'Grandfathered' Health Plans, New Regulations Issued

The government issued new rules to deter employers from cutting health insurance benefits or increasing the cost of health coverage. The government said the rules will help Americans keep their health plan if they are satisfied with it. The rules apply to plans already in existence on March 23 of this year, also known as "grandfathered plans." The grandfathered clause exempts qualifying group health plans from some of the new insurance requirements established under the Affordable Care Act. Plans will lose their grandfathered status if they make significant changes that reduce benefits or increase costs to consumers.

According to the new rules, employers risk losing their grandfathered status if they:

  • Significantly cut or reduce benefits
  • Raise co-insurance charges
  • Significantly raise co-payment charges
  • Significantly raise deductibles
  • Significantly lower employer contributions
  • Add or tighten an annual limit on what the insurer pays
  • Change insurance companies

In addition, employers will lose their grandfathered status if they force consumers to switch to another grandfathered plan or if they try to avoid complying with the law by having their plan bought or merged with another plan. The new regulations also promote transparency by establishing rules on when plans need to disclose information to consumers.

Grandfathered health plans will be able to make routine changes to their policies and maintain their status such as cost adjustments due to medical inflation, adding new benefits, or making reasonable adjustments to existing benefits

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