The healthcare reform bill included assurances that employers’ current plans would be “grandfathered” — companies could keep their coverage without being subject to new, expensive mandates. But just-released federal rules make it clear that maintaining that “grandfathered” status is likely to be a very pricey proposition.
The Departments of Labor, Treasury and Health and Human Services have jointly issued interim regulations on the grandfathering provisions. And they are not good news for employers.
Under the new regs, companies lose their grandfathered status if they:
- increase customer costs, or
- significantly reduce health benefits.
What you can’t do
Under the new regs, if a company wants to stay grandfathered, it can’t:
- Significantly cut or reduce benefits. For example, firms can’t eliminate coverage for people with chronic conditions like diabetes.
- Significantly raise co-pays. Grandfathered plans can’t increase staff co-pays by more than $5 (adjusted annually for inflation) or a percentage equal to medical inflation plus 15 percentage points. For instance, a plan would lose grandfathered status if co-pays rose from $30 to $50 over two years.
- Significantly raise deductibles. Plans can increase deductibles only by a percentage equal to medical inflation plus 15%.
- Significantly lower employer contributions. Grandfathered plans can’t decrease the percentage of premiums that employers pay by more than five percentage points.
Yes, there are some changes you can make to your plan without threatening your grandfathered status. But there’s not a lot of wiggle room.
You can make modest adjustments to existing benefits, voluntarily adopt new consumer protections under the new law, and make changes to comply with state or other federal laws.
Think your company will be able to keep its health coverage as it stands today? And if you lose your grandfathered status, what do you foresee happening to your health benefits? Let us know in the Comments section below.
