Apr 01, 2009

No April Fool’s Joke: New Group Health Plan Requirements Effective April 1, 2009

Mandatory Reporting Now Required for Medicare Secondary Payer (MSP)

Effective January 1, 2009, the Medicare, Medicaid, and SCHIP Extension Act of 2007 amended MSP rules, requiring insurers, third-party administrators (TPAs), and plan administrators of group health plans (referred to as Responsible Reporting Entities, or RREs) to obtain and submit certain information about plan participants who are also entitled to Medicare.

On a quarterly basis, RREs must now submit online demographic and group health plan information pertaining to individuals who may have Medicare coverage. RREs are required to register with CMS no later than April 30, 2009. Once registration is complete, CMS will establish a deadline for online file submission.

Please note, while most group health plans may not be RREs for purposes of the MSP mandatory reporting requirements, plan sponsors may have a fiduciary duty to consult with their insurers or TPAs to ensure that their group health plans comply with the mandatory reporting requirements.

Expansion of the State Children’s Health Insurance Program

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), signed into law on February 4, 2009, funded and expanded the State Children’s Health Insurance Program (SCHIP). The new law requires group health plans and insurers to provide special enrollment rights to employees and dependents who are eligible for (but not enrolled in) group health plan coverage (most flexible spending, dental and vision plans are exempt from these requirements). In addition, the law allows states to provide premium assistance subsidies for employer-provided group health coverage rather than providing health coverage directly to eligible families, and imposes additional notification and disclosure duties on group health plan administrators.

Special Enrollment Rights for Group Health Plans

Group health plans must allow special enrollment of certain individuals under SCHIP beginning on April 1, 2009, including an employee or dependent who:

  • loses coverage under Medicaid or SCHIP; or
  • becomes eligible for premium assistance in an employer’s group health plan under a Medicaid or SCHIP program.

To take advantage of the new special enrollment rights, affected employees must request coverage within 60 days of the date of the event. Group health plan documents and cafeteria plans should be amended to include the new special enrollments rights under SCHIP.

States May Subsidize Employer-Sponsored Group Health Plan Coverage

According to the new law, states now have the option of providing a premium assistance subsidy for certain employer-sponsored health coverage rather than providing health coverage directly to eligible families. The premium assistance subsidy option will be available for low-income children eligible for SCHIP who have access to employer-sponsored coverage, and elect this coverage through a parent or guardian. Employers can choose to either receive the subsidy directly from the state, or opt-out and require the employee to be provided with the subsidy.

Notification and Disclosure Duties

The new law also requires that group health plans provide written notice to employees about the premium assistance opportunities under the SCHIP expansion. However, notices are not required until the first plan year after model notices are released by the Department of Health and Human Services. (The law directs the government agency to develop the notices by February 4, 2010, but the notices are expected to be released this year.) Notices for calendar year plans will likely be required in 2010.

For more information on the MSP mandatory reporting requirements and the SCHIP expansion, contact your SGR Executive Compensation and Employee Benefits counsel.

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