Final interim rules issued by the departments of Health and Human Services, Treasury, and Labor on Monday specify when group health plans will be exempted—or "grandfathered in"—when complying with the new healthcare reform requirements.
Under the interim rules, all health plans—whether or not they are grandfathered plans—must provide specific benefits to their customers for plan years starting on or after Sept. 23, 2010, including: No lifetime limits on coverage for all plans, no rescissions of coverage when people get sick and have previously made an unintentional mistake on their application, and extension of parents’ coverage to young adults under age 26.
For those getting their health insurance through employers, additional benefits will be offered—no matter if their plan is grandfathered—including: no coverage exclusions for children with pre existing conditions, and no "restricted" annual dollar limits on coverage.
Plans will lose this "grandfather" status if they choose to significantly cut benefits—for instance, if they eliminate conditions already covered such as diabetes, cystic fibrosis, or HIV/AIDS. That status also will be lost if plans significantly raise copayment charges over the two years (for instance, from $30 to $50), or significantly raise deductibles (for example, from $1,000 to $1,500) also over the next few years.
The grandfathered plans, though, can increase deductibles and out of pocket limits—but only within a certain percentage. The maximum percentage is defined as an increase in the medical care component of the Consumer Price Index since March 23 (when the reform bill was signed), plus 15%.
The flexibility over plan deducible and limits will encourage employers to continue offering health coverage to their employees and help to ensure coverage for all Americans, said Secretary of Labor Hilda Solis.
The new rule provides flexibility to "employers who offer quality insurance to make routine changes and still continue offering the same coverage to employees," said Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, in statement.
Between 71% and 87% of larger employer plans, currently serving 133 million enrollees are expected to remain grandfathered in through 2011; by 2013 (before health exchanges are implemented), between 35% and 66% will remain grandfathered in.
For smaller employee plans with 43 million covered enrollees, between 58% and 80% are expected to remain grandfathered in 2011; by 2013, that rate is expected to drop to between 20% to 51%. By 2014, small businesses and individuals who purchase insurance on their own will gain access to the competitive market exchanges under the current healthcare reform act.