Greater Flexibility for Grandfathered Plans

On July 10, 2020, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury Departments issued a proposed rule intended to provide greater flexibility for grandfathered group health plans — which would include changes to certain cost-sharing requirements without losing grandfather status.

The proposed rule would amend current rules to allow some grandfathered group health plans to make certain cost-sharing changes without causing a loss of grandfather status, such that:

  1. It would allow grandfathered group health plans that are high deductible health plans (HDHPs) to make changes to certain fixed amount cost-sharing requirements without causing a loss of grandfather status. These changes would be allowed only to the extent necessary for compliance with the minimum cost-sharing requirements for HDHPs.
  2. It would provide an alternative method of determining the “maximum percentage increase,” based on the premium adjustment percentage — instead of the Consumer Price Index.

According to the Departments, the proposals would enable these grandfathered plans to continue offering affordable coverage, aiming to enhance their ability to combat rising healthcare costs. The proposals would also ensure that the plans are able to comply with minimum cost-sharing requirements for HDHPs so that enrollees remain eligible to contribute to their health savings account (HSA).

It is important to note that the rule would not impact grandfathered individual health coverage. Additionally, the proposed rule would not allow non-grandfathered plans to become grandfathered or to regain grandfather status. The departments issued FAQs regarding the proposed rule for your reference.

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Should you have any questions regarding this information, feel free to reach out to the Creative Benefits Team at solutions@creativebenefitsinc.com or 866-306-0200.