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Proposed Rule Would Relax Limits on Some Grandfathered Plans

On July 10, 2020, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury issued a proposed rule, which would provide flexibility to grandfathered group health plans as allowable changes that would be permitted without losing grandfathered status under the Affordable Care Act (ACA). A grandfathered health plan is a health insurance plan policy in force on or before March 23, 2010, i.e., prior to the ACA’s enactment and that met various thresholds related to plan changes and cost-sharing.

The proposed rule will allow a grandfathered plan to make the following cost-sharing changes and maintain grandfathered status:

  1. If changes are made to a grandfathered group high deductible health plan (HDHPs) pertaining to certain cost-sharing provisions and will not result in a loss of grandfather status. These changes would be allowed only to the extent necessary for compliance with the minimum cost-sharing requirements for HDHPs.
  2. Pertaining to an alternative arrangement for grandfathered health plans to determine the maximum percentage increase, which is the amount an employer can raise fixed plan cost-sharing amounts by no more than medical inflation, 2.7% for 2020. This method is based upon the premium adjustment percentage instead of the Consumer Price Index.

The proposed rule only applies to plans that have maintained their grandfathered status since 2010. It is important to note that the proposed rule does not provide employers with the opportunity to grandfather any additional group medical plans, nor does it re-qualify previously grandfathered plans that may have lost their grandfathered status.

Read the Legal Update.

Contact your Cowden representative for more information on this or other compliance issues.