Human Resources News & Insights

How many ‘grandfathered’ plans will survive — and for how long?

It appears as though most employers would rather have the flexibility to change their health plans than be severely limited by the regulations that’d allow them to maintain their “grandfathered status.”

The proof is in the numbers: 90% of companies said they plan to lose their grandfathered status by 2014, with the majority expecting to lose it in the next two years, according to a recent survey of 466 (mostly larger) employers by Hewitt Associates.

Health plans that manage to stay “grandfathered” are exempt from many of the new healthcare reform law mandates.

Companies can lose their plans’ grandfathered status by reducing employee health benefits, changing insurance carriers, or significantly increasing co-pays or deductibles.

The vast majority (72%) of companies cited “health plan design changes” as the reason they expect to lose their grandfathered status. Other reasons included “consolidation of health plans” (16%), “changes to insurance carriers” (16%) and “union negotiations” (15%).

Some other findings:

  • Of those companies with self-insured plans, 51% expect to lose their grandfathered status in 2011 and 21% expect to lose it in 2012, and
  • 46% of companies with fully-insured medical plans expect to lose their grandfathered status in 2011, with another 18% expecting to lose it a year later.
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