Recent Update to Grandfathered Status Under the Health Care Reform Act

Multiple government agencies responsible for implementation of the new health care reform bill (PPACA), including the Internal Revenue Service and Health and Human Services, recently announced an amendment to the rules governing the grandfathered status of group health plans. The amendment allows group health plans to change policies, contracts, or carriers and keep their grandfathered status, provided the coverage does not violate one of the other rules for maintaining grandfather status (e.g. not increasing co-insurance, deductibles, co-pays above certain thresholds, etc.). This amendment to the interim final rules is effective November, 15, 2010.

Several concerns were raised concerning the prior interim rules which lead way to the creation of this amendment. One of those concerns which this amendment corrects was that self-insured group health plans were being treated differently than fully-insured programs. Self-insured plans were allowed to change third party administrators without affecting grandfathered status. Now that this amendment has been put in place, this change will equalize the treatment of the two different plans.

The full amendment can be found here.