Schiff Hardin Employee Benefits and Executive Compensation Group Update

Department of Labor Publishes Model CHIP Notice for Use by Employers

The Department of Labor (the "Department") recently published a model template that employers may use to satisfy their notice obligation to employees, promulgated under the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA"). The Department's model template can be found at www.dol.gov/ebsa/chipmodelnotice.doc.

The notice obligation requires an employer that maintains a group health plan (i.e., provides medical benefits directly or through insurance, reimbursement or otherwise) in a state that provides premium assistance under Medicaid or the Children's Health Insurance Program ("CHIP") for the purchase of group health plan coverage to notify its employees of potential opportunities to receive such premium assistance. Currently, 40 states provide premium assistance under a Medicaid or CHIP program; Connecticut, Delaware, Hawaii, Illinois, Maryland, Michigan, Mississippi, Ohio, South Dakota and Tennessee do not.

Each employee who resides in one of the 40 states that provide premium assistance is entitled to receive notice of potential opportunities for assistance under Medicaid or CHIP, regardless of his or her enrollment status in the employer's group health plan. (Note that an employer may provide notice to all employees, including those not residing in one of the 40 states that provide premium assistance, for purposes of administrative convenience.)

The notice must be provided by the later of (i) the first day of the first plan year beginning after February 4, 2010, or (ii) May 1, 2010 (i.e., January 1, 2011 for calendar year plans). The notice may be provided concurrent with other materials (e.g., enrollment packets, open season materials or plan SPD), as long as the notice is timely provided. The notice must be provided as a separate and prominent document so that the employee can reasonably be expected to appreciate its significance. Accordingly, it appears that direct insertion of the model notice language into a plan SPD would not satisfy this requirement. The notice may be provided by first-class mail or electronically in compliance with the Department's electronic disclosure regulations.

Please contact your Schiff Hardin LLP attorney or any of the individual attorneys listed in this update if we can be of assistance to you with respect to CHIPRA and this new notice requirement.

ABOUT SCHIFF HARDIN LLP