DEPARTMENT OF HEALTH & HUMAN SERVICES

Centers for Medicare & Medicaid Services

7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, Maryland 21244-1850

Center for Medicaid and State Operations

SHO # 10-002
CHIPRA # 13

February 2, 2010

RE: CHIPRA Premium Assistance Option

Dear State Health Official:

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA),

Public Law 111-3, offers new opportunities for States to provide premium assistance to
children under age 19, who are eligible for the Children’s Health Insurance Program
(CHIP) or Medicaid , and who have access to qualified employer-sponsored coverage. In
some circumstances, family members who are not otherwise eligible for CHIP or
Medicaid may also receive premium assistance when enrolled in qualified employer-
sponsored coverage.

Premium assistance programs use federal and State CHIP and Medicaid funds to help
subsidize the purchase of group health coverage for children (and in some circumstances,
family members) who have access to employer-sponsored coverage, but may need
assistance in paying for their premiums. Premium assistance is designed to make health
care coverage more affordable for families. The CHIPRA premium assistance provisions
build on lessons learned from State experiences with premium assistance programs, and
are designed to reduce implementation barriers, such as providing a guaranteed right for
CHIP and Medicaid individuals to enroll in a group health plan without having to wait for
an open enrollment period if certain conditions are met.

States now have four state plan options for implementing premium assistance either
under title XXI (CHIP) or title XIX (Medicaid) of the Social Security Act (the Act):

The CHIP premium assistance option that was available prior to CHIPRA
continues to be an option for States. Section 301(a)(2) of CHIPRA changes the
cost-effectiveness test under this option, established in Section 2105(c)(3) of the
Act. This option is referred to as “Purchase of Family Coverage.”
Section 301(a)(1) of CHIPRA provides States with an additional premium
assistance option under CHIP by adding paragraph 2105(c)(10) to the Act;
Section 1906 of the Act is a Medicaid premium assistance option that was
available to States for children and adults prior to CHIPRA and continues to be an
option for States; and
Page 2 – State Health Official

Section 301(b) of CHIPRA provides States with an additional premium assistance

option for children under age 19 in Medicaid by adding section 1906A to the Act.

This letter provides general information on these four premium assistance options and
discusses the differences among these options. This letter also describes related
provisions of CHIPRA, such as section 302, Outreach, Education, and Enrollment
Assistance, and section 311, Special Enrollment Period under Group Health Plans.

CHIP Premium Assistance Options

1) Purchase of Family Coverage

Section 2105(c)(3) of the Act and implementing Federal regulations at 42 CFR 457.1010
allow States to provide title XXI premium assistance to children and their families
through the CHIP State plan “Purchase of Family Coverage” option. Under this option,
States can provide coverage to children and families eligible for CHIP by subsidizing
group health plan premiums under the following conditions:

Eligibility: States may offer premium assistance to targeted low-income children

and to families that include at least one targeted low-income child (as defined in
section 2110(b).
Insurance Status: Children must have access to, but not be enrolled in, group
health coverage.
Coverage for Non-Eligible CHIP Family Members: States can provide
premium assistance to non-eligible CHIP family members. Coverage, however,
must be cost effective as described below.
Mandatory/Voluntary Enrollment: Enrollment can be voluntary or mandatory
at the State’s option.
Benefits: Benefits provided to eligible children in premium assistance must meet
the same requirements as for children in CHIP direct coverage. To satisfy the
requirements of 2103(a) of the Act, benefits must meet benchmark coverage,
benchmark-equivalent coverage, or Secretary-approved coverage. These benefits
can either be provided fully through the employer-based plan or through the
private plan, with the State providing wraparound benefits. Non-eligible family
members do not receive wraparound benefits.
Cost Sharing: Cost sharing for eligible children in premium assistance must
meet the same requirements as those for children receiving benefits directly,
consistent with the requirements at section 2103(e). Cost sharing for families at
or below 150 percent of the Federal poverty level (FPL), must be “nominal” in
accordance with 42 CFR 457.540 - 457.555, and total charges may not exceed 5
percent of the family’s income for children of all income levels, in accordance
with 42 CFR 457.560.
Substitution Strategy: States must have a 6-month waiting period in place for
premium assistance to prevent CHIP from substituting for private coverage, as
required at 42 CFR 457.810(a)(1). Exceptions are permitted and the Centers for
Page 3 – State Health Official

Medicare & Medicaid Services (CMS) will work with States on devising
acceptable strategies to prevent substitution.
Employer Contribution: States must identify a minimum contribution level;
there is no Federal minimum contribution requirement.
Cost-Effectiveness: Prior to CHIPRA, States were required to demonstrate cost
effectiveness on an individual/family, or on an aggregate basis, compared to the
cost of providing direct CHIP coverage to a targeted low-income child. Section
301(a)(2) of CHIPRA amends the cost-effectiveness test under section 2105(c)(3)
of the Act to permit States to compare the costs of covering the entire family
relative to direct CHIP coverage of the entire family, rather than just the targeted
low-income child. States can continue to calculate these costs on the individual or
aggregate basis, and must now also include administrative costs in the cost-
effectiveness test.

2) Additional Premium Assistance Option in CHIPRA

Section 301(a)(1) of CHIPRA adds a new section 2105(c)(10) of the Act to provide
States with an additional premium assistance option under title XXI. States electing this
premium assistance option must adhere to the following conditions:

Eligibility: The State may offer premium assistance to targeted low-income

children who have access to qualified employer-sponsored coverage. Under
certain circumstances, States may also offer premium assistance to families as
described below under “Coverage for Non-Eligible CHIP Family Members.”
Insurance Status: Individuals must have access to, but not be enrolled in,
qualified employer-sponsored coverage as defined in section 2105(c)(10)(B).
Coverage for Non-Eligible CHIP Family Members: All States can cover
parents through incidental coverage, which occurs when the per-child subsidy for
covering children under a premium subsidy results in coverage for the parents at
no additional cost to the State or the federal government when compared to direct
CHIP coverage for the child or children only. States with section 1115
demonstration authority to cover families prior to the passage of CHIPRA can
directly cover families, including parents, under this new State plan option
(subject to the limitations of section 2111 of the Act).
Voluntary Enrollment Only: Section 2105(c)(10)(A) prohibits States from
requiring children and/or families to mandatorily enroll in this premium assistance
option. In addition, States must establish a process for permitting parents to
disenroll a child from employer-sponsored coverage, and to enroll the child in
direct coverage effective on the first day of any month for which the child is
eligible for such assistance and in a manner that ensures continuity of coverage
for the child.
Benefits: Coverage provided to eligible children in premium assistance must
meet the same requirements as those for children in CHIP direct coverage. If the
group health plan or health insurance coverage offered through an employer is
certified by an actuary as health benefits coverage that is a benchmark benefit
package described in section 2103(b) or benchmark-equivalent coverage that
Page 4 – State Health Official

