New Rules for “Grandfathered” Health Plans Released

If you like your current health plan provided by your employer, or more importantly, if you’re in HR or benefits administration and have any influence over the health plan your organization provides, you need to check out what the U.S. Department of Health and Human Services did this week.

“Regulations released Monday will determine which people who like their health plans will be able to keep them,” said a report from Kaiser Health News, noting that this was “a frequent promise made by the Obama Administration – when the health overhaul takes full effect.”

The Kaiser Health News story links you to a number of other stories that detail just what these regulations mean and how the “grandfathering” of health plans will work – great information if you, like so many, are struggling to get your hands around all these health care changes — but here are the basics, courtesy of a story on the St. Louis Post Dispatch website :

“The rules affect plans that were in operation when the president signed the new health care law on March 23. Companies have an incentive to retain this “grandfathered status” because it exempts them from some of the health care law’s new mandates. To qualify for the exemptions, however, companies will be able to make only limited changes to their plans.

“What would cause a health plan to lose its grandfathered status and trigger new federal requirements?

Dropping coverage for a particular health problem, for example, diabetes.
Increasing the proportion of insurance paid by workers, for example from 20 percent of the hospital bill to 25 percent.
Cutting back the share of premiums that the company pays by more than 5 percent.
Significantly increasing annual deductibles or co-payments paid by workers. For example, if an employer raises a $1,000 deductible by $500 over the next two years.”

Losing your “grandfathered” health plan status can be a big deal for some companies. “Any company can choose to forego grandfathered status and still offer health benefits,” the St. Louis Post Dispatch story said, “but the company’s health plan would then be considered a new plan and would be subject to an escalating series of new mandates. Starting next year, for example, new plans will be required to cover preventive services such as cancer screenings with no co-pays or other cost sharing.”

If anything is clear here it’s that there are many, many issues flowing out of the passage of “Obamacare” , and managers and HR leaders need to buckle down and stay on top of this stuff as best they can, because health care reform isn’t going to be easy for anyone involved.