HHS issues interim rules for grandfathered health plans

Jun 15 2010

Modern Healthcare: The government suggested that under a highly complicated interim rule released today more than half of employer-sponsored health plans could lose their special status that shields them from some aspects of the new health overhaul. The administration outlined "a number of ways health plans could lose their grandfathered status. Plans that substantially eliminate benefits to diagnose or treat a particular condition would lose the status, for instance. And changes to how much an enrollee pays could also lead to a plan being stripped of its grandfathered title." Changes in the level of co-insurance and increases in co-payments that exceed a certain amount would also be reason for dismissal. On the employer's side, "changes to its share of healthcare contributions could result in loss of grandfathered status. Employers that lower their payment share by 5 percentage points could be stripped of the status." The reason for granting this grandfathered status is to "provide individuals with the benefits of plan continuity. In addition, grandfathering could potentially slow the rate of premium growth and also provide an incentive to employers to continue coverage, potentially reducing new Medicaid enrollment and spending, the agency added" (DoBias, 6/14).  

Business Insurance: "While the law bans certain plan features, such as exclusions for pre-existing medical conditions and lifetime dollar limits for all health care plans, other requirements such as full coverage of preventive services do not apply to grandfathered plans." The rules were released Monday by the Internal Revenue Service, the Department of Labor and the Department of Health and Human Services (Geisel, 6/14).