for missing it.
Plan Document and SPD Language for CHIP Special Enrollment
Language for your documents and the points we could not confirm.
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