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Groups losing grandfathered
Groups losing grandfathered status will need to comply with the elimination of lifetime limits, dependent coverage to age 26 and other provisions, but how do we quantify the value over the long term.
I have one client who was paying 100% of the premium and now want to charge employees 20% for the same plan at renewal. This means they will lose grandfather status. Is this change just a short-term savings which will prove costly in the end, or is grandfathered status a political ploy with no true economic value?
So, you tell the client, you will lose your grandfathered status if you do this, but when they ask what the economic value of the grandfather is, I don't know how to respond. Any ideas?
A couple thoughts. First, all
A couple thoughts. First, all plans will have to comply with the lifetime limits. You can’t escape that one by retaining grandfather status. See attached.
Comparing plan cost differences and the value of grandfathering is something you really cannot quantify. You can compare similar plans that are grandfathered and not grandfathered. But you don’t know what the carrier rates will be like next year. Individuals will leave plans and join others. People move in and out of coverage. Blocs of business age and new ones are created. This affects premiums- but nobody can predict the impact.
Further, as grandfathered plans dwindle in number, it’s conceivable that carriers could discontinue plans. While an individual has the right to keep his coverage if he likes it, PPACA changes his coverage and the carrier is not required by law to continue offering the plan.
But if a client’s rates increase by 40%, a producer needs to change the plan design so that the client can offer benefits to employees. Grandfathering isn’t worth being uninsured. If your rates go up 7% and you like the plan, then keep it. Do what is in the best interest of the client.
We view loss of grandfather status as a question of not “if” but “when.” And there are indeed some provisions in loss of grandfather status that will increase premiums, the most notable being the requirement of covering in-network preventive services without co-pay or cost-sharing. But you can’t avoid the PPACA reaper forever.
Sharon Alt never disappoints.
Sharon Alt never disappoints. Excellent and meaningful information that agents need.
thank you for the webinar.
thank you for the webinar. Sharon provided some valuable information. I do have a couple of questions that I want to clarify:
#1: There is information out there that mentions Grandfathering affecting Groups of 100+?
#2: If group renews 9/1/10 they will not be impacted by any of these new mandates until 9/1/11? Or, will some of them (ie Age 26) apply as of 1/1/11 or immediately?
Thank you again.
#1: These same rules that
#1: These same rules that apply to small groups apply to groups of 100+ with exception of in 2014 the maximum deductibles and maximum out of pockets will only apply to 2 - 100 and individual plans. This is assuming that all groups are fully-insured. Exceptions for self-funded may apply.
#2: This is correct. The Age 26 rules may apply earlier if the carrier is one that implemented this rule prior to the requirement date. Most carriers have already done this. You will need to check with your carrier specifically.
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