The U.S. Department of the Treasury has revised its previously issued regulations on health plans that are “grandfathered” from certain health care reform requirements.
Specifically, a group health plan does not lose its grandfathered status solely due to the issuance of a new health insurance policy, either as a renewal of an existing insurance policy or as a new insurance policy from a new vendor. In other words, a group health plan can switch insurers without losing its grandfathered status, so long as the new insurance policy does not change the design of the health plan in a way that otherwise would cause a loss of grandfathering.
Note that the revised regulation is effective only for future periods, so if a group health plan entered into a new insurance policy after March 23, 2010, but before the effective date of the revised regulations, that plan would be considered to have lost its grandfathered status.
The revised regulations also confirm that a self-funded health plan is permitted to switch third-party administrators without losing its grandfathered status, provided that the switch to a new administrator does not change the design of the health plan in a way that would otherwise cause a loss in grandfathering.