Request for Information Regarding Grandfathered Group Health Plans
The Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, and Department of Health and Human Services (collectively, the "Departments") are requesting comments regarding grandfathered group health plans and grandfathered group health insurance coverage to better understand the challenges plan sponsors face in avoiding the loss of grandfathered status, and to determine whether there are opportunities for the Departments to assist such plans in preserving their grandfathered status. The request was published in the Federal Register on February 25, 2019 and is available online at https://federalregister.gov/d/2019-03170.
Action Needed Now: Plan sponsors should review the request and determine whether they would like to submit comments. Comments must refer to file code CMS-9923-NC and be received no later than 5 p.m. on. March 27, 2019. Comments may be submitted by mail or electronically at: http://www.regulations.gov.
The Affordable Care Act (ACA) provides that grandfathered health plans are subject to only certain provisions1 of the ACA for as long as they maintain their grandfathered status. A group health plan or group health insurance coverage is considered grandfathered if it has continuously provided coverage for someone (not necessarily the same person, but at all times at least one person) since March 23, 2010, and if it has not ceased to be a grandfathered plan. In general, changes that decrease plan benefits, increase participant cost-sharing requirements, or increase contribution rates beyond permissible indexed amounts will cause a plan or policy to lose its grandfathered status. Once grandfathered status is lost, there is no method to regain grandfathered status.
Solicitation of Comments
The Departments specifically request comments on the following:
- Maintaining (or Relinquishing) Grandfathered Status
- What actions could the Departments take, consistent with the law, to assist group health plan sponsors and group health insurance issuers preserve the grandfathered status of a group health plan or coverage?
- What challenges do group health plan sponsors and group health insurance issuers face regarding retaining the grandfathered status of a plan or coverage? Does any particular requirement(s) for maintaining grandfathered status create more challenges than others, and if so, how could the requirement(s) be modified to reduce such challenges?
- For group health plan sponsors and group health insurance issuers that have chosen to preserve grandfathered status of their plans or coverage, what are the primary reasons for doing so? If grandfathered status is preserved so that particular ACA requirements will not apply to the plan, please specify the particular ACA requirements not included in the grandfathered plan and explain any related concerns.
- What are the reasons why participants and beneficiaries have remained enrolled in grandfathered group health plans if alternatives are available?
- What are the costs, benefits, and other factors considered by plan sponsors and health insurance issuers when considering whether to retain grandfathered status of their plans or coverage?
- Is preserving grandfathered status important to group health plan participants and beneficiaries? If so, which participants and beneficiaries benefit the most and which, if any, are affected detrimentally by the employer offering grandfathered group health plan coverage?
- What is the typical change in benefits, employer contributions or employee organization contributions, and cost-sharing requirements that causes a grandfathered group health plan or grandfathered group health insurance coverage to lose its grandfathered status?
- Do the grandfathered health plan disclosure requirements in the November 2015 final rules provide adequate, useful, and timely information to plan participants and beneficiaries regarding grandfathered status? If not, how could the disclosure be improved?
- General Information about Grandfathered Group Health Plans and Group Health Insurance Coverage
- Other than the Kaiser Family Foundation's "Employer Health Benefits Annual Survey," and the MEPS-IC survey, what data resources are available to help the Departments better understand how many group health plans and group health insurance policies are considered grandfathered and how many participants and beneficiaries are enrolled in such plans and coverage?
- What are the characteristics (for example, plan size, geographic areas, or industries) of grandfathered group health plans and the plan sponsors and group health insurance issuers that have chosen to retain the grandfathered status of their plans or coverage? Do grandfathered group health plans or the plan sponsors and group health insurance issuers that have chosen to retain the grandfathered status of their plans or coverage share common characteristics?
- Do group health plan sponsors and group health insurance issuers that have chosen to retain grandfathered status for certain plans, benefit packages, or policies also offer other plans, benefit packages, or policies that are not grandfathered? If so, why?
- What are the typical differences in benefits, cost-sharing, and premiums (including employer contributions, employee organization contributions, and employee contributions) associated with grandfathered group health plans and grandfathered group health insurance coverage compared to non-grandfathered group health plans?
- How many group health plan sponsors and group health insurance issuers are considering making changes to their plans or coverage over the next few years that are likely to cause loss of grandfathered status under the November 2015 final rules? How many individuals would be affected?
- What impact do grandfathered group health plans and grandfathered group health insurance coverage have on the individual and small group market risk pools?
CHEIRON OBSERVATIONS: The preamble states that "in the Departments' view, there is no authority for non-grandfathered plans to become grandfathered." Therefore, it appears this request for comments does not contemplate any relief for plans that inadvertently lost grandfathered status to be able to regain grandfathered status.
The Departments note that the number of group health plans and policies and individual policies that are considered to be grandfathered has declined each year since enactment of the ACA, with only 16% of American workers being enrolled in a grandfathered group health plan in 2018 (down from 56% in 2011) and no new individual grandfathered policies being issued. Therefore, this initiative to assist plan sponsors and issuers in preserving grandfathered plan status may be arriving too late for the ultimate demise of grandfathered plans.
Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.
1 For a list of the market requirement provisions applicable to grandfathered health plans, visit https://www.dol.gov/sites/default/files/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/grandfathered-health-plans-provisions-summary-chart.pdf.