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Government Makes it Easier to Keep Health Insurance Plan’s Grandfathered Status

The Federal Government recently amended its final regulations under the healthcare reform law (the Patient Protection and Affordable Care Act (PPACA)), offering some employers a bit of reprieve.  The new amendments change the way in which a group health plan can maintain its “grandfathered” status, that is, remaining exempt from certain new (often expensive) requirements. 

Prior to the amendments, one of the reasons a plan could lose its grandfathered status was by changing insurers.  Now, the amended regulations allow employers to switch insurers, as long as the new group plan maintains the same level of coverage and general cost to employees and follows all the other required rules. 

The amendments also allow other changes to group health plans without affecting their status as a grandfathered plan.  These changes include (1) premium changes made in order to comply with a state/federal law, (2) policy renewals, (3) allowing covered employees to add family members, (4) allowing the addition of new employees and their dependents, (5) changes in cost sharing to reflect inflation in medical costs, (6) or voluntarily deciding to comply with other PPACA provisions. 

Reasons a plan can lose its grandfathered status include (1) elimination of most or all of the benefits to treat a certain condition, (2) increases of deductibles by a certain amount, or (3) certain changes to the employer contribution rates or co-insurance percentage for participants.  Also, a plan will lose its grandfathered status if annual limits below a certain amount are imposed on the dollar value of all benefits.

Employers must pay close attention to these regulations, as they can greatly affect their decisions regarding health coverage for employees.  Brody and Associates regularly advises management on complying and remaining up to date with state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.