PPACA Regulatory Update
June, 10, 2010
As reported by SIIA’s Government Relations Staff, Federal agencies will be continually issuing regulations and notices of guidance pertaining to how provisions of the newly enacted Patient Protection and Affordable Care Act will be implemented. SIIA staff will develop summaries of these and distribute along with the full documents as soon as they are released.
Departments of Labor, Treasury and Health and Human Services Jointly Release Interim Final Rules on Allowable Plan Modifications by Grandfathered Plans
Late this afternoon, Federal Departments released an interim rule detailing how plan modifications will affect a plan’s grandfathered status.
Background on “Grandfathered” Plans:
The PPACA details that a group health plan or group or individual health insurance coverage is a grandfathered health plan if it existed on March 23, 2010. Grandfathered plans are only subject to certain provisions of the Act, while being grandfathered from others. Family members and new-hires added to the plan will not negate a plan’s grandfather status.
Final Interim Rule:
These interim final regulations will generally permit, for example, plans and issuers to make voluntary changes to increase benefits, to conform to required legal changes, and to adopt voluntarily other consumer protections in the PPACA.
To maintain status as a grandfathered health plan, a plan or health insurance coverage must include a statement, in any plan materials provided to participants or beneficiaries describing the benefits provided under the plan or health insurance coverage, that the plan or health insurance coverage believes it is a grandfathered health plan. Model language has provided in the interim final regulations that can be used to satisfy this disclosure requirement.
Under these interim final regulations, to maintain status as a grandfathered health plan, a plan or issuer must also maintain records documenting the terms of the plan or health insurance coverage that were in effect on March 23, 2010, and any other documents necessary to verify, explain, or clarify its status as a grandfathered health plan. In addition, the plan or issuer must make such records available for examination.
The interim final regulations limits the extent to which plans and issuers can increase the fixed-amount and the percentage cost-sharing requirements that are imposed with respect to individuals when receiving items and services. As such, these interim final regulations include a standard for employer contribution changes that would result in cessation of grandfather status.
Changes to levels of coinsurance will end a plan’s grandfathered status, but changes to fixed amounts of cost-sharing, consistent with medical-inflation, will not.
The interim final regulations include a standard for employer contribution changes that would result in cessation of grandfather status. The interim final regulations would limit the ability of plan-sponsors to decrease its portion of the premium or other fixed cost of coverage under a group health plan or group health insurance coverage relative to the portion of such cost paid by employees. In the case of a self-insured plan, contributions by an employer or employee organization are calculated by subtracting the employee contributions towards the total cost of coverage from the total cost of coverage.
A plan or health insurance coverage will cease to be a grandfathered health plan if the plan or health insurance coverage makes certain specified changes. Generally, these changes are changes that significantly decrease the benefits covered, materially increase cost-sharing by participants in ways that might discourage covered individuals from seeking needed treatment, or substantially increase the cost of coverage borne by participants.
The elimination of all or substantially all benefits to diagnose or treat a particular condition will cause a plan or health insurance coverage to cease to be a grandfathered health plan.
Click here to view the full document.
How SIIA Intends to Educate its Members Further
Given the obvious importance of this new law, SIIA will be holding a series of one-day seminars to provide members with more in-depth information to help their businesses prepare for change. Please go to http://www.siia.org/i4a/pages/index.cfm?pageid=5338 for more details.
Phoenix, AZ – June 15th
Chicago, IL – June 30th