meets the requirements of section 2103(a)(2), then enrollment in the employer

plan meets the CHIP benefit standards. For qualified employer-sponsored
coverage that does not meet benchmark or benchmark-equivalent standards,
benefits must be provided through a combination of the employer-based plan and
the State through wraparound benefits.
Cost Sharing: Cost sharing for eligible children receiving premium assistance
must meet the same requirements as those for children receiving CHIP benefits
directly under the State plan, consistent with section 2103(e), as described above.
If the group health plan or health insurance coverage offered through an employer
is certified by an actuary as health benefits coverage that is a benchmark benefit
package or benchmark-equivalent coverage, then enrollment in the employer plan
meets the cost sharing CHIP standard. For qualified employer-sponsored
coverage that does not meet benchmark or benchmark-equivalent standards,
States must ensure all cost sharing protections apply under section 2103(e).
Substitution Strategy: States are not required to have a waiting period, except,
if they have a waiting period for direct coverage under their CHIP State plan, they
must apply the same waiting period to premium assistance, as specified by section
2105(c)(10)(F).
Employer Contribution: Section 2105(c)(10)(B) requires that an employer must
contribute at least 40 percent toward the cost of the premium.
Cost-Effectiveness: The employer contribution requirement serves as the proxy
for cost effectiveness; this option does not require a cost-effectiveness test.
Notice of Availability: If States provide premium subsidies, section 2105(c)(10)
requires that they must include information about premium assistance on the
CHIP application and establish other procedures to ensure that parents are fully
informed of the choices for child health assistance or through the receipt of
premium assistance subsidies.

Related Provisions
Section 301 of CHIPRA also provides an option for States to establish an employer-
family premium assistance purchasing pool. Employers who are eligible to participate
must: 1) have less than 250 employees; 2) have at least one employee who is a pregnant
woman eligible for CHIP, or a member of a family that has at least one child eligible
under the State’s CHIP plan. The State may provide a premium assistance subsidy for
enrollment in coverage made available through this pool. (See new section
2105(c)(10)(I) for additional conditions and limitations applicable to States and
employers regarding health benefits coverage for purchasing pools.)

Section 302 of CHIPRA amends section 2102(c) of the Act and, effective April 1, 2009,
requires States to include a description of outreach, education, and enrollment efforts
related to premium assistance subsidies in their CHIP State plan. This provision also
clarifies that outreach expenditures related to premium assistance programs under either
the CHIP State plan option, or under a demonstration, are exempt from the 10 percent
title XXI administrative cap. However, the total outreach expenditures claimed for
premium assistance cannot exceed 1.25 percent of the administrative costs.
Page 5 – State Health Official

Medicaid Options

3) Section 1906 Medicaid Premium Assistance.

(This option applies to Medicaid and Title XXI-funded Medicaid Expansions.)

CHIPRA does not amend existing section 1906 of the Act relating to Medicaid premium
assistance programs; and States may continue to use section 1906 authority to enroll
Medicaid-eligible individuals (children and adults) in group health plans as long as the
conditions outlined below are met:

Eligibility: This provision is available to all Medicaid-eligible individuals,

assuming the State has elected this option in its Medicaid State plan.
Insurance Status: The individual must be eligible to be enrolled in a group
health plan. Individuals may already be enrolled in the group plan or be eligible
and enrolled only once the premium assistance is provided.
Coverage for Non-Medicaid-Eligible Family Members: States may enroll
family members who are not eligible for Medicaid in employer coverage when
that enrollment is necessary to achieve coverage of Medicaid-eligible family
members. For example, Medicaid can pay premiums for a non-Medicaid-eligible
parent to enroll in an employer health plan so that a Medicaid-eligible child can
be enrolled in that plan. However, non-Medicaid-eligible family members do not
receive any wraparound benefits.
Mandatory Enrollment: Enrollment in the group health plan can be mandatory,
at the State’s option, but a child’s eligibility for benefits under title XIX is not
affected by a parent’s decision to not enroll the child in a group health plan.
Benefits and Cost Sharing: Medicaid-eligible individuals enrolled in a group
health plan under section 1906 of the Act: 1) must receive the same benefits
(whether or not provided by the group health plan) and the same cost-sharing
protections as any other Medicaid beneficiary; and, 2) must have all premiums,
deductibles, coinsurance, and other cost-sharing for items and services otherwise
covered under the State plan, paid on their behalf. Non-Medicaid-eligible family
members are eligible only to have group health plan premiums paid on their
behalf if necessary to obtain access for the Medicaid enrollee. The non-Medicaid-
eligible enrollees are liable for any additional cost sharing on their behalf.
Third Party Liability: The group health plan is treated as a third party resource
to pay all or part of the cost of care for the individual with respect to items or
services covered under the State plan.
Substitution Strategy: Not required.
Employer Contribution: No minimum employer contribution.
Cost-Effectiveness: Enrollment in a group health plan must be cost-effective
(i.e., the expenditures for an individual enrolled in a group health plan, including
wraparound benefits and cost sharing, are likely to be less than if the individual
participated in Medicaid fee-for-service). Costs for premiums for non-Medicaid-
eligible family members are included when testing for cost-effectiveness.
Page 6 – State Health Official

4) New Medicaid Premium Assistance Option for Children.

(This option applies to Medicaid and Title XXI-funded Medicaid Expansions.)

Section 301(b) of CHIPRA provides States with an additional Medicaid State plan
premium assistance option for children by adding a new section 1906A of the Act. This
option is intended to give States the opportunity to build on existing 1906 programs to
augment coverage options for children. The federal requirements under this option are as
follows:
Eligibility: Premium assistance under section 1906A is available at State option
to individuals under age 19 who are eligible for medical assistance under title
XIX of the Act (and, when appropriate, the parent of such individuals). As noted
above, this option also applies to title XXI-funded Medicaid expansions.
Insurance Status: The individual must have access to qualified employer-
sponsored coverage, as defined in section 1906A(b) of the Act.
Coverage for Non-Medicaid-Eligible Family Members: States may enroll
parents who are not eligible for Medicaid in qualified employer-sponsored
coverage when that enrollment is necessary to achieve coverage of Medicaid-
eligible family members.
Voluntary Enrollment: States may not make application for enrollment in
qualified employer-sponsored coverage a condition of becoming or remaining
eligible for Medicaid, for either the individual under age 19, or for the parent who
is Medicaid-eligible. In addition, States must establish a process for permitting
parents to disenroll their child from employer-sponsored coverage in any month.
Benefits and Cost Sharing: Children who are Medicaid-eligible (and their
parent(s), if applicable) will be covered for all items and services covered under
the Medicaid State plan, and the State must pay all premiums, deductibles,
coinsurance, and other cost-sharing obligations for items and services otherwise
covered under the State plan either through the employer-sponsored coverage or
in combination with State-provided wrap around benefits (exceeding the amount
otherwise allowed under section 1916 or 1916(A) of the Act). States must pay for
all cost sharing required by the qualified employer-sponsored insurance, even if
this cost sharing is greater than what individuals would pay under the Medicaid
State plan.
Third Party Resource: The qualified employer-sponsored coverage is treated as
a third party resource to pay all or part of the cost of care for the individual (and
the Medicaid-eligible parent(s)).
Substitution Strategy: Not required.
Employer Contribution: Employer must contribute at least 40 percent toward
the cost of the premium.
Cost-Effectiveness: The employer contribution is a proxy for cost-effectiveness;
this provision is not subject to a cost-effectiveness test.
Page 7 – State Health Official

Special Enrollment Periods under Group Health Plans

CHIPRA also includes new rules designed to ease transitions between public and private
coverage, and to allow States to enroll individuals into premium assistance regardless of
open enrollment periods. Effective April 1, 2009, section 311 of CHIPRA provides a
guaranteed right to enroll in a group health plan without having to wait for an open
enrollment period if either of the following conditions is met:

1) The employee/dependent’s coverage is terminated as a result of losing eligibility

under CHIP or Medicaid for individuals who otherwise meet the eligibility requirements
of a group health plan, or
2) The employee/child becomes eligible for premium assistance from the State under its
CHIP or Medicaid program, if he or she is otherwise eligible for a group health plan.
Enrollment must be requested within 60 days after the loss of eligibility or after the date
the employee or dependent is determined to be eligible for Medicaid or CHIP premium
assistance.

