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Final Rule Gives Greater Flexibility for Grandfathered Plans

On December 11, 2020, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury announced a final rule that provides greater flexibility for grandfathered plans under the Affordable Care Act (ACA). The final rule succeeds a proposed rule that was issued in July 2020.

What is a grandfathered health plan?

A grandfathered plan is a group health plan or health insurance coverage that was in existence on March 23, 2010 — the date the ACA was passed — that has not made certain prohibited changes to lose its grandfather status.

Since compliance assistance is a high priority, the Departments have issued frequently asked questions (FAQs) regarding ACA implementation of grandfathered health plans.

How does this final rule provide greater flexibility?

The final rule includes the following flexibility for grandfathered plans under the ACA:

  • Grandfathered high deductible health plan (HDHP) coverage may increase fixed-amount cost-sharing requirements, such as deductibles, to the extent necessary to maintain its status as an HDHP without losing grandfather status. This provision aims to ensure that participants and beneficiaries enrolled in this coverage remain eligible to contribute to a health savings account (HSA).
  • Provides an alternative method of measuring permitted increases in fixed-amount cost-sharing that is intended to allow plans and issuers to better account for changes in the costs of health coverage over time.

This additional flexibility may allow additional plans to maintain their grandfather status, despite certain changes being made.

In conclusion, the Departments intend for the updated flexibility to benefit plan participants, beneficiaries, employers, employee organizations and other stakeholders.

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Should you have any questions regarding this information, please contact the Creative Benefits Team at 866-306-0200 or solutions@creativebenefitsinc.com.