For years federal funding was not available to states to
enroll eligible children of state employees in the Children’s Health Insurance
Program (CHIP). It was assumed that state employees had access to affordable,
comprehensive insurance but, over time, that myth has been dispelled. The
Affordable Care Act (ACA) sought to remedy this but it took a little tweak in a
different law (details not important) to move this along. And now, long-awaited
guidance from the Centers for Medicare and Medicare (CMS) provides
clarification on this new option.
State Health Official Letter (SHO) #11-002 will be
helpful to states in determining if and when children of state employees (and
state employees who are pregnant) may be eligible for coverage under CHIP if
they otherwise meet state eligibility criteria. One of two circumstances must
exist. Under the first circumstance, the state must demonstrate that it has
consistently maintained its contribution to the cost of employee coverage, with
adjustments for inflation, since 1997. The guidance details how to ascertain if
the state contribution is consistent by using the Consumer Price Index for
medical expenses (CPI-M) to calculate what the state contribution amount would
be over time.
Alternatively, state employees may qualify for a hardship
exception if their aggregate annual cost for family premiums, deductibles and
cost-sharing (based on reasonable projections) exceeds 5% of family income. CMS
will work with states to determine if the state meets one of these two
conditions but the SHO letter emphasizes that the conditions must be met on an
ongoing basis with the qualifying calculations being updated annually.
States would not necessarily extend the state employee
CHIP coverage option to all income levels covered under regular CHIP
eligibility. For example, if a state has CHIP coverage up to 300% FPL but
determines that the hardship exception applies only to families below 200% FPL,
then eligibility in CHIP for state employee dependents would be limited to 200%
FPL. The state also may limit the specific eligibility groups that meet the
requirements. For example, if the state University system provides coverage
that differs in cost-sharing or state contribution level than other state
agencies, then the state would limit eligibility to the employee groups that
meet one of the conditions.
The new rules can be applied, at the state’s discretion,
to low-income pregnant women who are state employees, as well as children’s
dental coverage if the state has implemented a CHIP stand-alone dental plan.
States also may use the new option in conjunction with premium assistance,
helping to financially support enrollment in a state employee health benefits
plan if certain requirements are met. In terms of CHIP crowd-out provisions
(which have prompted many states to impose CHIP waiting periods), the guidance
reminds us that states have flexibility in how they monitor and discourage
crowd out and that waiting periods are not required. Some states with waiting
periods have affordability exceptions and these could be amended to include
eligible state employees.
All in all, this is good news for low-income state
workers who are unable to afford coverage for their children through the state
employee plan but have been locked out of the CHIP program. It’s also good news
to states that will have happier, more productive workers because their kids
have access to affordable coverage.