Continuation of Coverage for Children and Families Currently Covered under Title
XXI or Title XIX Section 1115 Premium Assistance Related Demonstrations.
CHIPRA does not prevent States with section 1115 demonstrations in effect prior to the
date of CHIPRA enactment, February 4, 2009, from continuing to provide premium
assistance to the title XIX and title XXI populations served under section 1115 authority.
CMS will also consider new premium assistance demonstration proposals on a State-by-
State basis in the future, but encourages States interested in creating new premium
assistance programs to consider the new CHIPRA title XIX and title XXI State plan
options. However, new section 2111 of the Act prohibits CMS from approving any new
demonstrations to cover parents with title XXI funds, regardless of whether or not these
demonstrations involve premium assistance. Under section 2111(b)(2) of the Act, States
have the option in fiscal years 2012 and 2013 to continue covering parents with title XXI
funds, if they achieve outreach and benchmarks related to performance in providing
coverage to children.

States wishing to adopt either the CHIP or Medicaid State plan options described above
must submit a State plan amendment, which must be approved by the Secretary. States
electing this option will be able to amend their CHIP or Medicaid State plan by
submitting the enclosed addendum to the CHIP or Medicaid State plan.

Enclosures

Enclosed you will find questions and answers related to both title XXI and title XIX
premium assistance programs, a draft CHIP State Plan template, a draft Medicaid State
plan preprint, and a summary chart of all four of the premium assistance options available
to States.

CMS looks forward to its continued work with States on considering these new options
for providing premium assistance to families with access to cost-effective employer-
sponsored coverage. Draft State plan amendment (SPA) template pages to implement the
Page 8 – State Health Official

new CHIPRA options for both CHIP and Medicaid are enclosed. These pages would be
an Addendum to the CHIP State child health plan, describing premium assistance
coverage under the plan. CMS is in the process of obtaining the required Office of
Management and Budget (OMB) clearance for the SPA templates. Given that States may
need considerable time to complete these templates, CMS is sharing, in draft, the SPA
template under the guidelines of the Paperwork Reduction Act (PRA) currently under
OMB review. Until the PRA process is completed, States are not obligated to use the
recommended template. After CMS obtains the necessary PRA clearance number from
OMB, States will be required to complete the SPA template.

Contact Information
If you have additional questions, you may send an email to
CMSOCHIPRAquestions@cms.hhs.gov or contact Ms. Victoria Wachino, Director,
Family and Children’s Health Programs Group, Center for Medicaid and State
Operations, at (410) 786-5647.

Sincerely,

/s/

Cindy Mann
Director
Center for Medicaid and State Operations

Enclosures

Enclosure 1 – Questions and Answers

Enclosure 2 – Side-by-Side Analysis of Title XXI and XIX Premium Assistance Options
Enclosure 3 – Draft CHIP State Plan Preprint
Enclosure 4 – Draft Medicaid State Plan Preprint

cc:

CMS Regional Administrators

CMS Associate Regional Administrators

Division of Medicaid and Children’s Health

Ann C. Kohler
NASMD Executive Director
American Public Human Services Association

Joy Wilson
Director, Health Committee
National Conference of State Legislatures
Page 9 – State Health Official

Matt Salo
Director of Health Legislation
National Governors Association

Debra Miller
Director for Health Policy
Council of State Governments

Christine Evans, M.P.H.

Director, Government Relations
Association of State and Territorial Health Officials

Alan R. Weil, J.D., M.P.P.

Executive Director
National Academy for State Health Policy
Page 10 – State Health Official

Enclosure 1

Questions and Answers Related to title XXI CHIPRA

Premium Assistance Provisions

The questions and responses below only pertain to premium assistance under
2105(c)(10) of the Act as added by section 301(a)(1) of CHIPRA. This is referenced as
the “Additional State Option for Providing Premium Assistance,” in CHIPRA.

PREMIUM ASSISTANCE SUBSIDIES

Question 1: What is the definition of premium assistance subsidy for a child and
how does the State calculate the costs of the subsidy?

Answer: As specified in Section 2105(c)(10)(C), a premium assistance subsidy is the

amount equal to the difference between the employee contribution required for
enrollment only of the employee under qualified employer-sponsored coverage and the
employee contribution required for enrollment of the employee and the child in such
coverage, less any cost sharing applied under the State child health plan. The formula
can be illustrated as follows:

Example: Contribution for Employee + Child $200

Contribution for Employee Only -100
Premium Cost Sharing under CHIP for Child -50
Premium Assistance Subsidy $50

Using this example, the State’s premium assistance subsidy is $50 (i.e., ($200 – $100) -
$50 = $50).

Question 2: Does the State have the option to reimburse the premium assistance
payment to either the employee or the employer?

Answer: Yes. The State may provide a premium assistance subsidy either as
reimbursement to an employee for out-of-pocket expenditures or directly to the
employer.

ELIGIBILITY

Question 3: Can any State elect this new option to cover targeted low-income
children under premium assistance?

Answer: Yes. Any State can elect to cover targeted low-income children under this new
option.
Page 11 – State Health Official

Question 4: Can any State provide coverage to the families of a CHIP child under
this new option?

Answer: All States can cover parents through incidental coverage, which occurs when
the per-child subsidy for covering children under a premium subsidy results in coverage
for the parents at no additional cost to the State or the federal government when
compared to direct CHIP coverage for the child or children only. States with section
1115 demonstration authority to cover families prior to the passage of CHIPRA can
directly cover families, including parents, under this new State plan option (subject to the
limitations of section 2111 of the Act).

Question 5: Are CHIP-eligible children or eligible family members required to

participate in premium assistance if the State opts for premium assistance and the
child has access to such coverage?

Answer: No, participation by families is voluntary and CHIP-eligible children are not
required to participate in premium assistance. In fact, a State must establish a process for
permitting the parent of a targeted low-income child receiving a premium assistance
subsidy to disenroll the child from the qualified employer-sponsored coverage and enroll
the child in the CHIP State plan, effective on the first day of any month for which the
child is eligible.

Question 6: Can a State provide premium assistance coverage to pregnant women?

