Loss of one plan's grandfathered status will not affect other plans

WASHINGTON—Employers that make design changes that result in one of their health care plans losing grandfathered status will not relinquish that status for other plans they offer, federal regulators have clarified.

Under the health care reform law, health care plans will lose grandfathered status if they make certain design changes, such as boosting coinsurance requirements or increasing employees' premium contributions by more than five percentage points. Grandfathered plans are exempt from certain reform law requirements, such as providing full coverage for preventive services.

In an updated set of frequently asked questions and answers, regulators clarified that the grandfathered plan analysis applies on a “benefit package-by-benefit package basis.”

If, for example, an employer offers a preferred provider organization plan, a point-of service plan and a health maintenance organization plan, a design change made to one of those plans would not affect the grandfathered status of the other plans.

“If any benefit package ceases grandfather status, it does not affect the grandfather status of the other benefit packages,” according to the guidance jointly issued by the Departments of Health and Human Services, Labor and Treasury.

In addition, the agencies noted that they are still considering under what circumstances employers can change health insurers without the plans losing grandfathered status.

Under previous guidance, regulators said loss of grandfathered status would be automatic in situations where employers changed carriers in their insured health care plans.