HHS Adjusts Rules for ‘Grandfathered’ Health Plans Under Reform Law
On Monday, HHS announced new changes to federal "grandfathering" rules for certain health plans under the federal health reform law, CQ HealthBeat reports (Adams, CQ HealthBeat, 11/15).
Under the initial rules, insurance plans being offered before the law was enacted would be exempt from certain mandates in the law, as long as they did not make significant changes to the plans' deductibles, copayments or benefits.
As a result, the plans would be exempt from the health reform law's limits on cost-sharing, as well as requirements to offer preventive care without copays or establish an appeals process for disputed claims (California Healthline, 9/30). Only self-funded plans, usually available at larger companies, would be permitted to switch insurance administrators without the risk of losing grandfathered status, CQ HealthBeat reports (CQ HealthBeat, 11/15).
Under the newly revised rules, HHS said employers that switch health insurance plans would be able to retain grandfathered status, but only if they do not make significant changes to enrollees' benefits or costs, the Wall Street Journal reports.
According to the Journal, the change could help Democrats keep their promise that employers could retain their existing health plans.
HHS also said that the earlier rules provided insurance companies an unfair advantage in negotiating renewal rates (Adamy, Wall Street Journal, 11/16).
Although business groups and insurers welcomed the revised rules, the effect of the changes likely will be diminished because many employers already have confirmed their benefits plans and provisions for the coming year, according to CQ HealthBeat.
In addition, some companies already might have relinquished their grandfathered status or concluded their open-enrollment periods.
Business group officials noted that even though the new changes might have come too late for some employers, it is important that companies be able to shop around in 2011 (CQ HealthBeat, 11/15).
According to the Journal, HHS has estimated that nearly 66% of small employer plans and 45% of large employer plans would give up their grandfathered status by 2013. Other independent surveys projected that as much as 85% of companies would relinquish their grandfathered status (Wall Street Journal, 11/16).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.