Answer: States can provide premium assistance to pregnant women only if the pregnant
woman meets the definition of a targeted low-income child, including being 19 years old
or younger.

Question 7: Can a State require beneficiaries to practice continuous enrollment in a

premium assistance program?

Answer: No. A State cannot require continuous enrollment in a premium assistance

program because States must permit children to opt out of premium assistance effective
on the first day of any month for which the child is eligible.

EMPLOYER PARTICIPATION

Question 8: What is the definition of qualified employer-sponsored coverage?

Answer: Qualified employer-sponsored coverage is defined as a group health plan or

health insurance coverage offered through an employer that qualifies as creditable
coverage as a group health plan under section 2701(c)(1) of the Public Health Service
Act, for which the employer contribution toward any premium for such coverage is at
least 40 percent, and that is offered to a classification of employees that is considered to
be a nondiscriminatory eligibility classification under section 105(h)(3)(A)(ii) of the
Page 12 – State Health Official

Internal Revenue Code of 1986 (without regard to clause (i) of subparagraph (B) of such
paragraph).

Question 9: Are health flexible spending arrangements or high deductible health

plans considered qualified employer-sponsored coverage?

Answer: No. Benefits provided under a health flexible spending arrangement, or any
high deductible health plan, as defined in section 223(c)(2) of the Internal Revenue Code,
are not considered qualified employer-sponsored coverage.

Question 10: Can an employer opt out of being directly paid a premium assistance
subsidy by the State on behalf of an employee?

Answer: Yes. The employer participation in a premium assistance subsidy shall be

voluntary and the employer can elect to opt out of receiving the subsidy.

Question 11: If qualified employer-sponsored coverage does not meet the 40 percent
premium contribution requirement, but the State could demonstrate that the
coverage was cost effective, could the coverage be deemed to be qualified?

Answer: No. The qualified employer-sponsored coverage must meet the 40 percent
requirement under title XXI as specified under 2105(c)(10)(B).

Question 12: Can States claim for outreach expenditures related to a premium
assistance program?

Answer: Yes. States may claim Federal financial participation for outreach activities
related to premium assistance programs operated under 2105(c)(10) of the Act, under the
Purchase of Family Coverage option, 2105(c)(3), of the Act, or under section 1115
demonstration program authority. The outreach expenditures are exempt from having to
be claimed under the 10 percent administration cap in CHIP. However, CMS will only
provide federal financial participation for expenditures up to 1.25 percent of the maximum
amount permitted to be expended under the 10 percent administration cap. For example,
if a State has a 10 percent limit on administrative costs of $5,000,000 in CHIP, the State
can claim Federal financial participation for $62,500 ($5,000,000*1.25%) in premium
assistance outreach costs.

Section 311: Special Enrollment Period under Group Health Plans in Case of
Termination of Medicaid or CHIP Coverage or Eligibility for Assistance in Purchase
of Employment Based Coverage; Coordination of Coverage.

Question 13: Are there new requirements under CHIPRA for employers to provide
notices to employees regarding premium assistance?

Answer: Yes. Employers who maintain group health plans in States that provide CHIP
(or Medicaid) premium assistance subsidies are required to provide written notices to
Page 13 – State Health Official

their employees informing them of the potential opportunities for premium assistance in
their State. In addition, the Department of Health and Human Services (HHS) and the
Department of Labor (DOL) are required to develop national and State-specific model
notices by February 4, 2010, to enable employers to comply with the notice requirement.
The national and State-specific model notices are required under Section
701(f)(3)(B)(i)(II) of ERISA, as added by section 3111(b)(1) of CHIPRA.

Question 14: Can States request information from group health plans regarding
benefit information?

Answer: Yes. CHIPRA requires group health plan administrators to disclose information
about plan benefits to States upon request when a family’s child is covered under
Medicaid or CHIP, to allow States to determine the cost-effectiveness of providing
premium assistance for the purchase of coverage for that child under the plan and to
provide supplemental benefits. In addition, HHS and DOL are directed to establish a
working group to develop a model coverage coordination disclosure form for plan
administrators to complete that would require certain information for this purpose.

Question 15: What is the purpose of the CHIP, Medicaid, and Employer-Sponsored
Coverage Working Group to be established under CHIPRA?

Answer: Section 311 of CHIPRA directs the Secretary of Health and Human Services
and the Secretary of Labor to jointly establish a CHIP, Medicaid, and Employer-
Sponsored Coverage Coordination Working Group. The purpose of the CHIP Working
Group is to: (1) develop a model coverage coordination disclosure form for plan
administrators of group health plans to permit a State to determine the availability and
cost-effectiveness of coverage available under group health plans to employees who have
family members who are eligible for premium assistance offered under a title XIX or title
XXI State plan and to allow for coordination of coverage for enrollees of such plans, and
(2) identify the impediments to the effective coordination of coverage available to
families that include employees of employers who maintain group health plans and
members who are eligible for medical assistance under title XIX or title XXI. For more
information on the CHIP Working Group, please go to the Federal Register notice
published on May 1, 2009, at 74 Fed. Reg. 20323 and/or
http://edocket.access.gpo.gov/2009/pdf/E9-10083.pdf
Page 14 – State Health Official

Questions and Answers Related to title XIX CHIPRA

Premium Assistance Provisions

The questions and responses below only pertain to premium assistance under
section 1906A of the Act as added by section 301(b) of CHIPRA. This is referenced
as the “Premium Assistance Option for Children” in CHIPRA.

GENERAL

Question 16: What is the effective date of the provision?

Answer: The effective date is April 1, 2009.

Question 17: Which States can provide premium assistance under section 1906A?

Answer: All States and the District of Columbia may elect to provide premium
assistance under section 1906A to children under age 19 who are entitled to medical
assistance under title XIX of the Act, and to the child’s parent(s) who have access to
qualified employer-sponsored coverage.

Question 18: How does section 1906A differ from section 1906?

Answer: Section 1906A differs from section 1906 as follows:

Eligible population: 1906 is available to any Medicaid-eligible individual; 1906A
covers children under age 19 and their parent(s) only.
Definition of health coverage: Section 1906 defines a group health plan in which
a Medicaid participant may be enrolled by cross-reference to section 5000(b)(1)
of the Internal Revenue Code of 1986. By contrast, section 1906A permits
premium assistance for employer-sponsored group health plan or health insurance
-- 1) that qualifies as creditable coverage under section 2701(c)(1) of the Public
Health Service Act; 2)for which the employer contribution is at least 40 percent;
and 3) is nondiscriminatory, pursuant to section 105(h)(3)(A)(ii) of the Internal
Revenue Code.
Benefits for adults: Section 1906 covers all items and services covered under the
Medicaid State plan for Medicaid-eligible individuals regardless of age, and
covers group health plan premiums for such individuals; 1906A only covers items
and services covered under the Medicaid State plan for Medicaid-eligible
individuals under age 19 (and the parents of such individuals), and covers
premiums, deductibles, co-insurance, and other cost sharing, as specified by the
group health plan, for Medicaid State plan-covered services for such individuals
and their parents.
Cost-effectiveness requirements: 1906 requires that enrollment in group health
insurance be cost-effective; 1906A does not require a cost-effectiveness test.
Employer premium contribution requirements: 1906 does not specify a minimum
level of employer contribution; 1906A requires the employer to contribute an
Page 15 – State Health Official

amount equal to at least 40 percent of the total amount of the premium for the
type of coverage being purchased.
Enrollment limitations: 1906 allows the State to make application for enrollment
in a group health plan a condition of becoming or remaining eligible for Medicaid
for eligible individuals; 1906A does not allow the State to make application for
enrollment in employer-sponsored coverage a condition of becoming or
remaining eligible for Medicaid.

