Friday, November 19, 2010

Grandfathered status amended to allow for change in carriers

On November 15th, the Departments of Treasury, Labor, and Health and Human Services announced they are amending the Interim Final Regulations (IFR) on grandfathered health plan status. The amendment allows employers to switch insurance carriers and/or change their funding from Administrative Services Only (ASO) to fully insured without losing grandfathered status.

Under the amended rules, employers that offer the same level of coverage through a new carrier can remain grandfathered as long as the changes do not result in significant cost increases, a reduction in benefits or the other prohibited changes specified in the IFR.

This amendment is effective November 17, 2010 and is not retroactive, nor does it apply to individual policies. As such, insured plans that changed insurance carriers or self-funded plans that became fully insured prior to November 17, 2010 will still lose grandfathered status.

The original IFR stated that changing insurance carriers would cause an insured group health plan that was in effect on March 23, 2010 to lose its grandfathered status.


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