On Friday, August 6, BenefitMall hosted a Legislative Webinar on the three topics – Dependent Coverage, Grandfathered Plans and Medical Loss Ratio. To view the power point presentation, please click on the “Presentations” tab located at the top right-hand corner of this webpage. If you have any questions regarding the three topics discussed, you may post those questions below by clicking on “Add New Comment.”
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Questions after viewing
Questions after viewing powerpoint:
1) Why would an employer want to maintain grandfathered plan status, specifically?
2) What requirements are grandfathered plans exempt from, specifically?
3) One slide mentions that an employer can make "routine changes" - one of which is cost adjustment to keep pace with inflationary cost of coverage. However, in a later slide it is stated that an employer cannot significantly lower their contributions and maintain grandfathered stauts. I need specific examples of what are and what are not acceptable "cost adjustments" an employer can make without losing grandfathered status?
4) Can an employer maintain their current plan(s) and add a plan w/higher copays, coinsurance, deductibles at renewal (creating a triple option, for example) and still maintain grandfathered status?
thank you
#1 A couple thoughts. First,
#1 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.
#2 A plan is a grandfathered plan if at least one individual was enrolled on the date of enactment (March 23, 2010). Assuming a grandfathered plan makes no impermissible changes, it will retain grandfathered status indefinetly.
Grandfathered plans are not required to comply with certain provisions of the Act as long as they retain their grandfathered status. These provisions include:
1.Required coverage for certain clinical trials
2.First dollar coverage for preventive care
3.Prohibition against discrimination in favor of highly compensated employees
4. Quality reporting requirements
5.Revised appeals process
6.Patient Protections
7.Transparency disclosures
8.Coverage for adult children with other employment based coverage available
#3 Grandfathered plans may not increase the employee-portion or other fixed cost of coverage relative to the premium portion paid by the employer by more than 5%. An increase of the employee-paid percentage for any tier of coverage by more than 5% from the level paid on March 23, 2010, will cause a plan to lose their grandfathered status. Employers should determine the cost of coverage using COBRA rates.
In other words, an employer who was paying 75% of the employee only premium on March 23,2010 can receive a 25% rate increase upon renewal, maintain the contribution level of 75% and maintain their grandfathered status even though the employee contribution dollar amount will have increased. As long as the percentage of contribution does not increase by more than 5% they should be fine.
#4 Yes, as long as the current plan (at least one employee enrolled as of March 23, 2010) does not make any changes outside the scope of "acceptable changes" as outlined in the law that plan can maintain it's grandfathered status and a new plan can be added that will not be grandfathered. Each plan is treated separately for grandfathered status.
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