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Courtney M. Brunsfeld
Michael V. Conger
Brian M. Johnston
Jamie Zveitel Kwiatek
Mary K. Samsa
Randal L. Schultz
William P. Sweeney
To learn more
about our
Employee Benefits and Executive Compensation practice or to contact
one of our
attorneys,
click here.
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August 2010 |
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Losing Grandfathered Status -
Should You Care?
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A Polsinelli Shughart Employee Benefits Update |
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The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (collectively, the Act), has significantly changed the landscape for providing health care coverage to employees. Although the mandates created under the Act are generally applicable to all group health plans, there are certain compliance exemptions for “grandfathered plans.” As a result, the initial reaction of employers was to take all steps necessary to establish and maintain grandfathered status. However, now that interim final regulations have been issued regarding grandfathered status (http://www.dol.gov/) and most employers are in the midst of their annual insurance renewal process, employers are now stepping back and re-evaluating the actual benefits of maintaining such status. Many employers are actually finding the costs of maintaining a grandfathered plan are more significant than the long-term impact of “losing” grandfather status in the process. The focus of this e-Alert is to identify the advantages and disadvantages of preserving grandfathered status.
What is a Grandfathered Plan?
For purposes of this discussion, a “grandfathered” health plan is any group health plan that was in effect on the date of the enactment of the Act (i.e., March 23, 2010). Under the interim final rules, a grandfathered “plan” is determined on a benefit program basis (e.g., if the employer maintains both an HMO and PPO plan design, each of these benefit programs is a separate “plan” for these purposes), and a benefit program that existed on March 23, 2010 will retain its grandfathered status unless and until an “impermissible” change is made to that benefit program on any date thereafter that otherwise causes it to lose grandfathered status. As such, if an employer maintained a health plan for its employees on March 23, 2010, under which employees could choose a PPO or HMO option, each option must be separately analyzed to determine whether grandfathering status is lost as a result of an impermissible change made to either or both programs on any date thereafter. It is also important to note that grandfathering does not apply to plans with less than two covered employees, retiree only plans, and certain limited scope dental and vision plans. Click here to learn more about:
- Significance of Maintaining Grandfathered Status
- Impermissible Change That Would Cause A Loss Of Grandfathered Status
- What To Do If You Lose Grandfathered Status
- Planning Points And Considerations
For More Information
For further guidance on the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act rules, contact:
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About Polsinelli Shughart PC
With more than 500 attorneys, Polsinelli Shughart PC is a national law firm that is a recognized leader in the areas of business litigation, financial services, bankruptcy, real estate, business law, labor and employment, construction, life sciences and health care. Serving corporate, institutional and individual clients regionally, nationally and worldwide, Polsinelli Shughart is known for successfully applying forward-thinking strategies for both straightforward and complex legal matters. The firm can be found online at www.polsinelli.com. |
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