SUBSIDY

Question 19: Is payment of a premium assistance subsidy considered a payment for

medical assistance for purposes of section 1903(d)?

Answer: Yes. Section 1903 of the Act authorizes payment of the Federal share of
medical assistance expenditures to the States. Sections 1903(a) – (c) specify the Federal
medical assistance percentage (FMAP) to be used in calculating payments to the States
for various types of expenditures and the limitations on allowable expenditures. Section
1903(d) authorizes the Secretary to estimate the amount to which a State will be entitled
under sections 1903(a) and (b) for a calendar quarter, prior to the beginning of the
quarter, and to pay the estimated amount to the State. Payment of a premium assistance
subsidy is considered payment for medical assistance for purposes of section 1903(a) of
the Act, and State expenditures for the subsidy are included in the calculation of the
Federal estimated payment to the State.

Question 20: What is the definition of premium assistance subsidy?

Answer: For section 1906A, premium assistance subsidy means the amount of the
employee contribution for enrollment in the qualified employer-sponsored coverage by
the individual under age 19 or by the individual’s family. The premium assistance
subsidy is (1) the amount the employee, who is an individual under age 19, pays to enroll
himself in qualified employer-sponsored coverage, when he has access to qualified
employer-sponsored coverage through his own employment, or (2) the amount the
employee pays to enroll himself and his child under age 19 in qualified employer-
sponsored coverage for either the employee plus dependent coverage option or the family
coverage option, as the employee chooses.

Question 21: May the State subsidize family coverage even if the employer offers
“employee + dependent/child” as a less expensive enrollment option than full family
coverage?

Answer: Yes. The selection of employee + dependent coverage or family coverage is the
choice of the parent(s). Section 1906A requires that the coverage selected by the
individual under age 19, and, if applicable, the parent(s) who have access to such
coverage, meets the definition of qualified employer-sponsored coverage.
Page 16 – State Health Official

Question 22: If a parent is already enrolled in his employer’s insurance plan, is his
premium subsidized when he elects premium subsidy and enrolls his child?

Answer: Yes.

ELIGIBILITY

Question 23: Are Medicaid-eligible children or their parent(s) required to

participate in premium assistance if the State opts for premium assistance and the
child has access to such coverage?

Answer: No. Under section 1906A, an individual under age 19, or the individual’s
parent(s), must voluntarily elect to participate. A State cannot require application for
enrollment in qualified employer-sponsored coverage or election to receive the premium
assistance subsidy as a condition of becoming or remaining eligible for medical
assistance under title XIX.

This differs from section 1906, under which a State may require application for
enrollment in a group health plan, and enrollment when it is likely to be cost-effective, as
a condition of becoming or remaining eligible for medical assistance under title XIX, but
only if the individual can enroll on his own behalf.

Question 24: May a Medicaid-eligible child be enrolled in fee-for-service coverage

or a Medicaid managed care organization while waiting for enrollment in qualified
employer-sponsored coverage?

Answer: Yes. The child who is eligible to participate in the premium assistance subsidy
under section 1906A has already been determined eligible for Medicaid and is entitled to
receive all necessary Medicaid State plan-covered services from any participating
Medicaid provider, through whatever delivery system the State uses.

Question 25: Section 1906A(a) says that the State may elect to offer a premium
assistance subsidy to individuals under age 19 and the parent (singular) of such
individual. Is “parent” inclusive of the parent’s spouse when (1) both parents are
living with the child, or (2) the child lives with a parent and step-parent?

Answer: Yes, to both situations.

Question 26: Can a pregnant woman receive premium assistance under section
1906A?

Answer: A pregnant woman may receive premium assistance subsidy if she (1) is under
age 19, otherwise eligible for Medicaid, and voluntarily elects to receive a premium
assistance subsidy for qualified employer-sponsored coverage, or (2) has a Medicaid-
eligible child under age 19 living with her and the child voluntarily elects (or the
Page 17 – State Health Official

pregnant woman elects on behalf of the child) to receive a premium assistance subsidy
for qualified employer-sponsored coverage.

Question 27: Can a State require continuous enrollment in a qualified employer-

sponsored coverage?

Answer: No. The parent of an individual under age 19 who is receiving a premium
assistance subsidy may disenroll the individual from the qualified employer-sponsored
coverage at any time.

Question 28: May a child “opt out” of qualified employer-sponsored coverage? Is

there a minimum or maximum interval between last participation in the employer-
sponsored coverage and subsequent re-enrollment?

Answer: The State must establish a process that allows the parent(s) of an individual
under age 19 receiving a premium assistance subsidy to disenroll the individual from
qualified employer-sponsored coverage (“opt-out”). The individual remains eligible for
full Medicaid coverage until Medicaid eligibility is redetermined. After the
disenrollment is effective, the parent may reenroll the individual under age 19 in qualified
employer-sponsored coverage (1) at the next open enrollment period offered by the
employer, (2) when Medicaid eligibility is terminated, or (3) after Medicaid eligibility
termination, when the individual becomes eligible for Medicaid again. For enrollment
after Medicaid eligibility termination or determination of Medicaid eligibility, the request
for enrollment in the qualified employer-sponsored coverage must be made not later than
60 days after the date of Medicaid termination or the date of Medicaid eligibility
determination.

Question 29: Who notifies the State of “opt-out,” so that subsidy payments can be
stopped?

Answer: States may accept notification from the individual under age 19, or the
individual’s parent(s), or the employer who was receiving the premium assistance
subsidy payment, at their discretion.

BENEFITS

Question 30: What services would the State be responsible for providing to children
enrolled in qualified employer-sponsored coverage?

Answer: The State is responsible for all items and services provided to Medicaid
recipients under the State plan for the individual under age 19 who is entitled to medical
assistance under title XIX. The qualified employer-sponsored coverage in which the
individual is enrolled is treated as a third-party resource.

In accordance with Medicaid third-party liability requirements, providers must include in

their claims for reimbursement the amount of payment received, or a denial of liability,
Page 18 – State Health Official

from the employer-sponsored coverage, unless the claim is for preventive pediatric
services covered under the State plan or the service was provided to a child on whose
behalf child support enforcement is being carried out by the State title IV-D agency. For
those exceptions, Medicaid will pay the provider and seek reimbursement directly from
the employer-sponsored coverage.

Question 31: Section 1906A(e) requires State subsidy of the parent(s)’ premiums,
deductibles, coinsurance, and other cost-sharing obligations for items and services
otherwise covered under the State plan. If the parent is not eligible for medical
assistance under the State plan, is he entitled to payment of deductibles,
coinsurance, and other cost-sharing obligations?

