HCW Benefits Blog

[On June 10, 2010 we held a half day conference at the McKimmon Center in Raleigh titled, Healthcare Reform: The Employers' Guide. The following are questions submitted that we were unable to address due to time restriction.]

1. What are some examples of actions/plan design changes that would cause us to lose our grandfathered status?

Some changes that would cause a loss of grandfathered status include:

• Significantly reducing benefits - Plans cannot eliminate all, or “substantially all”, benefits to diagnose or treat a particular condition. This includes the elimination of benefits for any necessary element to treat or diagnose a condition.
• Raising coinsurance charges - Plans cannot increase percentage cost-sharing requirements, including coinsurance, from their levels as of March 23, 2010.
• Significantly raising copayment charges - A plan cannot increase co-payments if the total increase measured from March 23, 2010, exceeds the greater of: 1) an amount equal to $5 (adjusted annually for medical inflation*); or 2) a percentage equal to medical inflation* plus 15 percentage points.
• Significantly raising fixed-amount cost-sharing - Amount Cost-Sharing (ex. deductibles and out-of pocket - A plan cannot increase deductibles or out-of-pocket limits if the total increase measured from March 23, 2010, exceeds a percentage equal to medical inflation* plus 15 percentage points.
• Significantly lowering employer contributions - A plan cannot decrease its contribution rate toward the cost of any tier of coverage by more than 5 percent below the contribution rate for the coverage period that includes March 23, 2010.
• Adding or tightening annual limits on what the insurer pays
• Changing insurance companies or entering into a new contract of insurance

2. Are there any limits as to how long a plan can remain grandfathered?

Employers can stay grandfathered indefinitely as long as they do not change their plan by more than the requirement above and as long as their carrier continues to offer a non-grandfathered plan design.  Note that these changes are not allowed each year, but rather from the plan in effect 3/23/10 to whatever future plan design you are considering.

3. How does the grandfather clause affect self-insured plans that have a reinsurer component?

Grandfathered plans do not apply to reinsurers, but rather just the employer’s underlying health plan (carrier or administrator for self-funded).