Fed Relaxes Rules for Grandfathering Group Health Care Plans

Dec 1, 2010

Topic: Business

A fully insured group health care plan can now retain its grandfathered status if an employer changes to a different health insurer that provides similar coverage at a lower cost, as long as no other changes are made that would violate the rules of maintaining grandfathered plan status.  Guidance was issued on November 17, 2010, by the Department of Labor (through the Employee Benefits Security Administration), the U.S. Treasury (through the IRS), and the Health and Human Services Department (HHS) that amends the interim final regulations (issued June 17, 2010) concerning the “grandfather” plan rules of the Patient Protection and Affordable Care Act.

Prior to the amendment, changing issuers (switching from one insurance company to another) could cause an insured health plan to lose grandfathered status.  Self-funded plans, however, were allowed under the initial regulations to change third-party administrators without loss of grandfathered plan status.

Read the full amendment. Reprinted with permission from Mountain States Employers Council, Inc.