Wave Goodbye to Your Grandfathered Health Plans

By August 17, 2010Health Care, Regulations

Hewitt Associates’ news release, “Nine out of 10 U.S. Companies Anticipate Losing Grandfather Status Under Health Care Reform, According to New Hewitt Survey“:

LINCOLNSHIRE, Ill., Aug 10, 2010 (BUSINESS WIRE) — While many U.S. companies initially hoped they could preserve much of their existing group health plans under the new grandfather provision, a new survey by Hewitt Associates, a global human resources consulting and outsourcing company, shows that almost all now believe they will not. Ninety percent of companies said they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.

Under the “grandfather” provision of the U.S. Patient Protection and Affordable Care Act, companies can maintain many of their current health care coverage provisions and are required to make fewer changes to plan documents and administrative procedures in order to comply with the new law. Companies can lose their grandfather status if they take certain steps such as reducing benefits, significantly raising co-payment charges, significantly raising deductibles or changing insurance carriers.

According to Hewitt’s survey of 466 companies–representing 6.9 million employees–most companies expect to lose grandfather status because of health plan design changes (72 percent) and/or changes to company subsidy levels (39 percent).

These survey results reinforce the observations made by Joe Trauger, the National Association of Manufacturers’ vice president for human resources policy, in a Shopfloor.org blog post on Monday, “Like Your Health Care Plan? You Can’t Keep It.” Short version: If your plan changes, wave it goodbye.

The NAM submitted its comments Monday (available here) in response to the Department of Health and Human Services’ Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan under the Patient Protection and Affordable Care Act.

The HHS regulatory docket is HHS-OS-2010-0015.

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