Answer: Yes. The eligibility of an individual under age 19 for medical assistance makes
the parent(s) eligible for premium assistance, including payment of premiums,
deductibles, coinsurance, and other cost-sharing obligations, as specified in section
1906A(e). Payments for cost-sharing (deductibles, coinsurance, and other cost-sharing
obligations) are limited to Medicaid State plan-covered services.

Question 32: Is employer-sponsored coverage through section 1906A considered a

third-party liability under section 1902(a)(25)?

Answer: Yes, qualified employer-sponsored coverage for which the State pays a
premium assistance subsidy through section 1906A is considered a third-party resource
under section 1902(a)(25). Providers’ claims presented to the State Medicaid agency on
behalf of an individual under age 19 who is entitled to medical assistance under title XIX
must be processed in accordance with Medicaid third-party liability requirements.

COST SHARING

Question 33: Do the cost-sharing limitations of sections 1916 and 1916A apply to
employer-sponsored coverage under section 1906A?

Answer: No. Section 1906A specifies that the State must pay all enrollee premiums for
qualified employer-sponsored coverage, and all deductibles, coinsurance, and other cost-
sharing obligations for items and services otherwise covered under the State plan, even if
these amounts exceed the amount otherwise permitted under section 1916 or 1916A of
the Act.

Question 34: Who pays the premiums, deductibles, coinsurance, and other cost-
sharing obligations for items and services otherwise covered under the Medicaid
State plan for participants in employer-sponsored coverage under section 1906A?

Answer: The State is responsible for payment of these costs, for the individual under age
19 and the individual’s parent(s). The amount of the employee contribution for
enrollment (the premium assistance subsidy) is considered payment for medical
assistance for purposes of section 1903(a) of the Act.
Page 19 – State Health Official

Question 35: How will States be expected to track cost-sharing expenditures

associated with children enrolled in qualified employer-sponsored coverage?

Answer: Premium assistance subsidies (the amount of the employee’s contribution for
enrollment in qualified employer-sponsored coverage) are considered payments for
medical assistance. States will need to identify recipients of premium assistance
subsidies in their Medicaid Management Information Systems to track these payments.

EMPLOYER PARTICIPATION

Question 36: Are employers required to participate in premium assistance subsidy?

Answer: No. Employer participation is voluntary. An employer who has agreed to

participate may opt-out of participation at any time by notifying the State that it will no
longer accept direct payment of the premium assistance subsidy. In such a situation, the
employee will be expected to pay the premium and the State will reimburse the
employee.

Question 37: What is the definition of qualified employer-sponsored coverage?

Answer: Qualified employer-sponsored coverage is a group health plan or health

insurance coverage offered through an employer that (1) qualifies as creditable coverage
as a group health plan under section 2701(c)(1) of the Public Health Service Act, (2) the
employer contribution toward any premium for such coverage is at least 40 percent, and
(3) is offered to all individuals in a manner that would be considered a nondiscriminatory
eligibility classification for purposes of paragraph (3)(A)(ii) of section 105(h) of the
Internal Revenue Code of 1986 (but determined without regard to clause (i) of
subparagraph (B) of such paragraph).

The employer can provide verification that health coverage offered to employees meets
the technical requirements for creditable coverage and nondiscriminatory offering. The
State can determine if the employer’s contribution meets the minimum contribution
requirement, based on employer verification of its cost to provide coverage and the
employee’s cost for premiums.

Question 38: Is there a minimum employer contribution toward the cost of

coverage for the child?

Answer: Yes. The employer contribution for qualified employer-sponsored coverage

must equal at least 40 percent of the total amount of the premium for the type of coverage
being purchased.

Question 39: Does the employer contribution of 40 percent apply to a family

premium or to the employee’s portion of a premium if the employer only subsidizes
the employee’s portion and does not subsidize any other family members?
Page 20 – State Health Official

Answer: The employer’s total contribution must equal at least 40 percent of the total
amount of the premium for the type of coverage being purchased.

Question 40: Regarding non-discriminatory eligibility classification, does the

Internal Revenue Code allow distinctions among employees based on (1) part-time
vs. full-time employment, (2) mandatory waiting period before enrollment (new
employees or open enrollment period for current employees), and (3) pre-existing
condition exclusions or waiting periods?

Answer: The Internal Revenue Service has jurisdiction over these requirements. States
should ensure that all health plans for which they provide a premium assistance subsidy
are compliant with the requirements set out in section 1906A(b)(1)(C). Employers can
provide verification of compliance with the Internal Revenue Code requirements to the
State.

Question 41: How are plans certified as providing creditable coverage?

Answer: Creditable coverage is determined by a complex set of rules involving the

Internal Revenue Service, the U.S. Department of Labor, and CMS. Health plans will
know if they are so certified. States may require individuals who wish to receive a
premium assistance subsidy to obtain verification of creditable coverage from the
employer.

COST EFFECTIVENESS

Question 42: If employer-sponsored coverage doesn’t meet the required employer

contribution level (40 percent of premium), can the State substitute a cost-
effectiveness test to qualify the coverage? If so, what are the required components
of the cost-effectiveness test?

Answer: No, the State may not substitute a cost-effectiveness test. The 40 percent of
premium contribution requirement is part of the definition of qualified employer-
sponsored coverage and may not be adjusted or have another test substituted for it.

WAITING PERIOD

Question 43: Is a State allowed to impose a waiting period on children selecting

enrollment in premium assistance? If so, what is the specified time period?

Answer: No, the State may not impose a waiting period.

Page 21 – State Health Official

Enclosure 2: Side-by-Side Analysis of Title XXI and Title XIX Premium Assistance Options
Conditions Purchase of Additional Premium Medicaid Premium Premium Assistance Option
Family Coverage Assistance Option Assistance(Section 1906 for Children (Section 1906A
(Section (Section 2105(c)(10) of of the Act and applies to of the Act and applies to
2105(c)(3) of the the Act) Medicaid and Title XXI Medicaid and Title XXI
Act) funded Medicaid funded Medicaid
Expansions) Expansions)
Eligibility Targeted low Targeted low-income All Medicaid eligibles if At State option, individuals
income children, children who have State has elected this under age 19, who are
and families that access to qualified option in its Medicaid eligible for title XIX (and the
include at least one employer sponsored State plan. parent of such individuals).
targeted low coverage.
income child.
Insurance Status Children must Children must have The individual must be The individual must have
have access to, but access to, but not be eligible to be enrolled in access to qualified employer
not be enrolled in, enrolled in, qualified a group health plan. sponsored coverage.
group health employer sponsored
coverage. coverage.
Coverage for Non- May provide Only States with States may enroll family States may enroll family
Eligible Family premium section 1115 members who are not members who are not
Members assistance to non- demonstration authority eligible for Medicaid in eligible for Medicaid when
eligible CHIP to cover families prior employer coverage when that enrollment is necessary
family members. to the passage of that enrollment is to achieve coverage of
CHIPRA can continue necessary to achieve Medicaid-eligible family
to cover families. All coverage of Medicaid- members.
States, however, can eligible family members.
continue to cover However, noneligible
parents on an incidental family members do not
basis under the CHIP receive any wrap-around
State plan. benefits.
Mandatory/Volunt Voluntary or Must be voluntary. May be mandatory, at Must be voluntary and States
Page 22 – State Health Official

