Good news: The feds just gave employers more leeway to make changes to their health plans and maintain their plans’ grandfathered status.
The most recent healthcare reform FAQ from the Department of Labor gives employers more specific guidance on plan changes they can make without losing their plans’ grandfathered status.
This should help those employers looking to make changes to their health plan and still avoid complying with some of the reform law’s more challenging provisions.
Grandfathered health plans don’t have to abide by certain requirements under the reform law — like covering 100% of preventive healthcare costs and establishing an external review process for benefit claim appeals, among several other mandates.
Acceptable reasons to switch plans
The reform law generally bans companies from switching to a health plan that either decreases employee coverage or increases employees’ costs without losing their plans’ grandfathered status — unless they have “a bona fide employment-based reason” to make the switch.
Now the feds have finally given some specific examples of bona fide reasons for making a switch that won’t cost a plan its grandfathered status.
Some examples:
- The insurance carrier is exiting the insurance market or won’t offer the plan anymore.
- Employee participation in the plan has dropped so low it’s now impractical for the employer to keep offering the plan.
- The plan is eliminated under a multi-employer plan as part of a collective bargaining process.
- A benefit package is eliminated and multiple benefit packages covering a “significant portion” of other employees remain available to the employees being transferred. (Note: It was not specified what would be considered a “significant portion” of employees.)
The FAQ also states that these examples are just that — examples. So there could be additional reasons for companies to switch plans that wouldn’t cost them their grandfathered status.
That means plans have more than just a little wiggle room to make changes and remain grandfathered — certainly more room than was first thought when the reform law passed.
Acceptable changes within plans
The feds also listed specific changes that could be made within existing plans that won’t cause a loss of grandfathered status.
For example:
- The addition of a generic alternative medication that causes a brand-name drug to be reclassified and bumped up into a more expensive cost-sharing tier.
- Participants’ costs increase in plans that use fixed-dollar employer contribution formulas. (Note: The formula must not change.)
Info: The complete FAQ can be found here.
