On October 8, 2010, the Department of Labor, in consultation with the Departments of Health and Human Services and the Treasury, published answers to frequently asked questions about an interim final rule, published on June 17, 2010 (75 Fed.Reg. 34537). The interim final rule addresses health plans that have been “grandfathered” under the Patient Protection and Affordable Care Act. In order to allow Americans the choice to maintain the health plan in which they had enrolled before the Act’s effective date, Congress grandfathered pre-existing plans by exempting them from some of the Act’s provisions. The interim final rule, however, establishes a set of six changes, to be codified at 45 C.F.R. § 147.140(g)(1), that would cause a plan to lose its grandfather status and the frequently asked questions address that issue.
The Department’s responses state that health plans may lose their grandfather status only in limited circumstances. First, the Department confirmed that the interim final rule’s list of six changes that would lead to the loss of grandfather status, to be codified at 45 C.F.R. § 147.140(g)(1), are not merely examples, but are the only changes that could lead to the loss of grandfather status. Moreover, the Department stated that it will evaluate whether one of the six changes takes place on a benefit-package-by-benefit-package basis. In other words, if a plan offers multiple benefit package options (i.e. PPO, POS, and HMO), one option’s loss of grandfather status will not affect the other options. Similarly, employer contribution tiers will be analyzed on a tier-by-tier basis. Thus, if an employer previously had self and self-plus-family tiers but then switches to self, self-plus-one, self-plus-two, etc., the plan will lose grandfather status if the employer contributions associated with the new tiers do not fall within 5 percentage points of that of the old self-plus-family tier. On the other hand, the addition of new tiers that expand plan coverage to previously uncovered classes (for example, adding a self-plus-family tier to a plan that previously had merely a self-only tier) will not affect the plan’s grandfather status.
In other responses, the Department outlined ways in which a plan would lose its grandfather status. For example, raising copayments above the amount outlined in the regulations for one category of services (i.e. primary care) would cause the whole plan to lose its status, since that violates one of the six changes to be codified at 45 C.F.R. § 147.140(g)(1). On the other hand, adding benefits to plans in order to reward healthy habits by participants would not affect a plan’s grandfather status, since that is not one of the six changes listed in the interim final rule.
Finally, the Department covered several miscellaneous topics. Among them, dental and vision benefits that qualify as “excepted benefits” under the Health Insurance Portability and Accountability Act of 1996 are similarly exempt from the Affordable Care Act’s market reforms. In addition, the Department stated that retroactive elimination of coverage for administrative reasons (i.e. an employer reconciles the employee list with the health plan only once a month, thus leading to coverage—for a few weeks—of some employees who have left the company) would not be considered a rescission as defined (and prohibited) by the Affordable Care Act.
A complete copy of the FAQs is available by clicking here.