Conditions Purchase of Additional Premium Medicaid Premium Premium Assistance Option

Family Coverage Assistance Option Assistance(Section 1906 for Children (Section 1906A
(Section (Section 2105(c)(10) of of the Act and applies to of the Act and applies to
2105(c)(3) of the the Act) Medicaid and Title XXI Medicaid and Title XXI
Act) funded Medicaid funded Medicaid
Expansions) Expansions)
ary Enrollment in mandatory at State State option, but a child’s may not make enrollment in
Premium option. eligibility for title XIX is qualified employer
Assistance not affected by a parent’s sponsored coverage a
decision not to enroll the condition of becoming or
child in a group health remaining eligible for
plan. Medicaid.
Benefits Coverage must Coverage must meet Medicaid-eligible Children who are Medicaid
meet the same the same requirements individuals are covered eligible (and their parents)
requirements as as those for CHIP for all items and services are covered for all items and
those for CHIP direct coverage. If covered under the services covered under the
direct coverage. coverage offered Medicaid State plan. Medicaid State plan.
These benefits can through an employer is
either be provided certified by an actuary
fully through the as benchmark or
employer-based benchmark-equivalent
plan or through the then enrollment in the
private plan plus employer plan meets
the State providing the CHIP benefit
wrap around standards. For
benefits. coverage that does not
meet benchmark or
benchmark-equivalent
standards, benefits
must be provided
through a combination
Page 23 – State Health Official

Conditions Purchase of Additional Premium Medicaid Premium Premium Assistance Option

Family Coverage Assistance Option Assistance(Section 1906 for Children (Section 1906A
(Section (Section 2105(c)(10) of of the Act and applies to of the Act and applies to
2105(c)(3) of the the Act) Medicaid and Title XXI Medicaid and Title XXI
Act) funded Medicaid funded Medicaid
Expansions) Expansions)
of the employer-based
plan and the State
providing wrap around
benefits.
Cost Sharing Cost sharing in Cost sharing for Cost-sharing protections The State must pay all
premium premium assistance as any other Medicaid premiums, deductibles,
assistance must must meet the same beneficiary and must coinsurance, and other cost
meet the same requirements as CHIP have all premiums, sharing for the individual
requirements as direct coverage. If deductibles, coinsurance, under age 19 and the parent.
CHIP direct coverage offered and other cost sharing for
coverage. through an employer is items and services
certified by an actuary otherwise covered under
as coverage that is the State plan, as
benchmark or specified by the group
benchmark-equivalent, health plan, paid on their
the plan shall be behalf. Non-Medicaid
determined to meet eligible family members
CHIP cost sharing are eligible only to have
standard. For coverage group health plan
that does not meet premiums paid on their
benchmark or behalf (if necessary to
benchmark-equivalent obtain access for the
standards, States must Medicaid enrollee).
ensure all CHIP cost
sharing protections
Page 24 – State Health Official

Conditions Purchase of Additional Premium Medicaid Premium Premium Assistance Option

Family Coverage Assistance Option Assistance(Section 1906 for Children (Section 1906A
(Section (Section 2105(c)(10) of of the Act and applies to of the Act and applies to
2105(c)(3) of the the Act) Medicaid and Title XXI Medicaid and Title XXI
Act) funded Medicaid funded Medicaid
Expansions) Expansions)
apply.
Third Party N/A N/A Group health plan is Qualified employer-
Liability/Resource treated as a third party sponsored coverage is treated
resource to pay all or part as a third party resource to
of the cost of care for the pay all or part of the cost of
individual with respect to care for the individual (and
items or services covered the Medicaid-eligible
under the Medicaid State parent).
plan.
Substitution States must have a States must apply same No requirement. No requirement.
Strategy six-month waiting waiting period (if
period. applicable) to premium
assistance as is applied
to direct coverage.
Employer States must Employer must No minimum employer Employer must contribute at
Contribution identify a contribute at least 40 contribution. least 40 percent toward the
minimum percent toward the cost cost of the premium.
contribution level; of the premium.
there is no Federal
minimum.
Cost Effectiveness CHIPRA changes This program does not Expenditures for an The provision is not subject
the cost require a cost- individual enrolled in a to a cost effectiveness test.
effectiveness test effectiveness test. group health plan,
to permit States to including wraparound
compare the costs benefits and cost-sharing,
Page 25 – State Health Official

Conditions Purchase of Additional Premium Medicaid Premium Premium Assistance Option

Family Coverage Assistance Option Assistance(Section 1906 for Children (Section 1906A
(Section (Section 2105(c)(10) of of the Act and applies to of the Act and applies to
2105(c)(3) of the the Act) Medicaid and Title XXI Medicaid and Title XXI
Act) funded Medicaid funded Medicaid
Expansions) Expansions)
of covering the are likely to be less than
entire family expenditures required by
relative to direct the plan. Costs for
CHIP coverage of premiums for non-title
the entire family, XIX eligible family
rather than just the members are included
targeted low- when testing for cost-
income child. effectiveness.
Notice of N/A States must include N/A N/A
Availability information about
premium assistance on
CHIP application and
establish other
procedures to ensure
parents are fully
informed of choices.
Purchasing Pool N/A States may establish a N/A N/A
premium assistance
purchasing pool.
Page 26 – State Health Official

Enclosure 3

DRAFT DRAFT

Additional State Plan Option for Providing Premium Assistance

CHIP SPA Template

Section 1: General Description and Purpose of the State Child Health Plans and
State Child Health Plan Requirements. (section 2101)

1.4.-APA Please provide the effective (date costs begin to be incurred) and
implementation (date services begin to be provided) dates for this plan or
plan amendment (42 CFR 457.65):

Effective date:
Implementation date:

Section 6: Coverage Requirements for Children’s Health Insurance (section

2103)

Section 6.4.3: Additional State Options for Providing Premium Assistance

A State may elect to offer a premium assistance subsidy for qualified
employer-sponsored coverage, as defined in section 2105(c)(10)(B), to all
targeted low-income children who are eligible for child health assistance
under the plan and have access to such coverage. No subsidy shall be
provided to a targeted low-income child (or the child’s parent) unless the
child voluntarily elects to receive such a subsidy. (section
2105(c)(10)(A)). Does the State provide this option to targeted low-
income children?

 Yes
 No

6.4.3.1: Qualified Employer-Sponsored Coverage and Premium Assistance

Subsidy

6.4.3.1.1.  Please provide an assurance that the qualified

employer-sponsored insurance meets the definition of qualified
employer-sponsored coverage as defined in section
2105(c)(10)(B), and that the premium assistance subsidy meets the
definition of premium assistance subsidy as defined in
2105(c)(10)(C).

