Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

Today, the Internal Revenue Service, Department of Labor and the Department of Health and Human Services released their “Final Interim Rules” to inform, assist and otherwise help group health plans comply with certain requirements of the new health care reform laws.

Current plans are permitted to make some changes, while other changes would cause them to lose their “grandfathered” status. Examples include the following (as compared to plan specifications that were in place on 03/23/2010):

  1. A grandfathered plan would lose its status if it eliminated coverage of a specific condition (the rules cite diabetes, HIV/AIDS and cystic fibrosis as examples).
  2. Coinsurance percentages cannot change.
  3. Copayments cannot be increased by more than, the greater of $5 or a percentage equal to medical inflation plus 15%.
  4. Cannot Significantly Raise Deductibles. Limit is equal to medical inflation plus 15%.
  5. Cannot Significantly Lower Employer Contributions (conversely cannot significantly increase Employee Contributions). Grandfathered plans cannot decrease the percent of premiums the employer pays by more than 5 percentage points (for example, decrease their own share and increase the workers’ share of premium from 15% to 25%).

The DOL’s fact sheet can be found here.

The full regulations (the Interim Final Rule) can be found here.

DOL’s Model “Grandfathered Plan” Notice
(to be distributed on/before the 1st day of the 1st plan year after 9/23/2010)