This is the tenth in a series of articles about health care reform.
Under a November 17, 2010 amendment to the interim final regulation regarding grandfathered plans, insured employer group health plans can now change health insurance carriers and maintain grandfathered status if certain requirements are met. Grandfathered plans are exempt from some of the requirements imposed on health plans by the Affordable Care Act of 2010. (Go here for a more detailed discussion of grandfathered plans).
Interim final regulations issued on June 17, 2010, stated that an employer group plan that moved to a new policy/certificate/contract on or after September 23, 2010, could not be treated as a grandfathered plan. The June 17, 2010 regulation effectively barred insured plans that wished to maintain grandfathered status from changing insurance carriers. The amendment to the interim final regulation removes this restriction so that group health plans can change insurers and maintain grandfathered status, provided they do not make any plan design changes that would otherwise cause the plan to lose grandfathered status. (For a list of the proscribed design changes, see Q&A #1 here).
The amended regulation does not apply retroactively, nor does it affect changes that were made during the good faith transition period that applies before the June 17, 2010 regulations, during which time the question of whether a plan could change carriers was not clear. The net effect is that an insured group health plan could potentially enter a new contract/policy/certificate with an effective date between March 23, 2010, and June 17, 2010, or with an effective date after November 17, 2010, and maintain grandfathered status. But a new policy that became effective after June 17, 2010, and before November 17, 2010, will not be treated as grandfathered, since the interim regulations in place during that time period prohibited changes in insurance policies/certificates/contracts.
A group health plan that enters into a new policy/contract/certificate and wishes to maintain grandfathered status must provide to the carrier (and the carrier must require) sufficient documentation of key plan terms (such as benefits, cost sharing, employer contributions and annual limits) under the plan's previous policy to show that the plan has not made any design changes that would otherwise cause it to lose grandfathered status. Like other grandfathered plans, the plan must also provide notice to the participants of its grandfathered status.
The revised regulation does not extend similar grandfathered status to new policies issued in the individual market.