November 16, 2010, the federal government published an amendment to the original “grandfather” regulations that were published last June concerning how employers can maintain grandfathered health plan status.
The new amendment “allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost while maintaining their grandfathered status, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered plan status.”
The updated announcement is posted on the U.S. Department of Health and Human Services website, click here to view that announcment. This amendment is scheduled to be published tomorrow, November 17, in the Federal Register.
The HHS website states further:
“The purpose of the grandfather regulation is to help people keep
existing health plans that are working for them. This amendment furthers
that goal by allowing employers to offer the same level of coverage through
a new issuer and remain grandfathered, as long as the change in issuer does
not result in significant cost increases, a reduction in benefits, or other
changes described in the original grandfather rule.”
HHS notes that “the original regulation only allowed self-funded plans to change third-party administrators without necessarily losing their grandfathered plan status.” The revised regulation impacts “insured group health plans” but not the “individual market.” HHS elaborates that “(u)nder this amendment, all employers have the flexibility to keep their grandfathered plan but change insurance company or third-party administrator.” The regulation was motivated in part to allow employers to shop around for better-priced insurance.