DOL Issues Model SCHIP Notices and Reminder of Important HIPAA HITECH Deadline

Legal Alert

October 11, 2012

DOL Issues Model SCHIP Notices

The Department of Labor ("DOL") has issued model notices for employers to use to satisfy the annual notice requirement under the Children's Health Insurance Program Reauthorization Act of 2009 ("CHIPRA"). As mentioned in a previous SGR Client Alert, CHIPRA created additional special enrollment rights permitting eligible employees and their dependents to enroll in an employer's group health plan upon termination of eligibility for Medicaid or a State Children's Health Insurance Program ("SCHIP"), and upon eligibility for a premium assistance subsidy under Medicaid or SCHIP.

In addition, CHIPRA added new notice and disclosure requirements for employers. Employers that maintain group health plans in states that provide Medicaid or SCHIP assistance in the form of premium assistance subsidies must provide this notice. The notice is intended to inform each employee, regardless of enrollment status, of potential opportunities for premium assistance under Medicaid and SCHIP in the state in which the employee resides.

The notice must be provided to employees annually. The notice is not required to be provided in a separate mailing, and employers may combine information to reduce administrative costs. For instance, the notice may be furnished concurrent with enrollment packages, open enrollment materials, or summary plan descriptions, provided that employees who may be eligible for premium assistance could reasonably be expected to appreciate the significance of the notice. Employers may also delegate this responsibility to their group health plan administrators.

The notice must be provided to employees by the later of (1) the first day of the first plan year after February 4, 2010, or (2) May 1, 2010. Accordingly, for employers whose next plan year begins on or after May 1, 2010, the SCHIP notice must be provided by the first day of the next plan year - January 1, 2011 for calendar year plans.

For more information on SCHIP, contact your SGR Executive Compensation and Employee Benefits counsel.

Reminder of Important HIPAA HITECH Deadline

February 17, 2010 is an important deadline under the Health Information Technology for Economic and Clinical Health Act (the "HITECH" Act), enacted as part of the 2009 stimulus bill. As mentioned in a previous SGR Client Alert, the HITECH Act substantively amended the administrative simplification rules under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").

As of February 17, 2010, business associates will:

Have a direct statutory obligation to comply with most of HIPAA's security rules, including the administrative, physical and technical safeguards for electronic protected health information, and the related policies, procedures and other documentation;
Have a new statutory requirement to comply with the privacy-related obligations in business associate contracts with covered entities such as employer group health plans;
Be directly subject to civil and criminal penalties for violating these requirements; and
Be directly subject to audits by the Department of Health and Human Services ("HHS").

In addition, as of February 17, 2010, the new privacy and security-related provisions that apply directly to business associates must be contained in business associate agreements, although HHS has yet to issue additional guidance on how such provisions should be incorporated.

You may contact your SGR Executive Compensation and Employee Benefits counsel for assistance with revising your business associate agreements, or for more information regarding the requirements of the HITECH Act.