For employers concerned that changing one of their plans means losing grandfathered status for all plans, an updated series of FAQs published by the Departments of Health, Labor and Treasury clarified grandfathered status will be maintained or lost on a "benefit-by-benefit package basis." Previously, the regulation held that grandfathered status would be lost for all plans if employers changed one.
For a plan that is continuing the same policy, the six changes described in the interim final regulations are the only changes that would cause a loss of grandfather status.
Again, the six changes that will cause a plan to relinquish grandfather status are:
- Elimination of all or substantially all benefits to diagnose or treat a particular condition.
- Increase in a percentage cost-sharing requirement (e.g., raising an individual’s coinsurance requirement from 20% to 25%).
- Increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points.
- Increase in a copayment by an amount that exceeds medical inflation plus 15 percentage points (or, if greater, $5 plus medical inflation).
- Decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points.
- Imposition of annual limits on the dollar value of all benefits below specified amounts.
The Departments are still considering the circumstances under which a change in insurers would not cause a loss of grandfathered status.
A separate question addressed how wellness programs will affect group health plans. The guidance explains that plans can continue to provide wellness incentives but warns that penalties may implicate the six changes that defeat grandfather status, as well as violating other nondiscrimination rules.
Click here to read the series of Q&As.
