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September 2024 Benefits Buzz: DOL updates model Employer CHIP Notice

September 2024 benefits buzz

The U.S. Department of Labor (DOL) released a new model employer Children’s Health Insurance Program (CHIP) notice with information that is current as of July 31.  

Under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), employers maintaining group health plans in states that provide premium assistance subsidies under a Medicaid plan or a CHIP plan must send employees an annual notice.  

An employer can choose to provide the notice on their own or concurrent with the furnishing of:  

  • materials notifying the employee of health plan eligibility; 

  • open enrollment materials; and 

  • the summary plan description. 

An employer is subject to this annual notice requirement if their group health plan covers participants who reside in a state that provides a premium assistance subsidy, regardless of the employer’s location.  

Employers may use the DOL’s model notice for this disclosure. DOL updates the model notice periodically to reflect changes in the states that offer premium assistance subsidies. The DOL’s model employer CHIP notice is current as of July 31. 

Employers can also choose to prepare their own notices or modify the model notice. Employers should include at least the minimum relevant state contact information for any employee residing in a state with premium assistance. 

The deadline for employers to receive MLR rebates is approaching 

Employers with insured group health plans may soon receive a medical loss ratio (MLR) rebate from their health insurance issuers. Issuers that did not meet the applicable MLR percentage for 2023 must provide rebates to plan sponsors by Sept. 30. These rebates may be in the form of a premium credit or a lump-sum payment.  

The MLR rules require issuers to disclose how much they spend on healthcare and how much they spend on administrative costs, such as salaries and marketing. If an issuer spends less than 80% (85% in the large group market) of premium dollars on medical care and efforts to improve the quality of care, they must refund the portion of the premium that exceeds this limit. Issuers that deliver rebates must provide plan sponsors and participants with a notice explaining how the rebate was calculated.  

Employers that receive MLR rebates should consider their options for using them. Any rebate amount that qualifies as a plan asset under ERISA must be used for the exclusive benefit of the plan’s participants and beneficiaries.  

In general, employers should use the rebate within three months of receiving it to avoid ERISA’s trust requirement. In addition, employers that receive MLR rebates should be prepared to answer questions from employees about the rebate and how it is being allocated. 

If you have questions, don’t hesitate to reach out to TruePlan. Our team of advisors can help you with questions within the scope of employee benefits.  

Read our August 2024 Benefits Buzz on the 5th circuit update on preventive care. 

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