When the Affordable Care Act took effect, many existing health plans were granted exemptions to some of its requirements, allowing insurers to continue offering low-cost health care plans. Such plans were allowed to remain in existence as long as they had been continuously offered since March 0f 2010 and certain changes hadn't been made. As noted by Modern Healthcare, approximately 13% of covered employees were enrolled in such a plan in 2019.

But times have changed. Or rather, health care costs have.

A proposed rule from the Departments of Labor, HHS and Treasury would create some flexibilities for group plans without jeopardizing their grandfathered status. The rule would allow high-deductible health plans to increase cost-sharing requirements–something that would currently cause them to lose their grandfathered status–in order to continue to meet the minimum required for plan members to be eligible for a health savings account.

The second change would offer an alternative method of calculating cost-sharing increases for copays, deductibles and out-of-pocket costs. Currently, such increases are tied to the Consumer Price Index, while advocates suggest the HHS's annual notice of benefit and payment parameters would be a better benchmark.

"The fact that a significant number of grandfathered group health plans remain indicates that some employers have found value in preserving grandfather status," Employee Benefits Security Administration's Jeanne Klinefelter Wilson said in a statement.

Currently, the six criteria that could cause a plan to lose its grandfathered status. Those are:

Elimination of benefits related to treatment or diagnosis of a particular condition.
An increase in percentage cost-sharing requirement (Coinsurance)
Any increase in fixed-amount cost-sharing requirement that exceeds certain thresholds;
Any increase in a fixed-amount copayment that exceeds certain thresholds
A decrease in contribution rate by an employer toward the cost of coverage by more than five percentage points
The imposition of annual limits on the dollar value of all benefits for group health plans and insurance coverage that did not impose such a limit prior to March 23, 2010

Last year, the department solicited feedback on how grandfathered health plans may be improved. Some commenters on the rule opposed any additional flexibility, arguing that such plans offer less-comprehensive coverage. Others countered that such plans are often more affordable for consumers, and that while not bound by the same criteria as ACA-compliant plans, many actually offer more robust networks and better coverage options.

The departments will accept comments on this new proposal through August 14, and any final regulations would be issued and go into effect sometime thereafter.

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Grandfathered health plans could get a little more breathing room

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