Amendment to Grandfather Status for Group Health Plans
Posted on November 18, 2010
Source: www.federalregister.gov
On November 17, 2010, the Federal Register announced an amendment to the Affordable Care Act regarding grandfather status for existing group health plans. This amendment permits certain changes to healthcare plans to occur (policies, certificates, or contracts of insurance) while maintaining grandfathered status.
The basis for the amendment stems from four main concerns surrounding the initial rules established in June of 2010:
- Formerly, group health plans could not change issuers or policies without ceasing their grandfather status; however, self-insured group health plans could change TPAs without a change in grandfather status. This demonstrates an inequality in treatment.
- Originally, a group health plan’s issuer could not change; however, if this change happened involuntarily (for instance, if the issuer withdrew from the market) and the plan sponsor wanted to maintain its grandfather status, it would not be able to do so.
- Previously, issuers were restricted from reissuing policies to current plan sponsors for administrative reasons beyond the issuer’s control (such as transitioning a policy to a parent company’s subsidiary) without losing the plan’s grandfather status.
- Under the former provision, any change from the original plan issuer meant that the grandfather status would be lost. This would create “undue and unfair leverage in negotiating the price of coverage renewals with the sponsors of grandfathered health plans.”
Per the amendment, “a group health plan that enters into a new policy, certificate, or contract of insurance must provide to the new health insurance issuer (and the new health insurance issuer must require) documentation of plan terms (including benefits, cost sharing, employer contributions, and annual limits), to maintain status as a grandfathered health plan.”
Comments on the amendment are due by Dec 17, 2010 (see the Federal Registry for instructions on how to submit comments.) For more information or questions about your health plan’s grandfather status, please contact one of our Human Resources Consultants at 888-810-8187.
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