The changes in the final rule apply only to group grandfathered plans and insurance coverage: the rule does not affect grandfathered individual coverage. (Photo: Shutterstock)
Group plans will be able to impose higher cost-sharing requirements without losing Affordable Care Act grandfathered status under new rules issued late last week. The final rule by the Labor, HHS and Treasury Departments follows a proposed rule issued last July.
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Under the final rule, the agencies generally would maintain existing rules for grandfathered plans, with two modifications:
- The agencies first adopt a new "special rule" for high-deductible health plans. Under the final rule, grandfathered group plans that are HDHPs can increase fixed-amount cost-sharing requirements as long as the changes are necessary to comply with HDHP rules under Section 223(c)(2)(A) of the Internal Revenue Code.
- The agencies also will allow an alternative way for grandfathered group plans to calculate the "maximum percentage increase" for fixed-amount cost-sharing requirements. For copay fixed-amount cost-sharing requirements, grandfathered plans cannot increase copays by the greater of a) $5, as increased by medical inflation or b) the maximum percentage increase. For non-copay fixed-amount cost-sharing requirements (such as deductibles or out-of-pocket maximums), increases cannot exceed the maximum percentage increase.
Grandfathered plans that make changes to cost-sharing that exceed these thresholds lose their grandfathered status.
Grandfathered plans are ones that already existed on the day the ACA was enacted and have been continuously offered without certain changes. Only a handful of ACA provisions apply to grandfathered coverage, including the law's bans on preexisting condition exclusions; excessive waiting periods; lifetime and annual dollar limits; and rescissions. Grandfathered plans also must cover dependents up to age 26 and provide members with a summary of benefits and coverage. Grandfathered coverage does not have to comply with most ACA reforms.
To maintain grandfathered status, at least one person must have been enrolled in the grandfathered plan since March 23, 2010. Grandfathered status is determined separately for each benefit package, meaning employers can offer both grandfathered coverage and new (or non-grandfathered) coverage. And grandfathered plans cannot deviate too far from their design at the time the ACA was enacted.
The changes in the final rule apply only to group grandfathered plans and insurance coverage: the rule does not affect grandfathered individual coverage. Less than 7% of enrollees in grandfathered plans are believed to be in individual market coverage. The agencies confirm that the final rule does not create a path to allowing non-grandfathered plans to become grandfathered.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
