New Interim Final Regs on Grandfathered Plans under the Patient Protection and Affordable Care Act

The U.S. Departments of Health and Human Services, Labor and Treasury issued a new Interim Final Regulation (IFR) on "grandfathered" health plans under the Affordable Care Act. A fact sheet on the new regulation is provided, and the new regulation is available on the Federal Register's website at: http://www.federalregister.gov/OFRUpload/OFRData/2010-14488_PI.pdf

Additionally; UnitedHealthcare is sharing its summary of the content of the IFR, as well as answers to some frequently asked questions, to assist you and our mutual clients with an analysis of the changes. While this summary is provided as a service to our valued consultant partners, it does not constitute legal advice. Please consult with your own legal counsel.

Summary of Guidance from the Interim Final Regulations

• Plans may continue to add new members without impacting their grandfathered (GF) status.
• Plans switching third party administrators will not lose their GF status unless they make other plan changes noted in the summary or IFR (e.g., changing coinsurance levels).
• Plans switching insurance carriers (on a fully insured offering) will lose GF status unless the plan is maintained under a collective bargaining agreement.
• Plans increasing the member's coinsurance percentage will lose their GF status.
• Beneficial changes to the plan (reduction in coinsurance percentages or the addition of a benefit or program are permissible).
• The plans may change their fixed cost sharing arrangements (copay, deductible, etc.) without losing their GF status provided they stay within certain prescribed ranges.
• The collective bargaining safe harbor rules only apply to fully insured plans. This means that plans maintained pursuant to a collective bargaining arrangement, which offer benefits on a self-funded basis, may still maintain grandfather status but the plan does not enjoy an automatic exemption for the duration of the term of the collective bargaining agreement (e.g., they must still comply with the same rules above regarding maintaining GF status). ASO and fully insured plans maintained pursuant to a collective bargaining agreement must also comply with the market reform provisions like all other plans (e.g., covering adult children until age 26, restrictions on lifetime limits, etc.).
• The IFR requires plan sponsors to include statements in its plan materials illustrating the plan is a grandfathered plan in order to maintain this status.
• A comment period is provided in order for plan sponsors, health plans, and other interested parties to submit comments.

Additionally; a UnitedHealthcare summary of the content of the IFR, as well as answers to some frequently asked questions, are provided below. Again; this does not constitute legal advice. Please consult with your firm's own legal counsel.

UnitedHealthcare Summary and FAQS 

Please contact your UnitedHealthcare representative for more information or assistance.