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Survey Says Most Health Plans to Lose Grandfathered Status

Source: Business Insurance

Posted on 11 Aug 2010

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A survey conducted by Hewitt Associates Inc. estimates that due to changes under health care reform laws, 90 percent of employers expect their health care plans will lose their grandfathered status within the next four years because of changes they expect to make.

Under the Patient Protection and Affordable Care Act, employer health insurance plans are shielded from certain requirements, such as providing full coverage of preventive services, if they meet certain requirements. For example, employers must maintain current coinsurance requirements and cannot raise employees’ premiums by more than five percentage points. Changing insurers also invalidates a plan’s grandfathered status.

According to the survey conducted on 466 employers representing 6.9 million workers, 90% of respondents expect their plan to lose its grandfathered status by 2014—the majority in the next two years.

“Most large employers would rather have the flexibility to change their benefit programs than be tied down to the limited modifications allowed under the new law,” Ken Sperling, leader of Hewitt’s health management practice in Norwalk, Conn., said in a statement.

Seventy-two percent of employers expect their health care plans to lose their grandfathered status because of design changes. Changing premium subsidy levels, changing insurers and consolidating plans are among other actions employers expect to result in their plans losing grandfathered status.

Fifty-one percent of employers with self-funded plans expect their plans to lose grandfathered status in 2011, and 21% expect that to happen in 2012. Forty-six percent of employers with fully insured plans expect to lose grandfathered status in 2011, and 18% expect that in 2012.