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Health Net: How Long Will Plans Remain Grandfathered?

Sep 06, 2013

There is no clearly defined end date to grandfathered status for health plans. A fact sheet distributed by the Department of Health and Human Services implies that as insurance exchanges are implemented in 2014, there is less likelihood that workers in small businesses will remain in grandfathered plans, but that consumers insured through large employers are more likely to do so.

Q: With regard to whether a group health plan is a grandfathered plan, what steps must Health Net and/or the employer take to communicate regarding changes to contribution rates?

A. The departments (Health and Human Services, Labor and Treasury) have determined that, until final regulations are issued, they will not treat an insured group health plan that is a grandfathered plan as having ceased to be a grandfathered health plan immediately based on a change in the employer contribution rate if the employer plan sponsor and issuer take the following steps:

If these steps are taken, a group health plan that is a grandfathered health plan will continue to be considered a grandfathered health plan.

The relief discussed here will no longer apply as of the earlier of the first date on which Health Net knows that there has been at least a 5-percentage-point-reduction or the first date on which the plan no longer qualifies for grandfathered status without regard to the 5-percentage-point-reduction. Moreover, nothing in the Affordable Care Act or in the interim final regulation prevents a policy, certificate or contract of insurance from requiring a plan sponsor to notify Health Net in advance (e.g., 30 or 60 days in advance) of a change in the contribution rate.

Q. Similarly, multiemployer plans do not always know whether (or when) a contributing employer changes its contribution rate as a percentage of the cost of coverage. What steps should multiemployer plans take to communicate with contributing employers regarding employer contributions towards coverage?

A. If multiemployer plans and contributing employers follow steps similar to those outlined in the previous question, the same relief will apply to the multi-employer plan. 

Q. Some multiemployer plans have either a fixed-dollar employee contribution or no employee contribution toward the cost of coverage. Is it relevant if a contributing employer’s contribution rate changes, provided that nothing else would cause the plan to lose grandfathered status and there continues to be either no employee contribution or no increase in the fixed-dollar employee contribution?

A. In this circumstance, if there is no increase in the employee contribution towards coverage and any changes in the coverage terms would not otherwise cause the plan to cease to be grandfathered, a change in a contributing employer’s contribution rate will not, in and of itself, cause a plan that is otherwise a grandfathered health plan to cease to be a grandfathered health plan.

For additional questions regarding Health Net or grandfathered plans, contact your b&p Sales Team - 888.722.3373.

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