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PPACA: Agencies Set Rules For Grandfathered Plans

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WASHINGTON BUREAU — Employers that want to keep their current health plans as Affordable Care Act rules take effect might have to refrain from switching insurers, tightening annual benefits limits, or increasing deductibles and co-payments by more than 15% plus the rate of medical inflation.

The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services have described the requirements for “grandfathered health plans” in a draft of interim final rules developed to implement ACA provisions that affect group health plans.

ACA is the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.

The Office of the Federal Register has posted a draft of the interim final regulations on its website and expects to publish the final version of the interim final rules Thursday. Agencies occasionally change Federal Register documents between the time they are posted on the OFR site and the time they appear in print.

Comments on the interim rules will be due 60 days after the Federal Register publication date.

Grandfathered plans will be able to avoid many of the changes that ACA will impose on other group health plans, officials say.

But the interim final rules would bar a plan from being grandfathered if the plan failed to comply with some of the new ACA mandates, such as requirements that plans provide free coverage for preventive care and guaranteed renewability of coverage.

A plan could not be grandfathered, for example, if the rate of medical inflation were 8% and the co-payment increased 50%, to $45, from $30, according to an insurance industry group analysis.

Group plans at employers with 100 or more workers cover 133 million Americans, and the enrollees in those plans will see few changes as a result of the new interim final rules, officials predict in the preamble to the draft of the interim final rules.

Many of the 43 million people enrolled in small group plans likely will transition from their current plan to ACA plans over the next few years, officials predict in a separate summary sheet.

Most of the 17 million people who get their coverage in the individual health insurance market, where plan switching and substantial changes in coverage are common, “will receive the new protections of the Affordable Care Act sooner rather than later,” officials say in the summary sheet.

Only about half of the health plans now in existence are likely to be in compliance with the new rules by 2013, officials say.

At press time, insurance groups were still reviewing the interim final rules.

Federal agencies have published several earlier documents related to ACA implementation in the Federal Register. In May, for example, the Internal Revenue Service, an arm of the Treasury Department, released examples of how to interpret the small group tax credit provisions.


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