Health Care Reform

Feds allow Insured Group Health Plans to Change Carriers and still Maintain Grandfather Status

Well, no surprise, the Feds have finally amended the interim final regulations on grandfathering to allow insured plans to maintain their grandfather status even if they change carriers, so long as certain requirements are met.
1. The new carrier/policy change must be effective on or after November 15, 2010 (the date the rule change was publicly released). Therefore, if a grandfathered insured plan changed carriers or policies and the new coverage took effect prior to November 15, the plan cannot take advantage of the rule change.
2. 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) under the prior health coverage sufficient to determine whether any change is being made that is prohibited by the grandfather rules in the interim final regulations. This documentation may include a copy of the policy or summary plan description.
3. If the plan makes any other changes that are not allowed by the grandfather rules, the plan will still lose its grandfather status. Examples of some of these other changes are: a) decreasing the employer contribution rate by more than 5 percentage points below what it was on March 23, 2010; b) increasing the participant co-insurance percentage; c) increasing participant co-pays or deductibles by more than an allowable amount; d) eliminating all benefits to diagnose or treat a particular condition.

This change to the grandfather rule is effective immediately, and interested parties may submit comments on the rule within 30 days after its official issuance (so probably by December 16, 2010). The Departments said they are still considering other changes to the grandfather rule, and they expect to issue a final rule sometime in the near future.

(See notice on HHS website: http://www.hhs.gov/ociio/regulations/grandfather/factsheet.html );

and read the Amendment itself at http://edocket.access.gpo.gov/2010/pdf/2010-28861.pdf or
http://www.ofr.gov/OFRUpload/OFRData/2010-28861_PI.pdf )