Message from Wrangle:
Wrangle has started 2020 with the focus on Plan Documents and other ERISA Reporting and Disclosure Requirements. Our ERISA Desk department, which focuses on these aspects, has seen scores of questions and inquiries come its way and wanted to bring the information to the blog for all to benefit from (future blog posts will return to 5500-related topics).
The following blog piece below is on the CHIPRA Notice. It is not tied to the Form 5500 report. Nevertheless, it is a mandated notice required to be disclosed to Plan Participants whose Employers offer “Qualified Employer-Sponsored Coverage. Please be sure to read on if this is applicable, since a penalty fee is imposed by the DOL if failure to distribute is brought to their attention.
Important Status Updates on the 2020 CHIPRA Notice
The Children’s Health Insurance Program Reauthorization Act (CHIPRA), which was signed into law in 2009, allows eligible low-income employees to receive a state subsidy towards their employer-sponsored group health plan coverage.
What is the Employee Disclosure Requirement?
Employers who offer “Qualified Employer-Sponsored Coverage” must distribute a “CHIPRA Notice” to each eligible employee who resides in a state that provides the CHIPRA premium assistance to eligible low-income individuals. The CHIPRA Notice includes information on how to apply for state premium assistance, along with a list of contacts for each state selected by the federal government to receive the CHIPRA subsidy. The state list is updated bi-annually by the Department of Labor (DOL).
Welcome Back California!
In 2009, California was listed on the CHIPRA Notice as a state offering a CHIPRA premium assistance program. However, California has been off the list for quite some time. Until now! The newly released CHIPRA Notice (effective January 31, 2020) includes California once again.
Moving forward, employers with employees residing in California should ensure that they are compliant with the CHIPRA Notice disclosure requirements. The CHIPRA Notice is usually included in open enrollment/new enrollment materials, as well as in the Summary Plan Description, as required under the Employee Income Security Act (ERISA).
Status on Other States:
In addition to California’s return to the 2020 CHIPRA Notice, the DOL updated the contact information for the following states already listed on the Notice:
Download the latest CHIPRA Notice here.
What is Qualified Employer-Sponsored Coverage?
CHIPRA applies to all employer-sponsored group health plans that constitute “Qualified Employer-Sponsored Coverage”, whether subject to ERISA or not, regardless of the number of plan participants.
Qualified Employer-Sponsored Coverage means group health plan or health insurance coverage offered through an employer that:
- Qualifies as creditable coverage for purposes of HIPAA portability.
- Contributes toward any premium is at least 40 percent.
- Satisfies the eligibility nondiscrimination rules applicable to self-funded health plans.
What are the Possible Penalties?
- Employers who fail to comply with the CHIPRA Notice distribution requirements can incur penalties of up to $119 per day from the date of the employer’s failure to meet the notice requirements.
- Each violation with respect to any single employee is treated as a separate violation.
- In addition, plan administrators who fail to provide timely benefits information to a state are subject to a $119 per day penalty.