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Life Health > Health Insurance > Your Practice

PPACA: New HHS Health Agency Helps Issue Grandfather Regs

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The new federal Office of Consumer Information and Insurance Oversight is one of the agencies helping to roll out the new grandfathered health plan interim final rules.

The OCIIO, an arm of the U.S. Department of Health and Human Services, put out the interim final regulations together with the Internal Revenue Service, which is an arm of the U.S. Treasury Department, and the Employee Benefits Security Administration, an arm of the U.S. Labor Department.

The agencies posted a draft of the grandfathered plan regulations on the Web Monday. The official version of the rules appeared today in the Federal Register.

The new Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act and the “PPACA fixer” bill, the Health Care and Education Reconciliation Act – called for HHS officials to establish the OCIIO. Jay Angoff, a former Missouri insurance commissioner, is the director of the OCIIO.

Public comments on the interim final regulations are due Aug. 16.

The IRS also has published the regulations as a set of proposed rules. Comments on the proposed rules version are due Sept. 15.

Employers that sponsor group health plans and insurers that issue individual health insurance policies can use the interim final rules to maintain “grandfathered” status, meaning that the plans will be exempt from many new ACA health plan requirements.

The interim rules could apply to about 2.2 million health plans covered by the Employee Retirement Income Security Act and about 105,000 non-ERISA health plans, such as government plans and plans offered by Native American tribal governments, officials estimate in the preamble to the interim rules.

Employers and individuals that get new plans or have plans that change significantly will lose grandfathered status for those plans.

Grandfathered status may be short-lived for many individual plans, because, historically, about 40% to 67% of individual policies have been in effect for less than 1 years, officials say.

Officials are estimating that 39% to 69% of all group plans will lose grandfathered status by 2013, and that 49% to 80% of small group plans will lose grandfathered status by 2013.

Officials say they will allow some flexbility for employers and individual plan issuers interested in keeping grandfathered status.

“For purposes of enforcement, the departments will take into account good-faith efforts to comply with a reasonable interpretation of the statutory requirements and may disregard changes to plan and policy terms that only modestly exceed those changes described in [the final rules] and that are adopted before June 14, 2010, the date the regulations were made publicly available,” officials say.

“In addition, these interim final regulations provide employers and issuers with a grace period within which to revoke or modify any changes adopted prior to June 14, 2010, where the changes might otherwise cause the plan or health insurance coverage to cease to be a grandfathered health plan,” officials say.

The grace period will end the first day of the first plan or policy year beginning on or after Sept. 23, officials say.


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