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.
Page 27 – State Health Official

6.4.3.1.2. Please describe whether the State is providing the premium

assistance subsidy as reimbursement to an employee or for out-of-
pocket expenditures or directly to the employee’s employer.

6.4.3.2: Supplemental Coverage for Benefits and Cost Sharing Protections

Provided under the State Child Health Plan.

6.4.3.2.1  If the State is providing premium assistance for qualified

employer-sponsored coverage, as defined in section
2105(c)(10)(E)(i), please provide an assurance that the State is
providing for each targeted low-income child enrolled in such
coverage, supplemental coverage consisting of all items or services
that are not covered or are only partially covered, under the
qualified employer-sponsored coverage consistent with 2103(a)
and cost sharing protections consistent with section 2103(e).

6.4.2.2.2. Please describe whether these benefits are being provided through
the employer or by the State providing wraparound benefits.

6.4.3.2.3  If the State is providing premium assistance for benchmark

or benchmark-equivalent coverage, check here to indicate that the
State will ensure that such group health plans or health insurance
coverage offered through an employer will be certified by an
actuary as coverage that is equivalent to a benchmark benefit
package described in section 2103(b) or benchmark equivalent
coverage that meets the requirements of section 2103(a)(2).

6.4.3.3: Application of Waiting Period Imposed Under State Plan: States are
required to apply the same waiting period to premium assistance as is
applied to direct coverage for children under their CHIP State plan, as
specified in section 2105(c)(10)(F).

6.4.3.3.1  Please provide an assurance that the waiting period for

children in premium assistance is the same as for those children in
direct coverage (if State has a waiting period in place for children
in direct CHIP coverage).

6.4.3.4: Opt-Out and Outreach, Education, and Enrollment Assistance

6.4.3.4.1. Please describe the State’s process for ensuring parents are
permitted to disenroll their child from qualified employer-sponsored
coverage and to enroll in CHIP effective on the first day of any month for
which the child is eligible for such assistance and in a manner that ensures
continuity of coverage for the child (section 2105(c)(10)(G)).

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.
Page 28 – State Health Official

6.4.3.4.2. Please describe the State’s outreach, education, and enrollment efforts
related to premium assistance programs, as required under section
2102(c)(3). How does the State inform families of the availability of
premium assistance, and assist them in obtaining such subsidies? What
are the specific significant resources the State intends to apply to
educate employers about the availability of premium assistance
subsidies under the State child health plan? (section 2102(c))

6.4.3.5: Purchasing Pool: A State may establish an employer-family premium

assistance purchasing pool and may provide a premium assistance subsidy
for enrollment in coverage made available through this pool (section
2105(c)(10)(I)). Does the State provide this option?

 Yes
 No

6.4.3.5.1. Please describe the plan to establish an employer-family premium

assistance purchasing pool.

6.4.3.5.2  Please provide an assurance that employers who are eligible to

participate: 1) have less than 250 employees; 2) have at least one
employee who is a pregnant woman eligible for CHIP or a member
of a family that has at least one child eligible under the State’s
CHIP plan.

6.4.3.5.3 Please provide an assurance that the State will not claim for any
administrative expenditures attributable to the establishment or
operation of such a pool except to the extent such payment would
otherwise be permitted under this title.

6.4.3.6.: Notice of Availability of Premium Assistance: Please describe the

procedures that assure that if a State provides premium assistance
subsidies under this section, it must: 1) provide as part of the application
and enrollment process, information describing the availability of
premium assistance and how to elect to obtain a subsidy; and 2) establish
other procedures to ensure that parents are fully informed of the choices
for child health assistance or through the receipt of premium assistance
subsidies (section 2105(c)(10)(K)).

6.4.3.6.1. Please provide an assurance that the State includes information

about premium assistance on the CHIP application or enrollment
form.

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.
Page 29 – State Health Official

Section 9: Strategic Objectives and Performance Goals and Plan Administration

(section 2107)

9.9.-APA Describe the process used by the State to accomplish involvement of the
public in the design and implementation of the plan and the method for
ensuring ongoing public involvement. (section 2107(c) and 42 CFR
457.120(a) and (b))

9.9.1 Describe the process used by the State to ensure interaction with
Indian Tribes and organizations in the State on the development
and implementation of the procedures required at 42 CFR section
457.125. (Section 2107(c) and 42 CFR 457.120(c))

9.10. Provide a 1-year projected budget. (section 2107(d) and 42 CFR 457.140)

The budget must describe:

Planned use of funds, including:
Projected amount to be spent on health services;
Projected amount to be spent on administrative costs, such as
outreach, child health initiatives, and evaluation; and
Assumptions on which the budget is based, including cost per child
and expected enrollment.
Projected sources of non-Federal plan expenditures, including any
requirements for cost sharing by enrollees.

States must include a separate budget line item to indicate the cost of providing coverage
to premium assistance children.

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.
Page 30 – State Health Official

Enclosure 4

DRAFT DRAFT

Additional State Plan Option for Providing Premium Assistance

CHIP Medicaid Template

29d

STATE PLAN UNDER TITLE XIX OF THE SOCIAL SECURITY ACT

State: __________________ Medical Assistance Program
________________________________________________________________________
_
Citation Condition or Requirement
________________________________________________________________________
_____

1906 of the Act (c) Premiums, Deductibles, Coinsurance and Other Cost Sharing
Obligations

The Medicaid agency pays all premiums, deductibles,

coinsurance and other cost sharing obligations for items and
services covered under the State plan (subject to any nominal
Medicaid copayment) for eligible individuals in employer-
based cost-effective group health plans.

When coverage for eligible family members is not possible

unless ineligible family members enroll, the Medicaid agency
pays premiums for enrollment of other family members when
cost effective. In addition, the eligible individual is entitled to
services covered by the State plan which are not included in
the group health plan. Guidelines for determining cost
effectiveness are described in section 4.22(h).

1906A of the Act (c)-1 Premiums, Deductibles, Coinsurance and Other Cost
Sharing Obligations

The Medicaid agency pays all premiums, deductibles,

coinsurance and other cost sharing obligations for items and
services covered under the State plan, as specified in the
qualified employer-sponsored coverage, without regard to
limitations specified in section 1916 or section 1916A of the
Act, for eligible individuals under age 19 who have access to
and elect to enroll in such coverage. The eligible individual is
entitled to services covered by the State plan which are not
included in the employer-sponsored coverage. For qualified
employer-sponsored coverage, the employer must contribute at
least 40 percent of the premium cost.

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.
Page 31 – State Health Official

When coverage for eligible family members under age 19 is

not possible unless an ineligible parent enrolls, the Medicaid
agency pays premiums for enrollment of the ineligible parent,
and, at the parent’s option, other ineligible family members.
The agency also pays deductibles, coinsurance and other cost
sharing obligations for items and services covered under the
State plan for the ineligible parent.

1902(a)(10)(F) of (d) The Medicaid agency pays premiums for individuals

the Act described in item 19 of Attachment 2.2-A.

TN No.: ______ Approval Date __________ Effective Date

___________
Supersedes TN No.______

Please note: This form has not been approved by OMB pursuant to the PRA and States are not obligated
to use it.