Grandfathering Allowed: Final Regulations Update
Grandfathering allowed for most standard and non-standard plans
As we recently communicated with you, the federal government has issued Interim Final Regulations for the grandfathering provision. Because there are advantages to grandfathering, we will grandfather most standard and non-standard plans in our portfolio. To help you better understand what this means to you, we’ve put together this Grandfathering Fact Sheet. It explains:
£ More about grandfathering
£ What changes can be made without losing grandfathered status
£ What changes will result in losing the grandfathered status
This is an important provision for many individuals and group policyholders. You can expect more information about grandfathering, including how we will implement it. As always, please talk with your consultant if you have any questions.
Grandfathering Fact Sheet
Under the recently enacted federal health care reform legislation, health plans can be grandfathered. Interim Final Regulations have been published to provide further clarification on grandfathering. These rules are designed, according to the Obama administration, to allow grandfathered plans to “innovate and contain costs by allowing insurers and employers to make routine changes without losing grandfather status.” In general, grandfather status will be lost if there are significant reductions to benefits or increases in out-of-pocket spending for consumers, such as deductibles or co-pays.
We believe there are benefits to grandfathering for our groups and individual members who wish to maintain their existing health benefit coverage. For this reason, we will grandfather most group and individual plans. In a continued effort to simplify our plan offerings, we are reviewing our current options by state to determine which ones we will offer as grandfathered plans. More information explaining how we will implement grandfathering for our individual and group customers will be provided in the near future.
Additionally, in limited situations, the legislation allows clients that made benefit changes after March 23, 2010, that would not meet the grandfathering rules to regain grandfathered status at the next renewal in 2011. We are working to determine how to help plans possibly regain grandfathered status.
What is grandfathering?
Grandfathering allows groups and individual members that keep their existing plan from March 23, 2010, to January 1, 2014, to be exempt from the new product and rating framework that is effective in 2014. To maintain grandfathered status, a client must continue to keep the plan and the plan’s benefits essentially the same. Grandfathering also exempts plans from some of the requirements of the plan-related provisions effective September 23, 2010.
The following changes can be made without impacting grandfathered status:
Changes in premiums of a policy or plan
Changes required to comply with federal or state law
Changes to increase benefits, or voluntarily comply with provisions of the Patient Protection and Affordable Care Act
Changes to plan structure, for example, switching from a health reimbursement arrangement to major medical coverage, or from insured to self-funded coverage
Changes to a provider network
Changes to a prescription drug formulary
Changes to accommodate mergers and acquisitions (as long as the merger or acquisition is not done solely to allow a group to move from one grandfathered plan to another when the plan change would reduce benefits or increase cost sharing in excess of that allowed by the regulations)
Changes to an ASO plan’s third-party administrator
The following changes would cause a loss of grandfathered status:
Eliminate all (or substantially all) benefits to diagnose or treat a particular condition.
Increase coinsurance (or another percentage cost-sharing requirement) above the level at which it was set on March 23, 2010. In other words, any increase in an insurer or plan’s coinsurance will result in a loss of grandfathered status.
Increase fixed-amount cost-sharing requirements other than copayments, such as a deductible or an out-of-pocket limit, by a total percentage (measured from March 23, 2010) that is more than the sum of medical inflation plus 15%.
Increase copayments above the level in effect on March 23, 2010, by an amount that exceeds the greater of (a) the sum of medical inflation plus 15%, or (B) $5 increased by medical inflation.
Reduce employer contributions (calculated by cost or formula, such as hours worked) toward any tier of group health insurance coverage or a group health plan by more than 5% below the contribution rate on March 23, 2010.
Impose an annual limit on the dollar value of benefits if an annual or lifetime limit had not been previously imposed on all benefits or, for plans that previously imposed a lifetime limit of all benefits, impose an overall annual dollar limit that is lower than the lifetime limit, or, for plans that
previously imposed an annual limit on all benefits, decreases the dollar value of the annual limit.
Issuer or plan sponsor does not disclose to participants and beneficiaries that the plan or coverage is a grandfathered health plan.
Change from one insurer to another
New government website lets consumers compare insurance plans
The U.S. Department of Health and Human Services (HHS) has just launchedHealthCare.gov, a website designed to help individuals and small businesses compare both private and public health insurance plans. Through HealthCare.gov, consumers can find information on literally thousands of private and public health care products.
Important note about how some products appear on the site
Please note that the products are listed under the legal entities – not their brand names, which may cause confusion. Companies currently working with HHS to correct this matter, and they hope to have their familiar brand names appear on the website soon. Until then, please be aware of how our products are listed on the website, state by state:
£ California: Blue Cross of California, Anthem Blue Cross Life & Health Insurance Company
£ Colorado: Rocky Mountain Hospital and Medical Service, Inc.
£ Connecticut: Anthem Health Plans, Inc.
£ Georgia: Blue Cross and Blue Shield of Georgia, Inc., Blue Cross Blue Shield Healthcare Plan of Georgia, Inc.
£ Indiana: Anthem Insurance Companies, Inc.
£ Kentucky: Anthem Health Plans of Kentucky, Inc.
£ Maine: Anthem Health Plans of Maine, Inc.
£ Missouri: RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC),
£ Nevada: Rocky Mountain Hospital and Medical Service, Inc.
£ New Hampshire: Anthem Health Plans of New Hampshire, Inc.
£ New York: Empire HealthChoice HMO, Inc., Empire HealthChoice Assurance, Inc.,
£ Ohio: Community Insurance Company
£ Virginia: Anthem Health Plans of Virginia, Inc.
£ Wisconsin: Blue Cross Blue Shield of Wisconsin, Compcare Health Services Insurance Corporation
In October, HealthCare.gov will also start including rate estimates for private insurance plans. Insurance companies are working with the government to determine how small group information will appear in states with no community ratings.
HealthCare.gov can be a valuable tool for you, which is why Insurance Companies are working hard to have their recognizable names appear on it soon. We’ll keep you posted as more information becomes available to us. If you have any comments or questions, please talk with your sales representative.
Getting to the bottom of health care costs
Did you know: Only three cents of every premium dollar is profit?
On average, 87 cents of every premium dollar you pay is spent covering medical care and services that members receive like doctor visits, hospital costs, prescription drugs and more according to a PriceWaterhouseCoopers medical cost trend report for 2009. Another 10 cents funds services we provide like claims processing, enrollment and billing and provider credentialing. That leaves 3 cents of every premium dollar for profits. Kaiser Health news has reported that the combined annual profits of the top 10 health insurers are equal to just two days work of national health care expenditures or just 0.5% of the estimated $2.5 trillion the nation spent on health care in 2009.