Earlier this month, the Department of Labor (“DOL”) and Health and Human Services (“HHS”) released a proposed rule which provides more flexibility for grandfathered health plans to change cost-sharing requirements. A grandfathered health plan is generally a group health plan that has continuously provided coverage since March 23, 2010, and has not taken certain actions, including not changing any cost-sharing under the plan beyond specific limits. By remaining grandfathered, a health plan is not subject to several ACA requirements, including the requirement to cover preventive care at 100%.
These proposed rules, if finalized, would amend the grandfathered plan rule to provide greater flexibility for grandfathered group health plans in two ways. First, the proposed rules specify that any grandfathered group health plan that is a high-deductible group health plan (“HDHP”) may make changes to fixed-amount cost-sharing requirements that are necessary to comply with the requirements for HDHPs without losing grandfathered status. Although the latest increase in the minimum deductible for a plan to satisfy the requirements to be an HDHP is still below the allowed limit for changes to a grandfathered plan, the proposed rule provides comfort to employers for future changes they may be required to make to keep their plan qualified as an HDHP.
Second, the proposed rule includes a revised definition of “maximum percentage increase.” This percentage is used to set the limits on increases made to cost sharing in grandfathered plans. The proposed rule provides that plans may use the “premium adjustment percentage,” which is published annually by HHS. Previously, plans could only use the “medical inflation” amount published by the DOL. The “medical inflation” amount was criticized because it included changes in pricing for self-pay patients and for Medicare. The “premium adjustment percentage” does not include those price changes and may be a more accurate reflection of change for private employer plans.
The proposed rule allows a plan to use either the “medical inflation” or “premium adjustment percentage” when reviewing cost-sharing changes to the plan. And, a plan is permitted to choose the method that yields the larger change.
Grandfathered health plans can be quite complicated if you are trying to make cost-sharing changes; and a mistake means you lose your status forever. If you have any questions about your grandfathered plan, the proposed rule, or benefits in general, please contact any of Graydon’s employee benefits attorneys.
