It will soon be open enrollment and invariably several months after the start of a new plan year we receive a few calls or Change in Status (CIS) forms from parents who want to drop from their health plans children who were recently accepted into Florida KidCare, or from parents whose son or daughter is off to college and are now covered under a University plan as a mandated part of tuition. After the start of a plan year, are these eligible CIS requests? The answer is no even though change in status rules permit mid-year changes when coverage is gained or lost involving employer-provided coverage.
The Internal Revenue Code (IRC) speaks specifically to the loss of coverage under a group health plan sponsored by a governmental or educational institution as an eligible change in status event, including a State’s Children’s Health Insurance Program [CHIP] under Title XXI of the Social Security Act (Florida KidCare is a CHIP program). See §1.125-4(f)(5). However, the preamble to the final permitted election change regulations makes it clear that the regulations do not allow employees to drop coverage upon gaining CHIP coverage. The rationale as stated in the regulations addresses “a concern that such a rule would violate a fundamental principle of Title XXI of the Social Security Act that CHIP coverage not supplant existing public or private coverage.” See 66 Federal Register 1839 (Jan. 10, 2001).
What becomes confusing for some parents and employers alike is that they may have heard or read that the 2009 Children’s Health Insurance Program Reauthorization Act (CHIPRA) permits coverage to be dropped if they add their kids to their health plan and later the kids are accepted into KidCare. They may also wonder why if an employee, spouse or dependent becomes entitled to and enrolls in Medicare or Medicaid coverage, the employee may make a mid-year election change to cancel or reduce health coverage. Aren’t they all governmental programs?
CHIPRA does not permit coverage to be dropped per se, it does permit an individual who is receiving a premium subsidy under CHIP toward payment of premiums through an employer plan to drop the employer plan and opt back into CHIP for health care. This is a nuance that has been inaccurately interpreted by some. It’s true that CHIP, CHIPRA, Medicare or Medicaid are all governmental programs but Congress was very clear that CHIP or CHIPRA programs are only to be used when no other affordable coverage is available.
CHIPRA reauthorizes and expands the scope of CHIP. It amended the Internal Revenue Code (IRC), Employee Retirement Income Security Act (ERISA) and the Public Health Service ACT (PHSA) to make it a requirement that group health plans permit an employee to enroll in coverage when the employee (or his or her dependent) either becomes eligible for a premium subsidy under CHIP or loses eligibility for Medicaid or CHIP benefits. Currently Florida KidCare does not offer a premium subsidy toward employer coverage but if it did, an employee who did not have employer coverage would be permitted to enroll in his/her employer’s health plan if a premium subsidy was obtained. Conversely, CHIP-eligible individuals who are receiving employer-provided coverage under a state premium assistance subsidy program are permitted to drop the employer coverage and opt back into CHIP. See Publication L. No. 111-3, §301 (2009).
For additional information contact Lena Lewis at firstname.lastname@example.org