HHS, DOL and Treasury Issue Interim Final Regulations on Grandfathered Health Plans |
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On June 14, 2010, an interim final regulation was released regarding grandfathered health plans under the Affordable Care Act. These regulations provide guidance on how a plan can retain its grandfathered status and what changes would cause a plan to lose such status. Note: Grandfathered health plans are plans in existence on March 23, 2010, the date health care reform legislation was enacted.
Grandfathered health plans will be able to make routine changes to their policies and maintain their status. These routine changes include cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustments to existing benefits, voluntarily adopting new consumer protections under the new law, or making changes to comply with State or other Federal laws.
CHANGES RESULTING IN LOSS OF GRANDFATHERED STATUS
According to the interim final rule, to maintain grandfathered status the plan cannot:
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Significantly Cut or Reduce Benefits. A plan cannot decide to no longer cover care for particular conditions.
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Raise Co-Insurance Levels.
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Significantly Raise Co-Payment Charges. Grandfathered plans will be able to increase co-pays by no more than the greater of $5 (adjusted annually for medical inflation) or a percentage equal to medical inflation plus 15 percentage points. For example, if a plan raises its co-payment from $30 to $50 over the next 2 years, it will lose its grandfathered status.
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Significantly Raise Deductibles. Grandfathered plans can only increase deductibles by a percentage equal to medical inflation plus 15 percentage points.
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Significantly Lower Employer Contributions. Grandfathered plans cannot decrease the percent of premiums the employer pays by more than 5 percentage points.
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Add or Tighten an Annual Limit on What the Insurer Pays. However, plans without annual dollar limits may add an annual limit but it must be at least as high as the existing lifetime limit.
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