December 10, 2010
New Insurance Amendments with Grandfathered Regulations
~ written by Char Sutak, Member Benefits, Willis
In November, the agencies responsible for implementing the health care reform law’s grandfather rules (the Departments of Labor, Treasury and Health and Human Services) issued amendments to the regulations they issued last June. Under the amendments, group health plans may enter into new insurance contracts without affecting their grandfathered status, provided there are no changes in the coverage that would cause loss of grandfathered status (e.g., elimination of benefits for a condition and certain changes in cost sharing requirements).
Unfortunately, the amendment is not effective retroactively, so new insurance contracts that became effective before November 15, 2010 are NOT grandfathered. In addition, for new insurance contracts with effective dates on or after November 15, 2010, the new insurance carrier must be provided with documentation of the plan terms under the prior policy (e.g., a copy of the policy or a summary plan description) sufficient to determine whether any change in the coverage would cause the plan to lose grandfather status. The amendment does not apply to individual insurance policies (i.e., any newly issued individual health insurance policy will not be grandfathered).
The amendments allow a group health plan to change health insurance coverage without ceasing to be a grandfathered health plan. That is, a group health plan or the plan’s sponsor may enter into a new policy, certificate, or contract of insurance with the existing carrier or a new carrier and that change by itself will not result in the plan losing grandfathered status. There are exceptions to this new rule and some conditions that must be met if a plan is to retain grandfathered status following a change of insurance policies.
For more on Grandfather Rules, contact Char Sutak at email@example.com.