42 CFR § 457.805 - State plan requirement: Procedures to address substitution under group health plans.
(a) State plan requirements. The state plan must include a description of reasonable procedures to ensure that health benefits coverage provided under the State plan does not substitute for coverage provided under group health plans as defined at § 457.10.
(b) Limitations.
(1) A state may not, under this section, impose a period of uninsurance which exceeds 90 days from the date a child otherwise eligible for CHIP is disenrolled from coverage under a group health plan.
(2) A waiting period may not be applied to a child following the loss of eligibility for and enrollment in Medicaid or another insurance affordability program.
(3) If a state elects to impose a period of uninsurance following the loss of coverage under a group health plan under this section, such period may not be imposed in the case of any child if:
(i) The premium paid by the family for coverage of the child under the group health plan exceeded 5 percent of household income;
(ii) The child's parent is determined eligible for advance payment of the premium tax credit for enrollment in a QHP through the Exchange because the ESI in which the family was enrolled is determined unaffordable in accordance with 26 CFR 1.36B–2(c)(3)(v).
(iii) The cost of family coverage that includes the child exceeds 9.5 percent of the household income.
(iv) The employer stopped offering coverage of dependents (or any coverage) under an employer-sponsored health insurance plan;
(v) A change in employment, including involuntary separation, resulted in the child's loss of employer-sponsored insurance (other than through full payment of the premium by the parent under COBRA);
(vi) The child has special health care needs; or
(vii) The child lost coverage due to the death or divorce of a parent.