CHIP
Policy
CHIP
Policy
The following conditions must be considered in determining access to health insurance and eligibility for CHIP enrollment.
Access to Employer-Sponsored Health Insurance:
A child is NOT eligible for enrollment in CHIP if the cost to enroll the child is less than 5% of the MAGI-based countable income for the individual’s household after any applicable 5% disregard is applied.
A child has access if the plan provides coverage for dependents and the custodial parent or the legal guardian could enroll the child in the plan.
Consider the child to have access to coverage even if the employer offers coverage only during an open enrollment period.
Cost of Coverage:
To determine the cost, find out how much the employee is required to pay to enroll the child, or children, in the health plan.
If the children cannot be enrolled unless the employee is enrolled and the employee must pay for his coverage, include the cost of his coverage.
Consider an unborn the same as a child when determining the cost of coverage.
Use the family cost of coverage from the Form 116M when there are two or more children in the household, including unborn children. If there is only one child or one unborn, use the employee + child cost of coverage.
If the plan has a deductible, add the monthly amount of the deductible to the monthly cost of the premium.
Deductibles are typically annual amounts and will need to be divided by 12 before adding them to the individual’s cost of coverage.
Count the ‘individual’ or ‘single’ deductible amount to the policy holder and the ‘family’ amount to anyone else in the household.
Next, compare the total cost to the individual’s countable income after any applicable 5% disregard has been applied.
If the cost of the insurance is less than 5% of the individual’s countable income after any applicable 5% disregard has been applied, the child is not CHIP eligible.
If the cost of the insurance is 5% or more of the individual’s countable income after any applicable 5% disregard has been applied, the child is CHIP and possibly UPP eligible. If eligible for both programs, allow the parent to choose the best program for their family.
Example #1: Jerry Jones has 2 children under 19. He is on salary and receives $2,000 per month. His employer offers health insurance coverage. Jerry must pay $40 per month for employee only coverage. The cost for him and his family coverage is $80 per month. He must also pay a $3,000 deductible.
|
5% of Monthly Income |
Monthly Deductible |
Total Cost of Coverage |
|
$2,000 /mo |
$3,000 /yr |
$80 /premium |
|
X .05 |
/ 12 |
+$250 /deductible |
|
= $100 |
= $250 |
= $330 |
The cost of coverage is more than 5% of Jerry’s income; therefore, the children do not have access to health insurance coverage.
Example #2: Mary Evans has 3 children under 19. She is on salary and receives $3,000 per month. Her employer offers health insurance coverage. The employer pays all of Mary’s cost for employee only coverage but Mary must pay $100 per month for family coverage. She must also pay a $500 deductible.
|
5% of Monthly Income |
Monthly Deductible |
Total Cost of Coverage |
|
$3,000 /mo |
$500 /yr |
$100 /premium |
|
X .05 |
/ 12 |
+ $41.67 /deductible |
|
= $150 |
= $41.67 |
= $141.67 |
The cost of coverage is less than 5% of Mary’s income; therefore, the children have access to health insurance coverage and are not eligible for CHIP.
“Cafeteria" or "Flexible Benefit" Plans.
Some employers may allow a certain dollar amount per employee to “purchase” various kinds of benefits, including health insurance. Each employee has some discretion in how to use his “benefits.” For example, an employer may allow a certain amount each month that could be used to purchase group health insurance for dependents, additional life insurance, long-term disability benefits, etc.
If the employee receives these funds and is allowed to use them to purchase health insurance, and the employer offers a group health plan, decide whether the cost of the group health plan is 5% or more of the individual’s countable income after any applicable 5% disregard is applied. If the cost is less than 5% of the individual’s countable income after any applicable 5% disregard is applied, the child has access. It does not matter whether or not the employee has chosen to use the funds in that manner.
If an employer pays cash to employees with the intent that the employees privately purchase individual health insurance, the funds paid by the employer are simply counted as income.
In some instances, employees may choose to defer some income from gross pay to be used to reimburse the employee for out-of-pocket medical expenses. This type of benefit is usually called a “flex-plan” or “flexible spending plan.” This is different than funds the employer makes available to the employee to purchase health insurance. Do not deduct deferred income for medical expenses from the employee’s wages.
First Opportunity to Enroll.
Access to enroll in an employer-sponsored health insurance plan may only be available during an open enrollment period.
Applicants. If an applicant could enroll their children in employer-sponsored health insurance except it is not an open enrollment period, the child is still considered to have access to coverage and is NOT eligible for CHIP if:
The child has had at least one chance to enroll, and the cost to the employee to enroll the child in the least expensive employer-sponsored health insurance plan is less than 5% of the individual’s monthly countable income after any applicable 5% disregard is applied.
OR
Within 30 days of application the applicant will have their first opportunity to enroll and the cost to the employee to enroll the child in the least expensive employer sponsored health insurance plan is less than 5% of the individual's countable income after any applicable 5% disregard is applied.
Recipients. If a household currently enrolled in CHIP reports that a parent or the enrollee has obtained employment, request information regarding employer-sponsored health insurance.
If the least expensive employer-sponsored health insurance plan costs less than 5% of the individual’s countable income after any applicable 5% disregard is applied AND they must wait for the next open enrollment period before they can enroll their children, the children may stay enrolled in CHIP until they either enroll the children or until the current certification period expires.
Exception: If access to an affordable health insurance plan is discovered as part of an ex parte review process, the eligibility agency ends benefits in the first month in the new certification period that proper notice can be given. See 703-1.
At the end of the review period, the CHIP enrollment must be discontinued. It does not matter whether or not there are any further enrollment period restrictions.
If the least expensive employer-sponsored health insurance plan costs 5% or more of the individual's monthly countable income after any applicable 5% disregard is applied, the children may stay enrolled in CHIP.
If they choose to enroll in the employer coverage, discontinue CHIP at the end of the month in which proper notice can be given and consider the family for UPP.
To move from CHIP to UPP, the enrollee has 10 days to report enrollment in the insurance coverage from the date the child is signed up or the date coverage begins, whichever is later.
Qualifying Events for Employer-Sponsored Health Insurance
Regardless of when the employer’s open enrollment period is scheduled, an employer-sponsored health plan offering coverage for dependents must allow 30 days to enroll new dependents when the following qualifying events occur:
When a covered individual marries, the spouse and any dependent step-children may enroll;
When a new baby is born to a covered individual;
When a child is “placed” for adoption with a covered individual. (Placed for adoption is when the child is initially placed in a home for the purpose of adoption, even though the adoption will not be finalized for several months.)
When a spouse loses coverage under his or her employer’s plan, and had not enrolled in the other spouse's coverage because he or she was covered under a different plan.
If a household with an open CHIP case requests to enroll a new child on CHIP, determine if the child could be enrolled in any employer-sponsored health insurance plan and the cost to enroll the child is less than 5% of the individual’s countable income after any applicable 5% disregard is applied. If so, the child is not eligible for CHIP enrollment. (The countable income used to determine CHIP eligibility is the Best Estimate used at the time of current certification.)