Modest Changes in Health Plans Can Cause Loss of “Grandfathered” Status
As previously reported at this blog, more than half of U.S. workers are expected to be in health plans that will lose their “grandfathered status” within three years. And once grandfathered status is surrendered, employer health plans will be exposed to expensive new rules that can significantly increase health care costs. In general, health plans and employers would lose their “grandfathered” status if they:
- Significantly cut or reduced benefits such as eliminating coverage for people with diabetes or AIDS.
- Significantly raised co-payments or deductibles. Co-pays could not be increased by $5 or a medical inflation rate plus 15 percentage points, whichever is greater. Deductibles could not be raised by a percent equal to medical inflation plus 15 percentage points. Medical inflation has averaged 4 percent to 5 percent in recent years. Thus, a family with a $1,000 annual deductible could still see its deductible hiked to $1,200 and the plan keep its grandfathered status.
- Significantly lowered the portion of health coverage premium paid for by the employer. Grandfathered plans would not be allowed to decrease the amount by more than 5 percentage points.
Full article on new federal rules on changes in health benefits.
It’s obvious what is going on here. The Obama administration wants to control everyone’s health plan. They don’t want anyone to be grandfathered. So they are going to make it as hard as possible for plans to maintain grandfather status.
I agree with Bruce.
The only plans that have any real protection are the union plans.
Tht’s what they are all about. Command and control.
I assume that over time virtually all existing employer plans will go away due to attrition, new regulations and changes in plan design. I also assume the designers of the current regulations expected this to occur all along — all the while claiming workers could keep what they have it they liked it. It’s an empty promise if the law was designed in such a way to discourage continuity of grandfathered employer coverage.
It seems to me that having to grandfather some people will create some pretty strange incentives to keep your existing plan. It’s like not wanting to tear down an aging building because it has been grandfathered into the city building code. You end up with a functional obsolete building because the owner doesn’t want to spend the money to renovate.