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Life Health > Health Insurance > Health Insurance

PPACA: Grandfather Rules Not So Terrible

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WASHINGTON BUREAU — The new interim final rules on grandfathered health plans are drawing a relatively mild response.

The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services unveiled the interim final rules Monday.

The rules describe how much a health plan can change without having to comply with all of the group health provisions of the Affordable Care Act, the legislative package that includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act.

Administration officials predicted that only about half of the health plans that now exist will still have “grandfathered health plan” status in 2013.

Republican House members have asked how President Obama can say he has kept his promise to let Americans keep their health coverage if a majority of group plan members will lose grandfathered status by 2013.

But Alec Valchon, a former Republican Senate staffer who is now a health care consultant, says Obama’s pledge was more aspirational than substantive.

Even now, “there is tremendous turnover in health care plans,” Valchon says.

The market reaction to leaks about the contents of the regulation, and to the release of the new rules, signaled that the new rules “won’t change the insurance business in a material way,” Valchon says.

But the government has imposed new rules that likely will raise employer – and employee – costs without reducing the number of covered lives that health plans must provide for, Valchon says.

Officials at the National Association of Health Underwriters, Arlington, Va., say they will ask for greater flexibility in the allowable co-pay band and a longer compliance transition period when federal agencies write the final regulations.

The transition period in the interim regulation, which lasts only from June 17 to July 1, is unrealistic, according to Jessica Waldman, a NAHU senior vice president.

“Plans must be given more time to comply” with the new rule,” Waldman says.

Most of the contracts that go into effect July 1 and Aug. 1 were negotiated over a several-month period, because they must go through review processes, and the tight transition schedule in the rule does not reflect the spirit of the president’s pledge that, “If you like your plan, you can keep it,” Waldman says.

NAHU also believes that restrictions on changes in co-pay levels are too rigid, because plans change their co-pays on hospital stays, X-rays, and lab fees frequently, Waldman says.

But Waldman appeared to take a measured approach to responding to the interim final rules, and Tom Currey, president of the National Association of Insurance and Financial Advisors, Fall Church, Va., says he sees some positive aspects.

Imposition of the new grandfathering rules and all the new regulations that will be forthcoming as the law is implemented will require agents to play “an even greater role assisting employers evaluate whether it makes sense to make changes to their current health plans that could subject them to losing their grandfathered status,” Currey says. “Employers will need help determining the costs associated with putting a new plan in place or whether maintaining a ‘grandfathered’ plan would be a better decision for companies and their employees.”

Once a determination is made, the agent will then provide guidance on how to maintain the existing plan without losing the ‘grandfathered’ status or assist the employer with the selection of a new plan,” Currey says.


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