Legal Alerts

Health Care Reform: Change in Insurance Carriers May Not Cause Loss of Grandfathered Health Plan


The Health Reform Act regulations on maintaining grandfather status that were issued on June 17, 2010 have been amended to allow more flexibility with regards to changing insurance carriers without jeopardizing grandfathered plan status. Prior to the amendment, a grandfathered health plan that entered into a new policy, certificate, or contract of insurance after March 23, 2010 would lose its grandfathered health plan status. The amendment to the regulations, which is effective November 15, 2010, now provides that a grandfathered health plan may enter into a new policy, certificate, or contract of insurance without losing grandfathered health plan status, so long as the plan is not changed in any other manner under the regulations that violates the other conditions that would cause loss of grandfathered health plan status. Changes that could cause a loss of grandfather status include:  significantly cutting or reducing benefits, raising co-payment charges and significantly raising deductibles. A grandfathered health plan is not required to comply with several of the Health Care Reform Act’s provisions that are effective for non-grandfathered health plans. The grandfathered health plan is also required to provide the insurance carrier with sufficient documentation to prove that the plan has not been previously changed in a manner that would cause the loss of the grandfather health plan status. 

This amendment is effective November 15, 2010 and is not applied retroactively. Therefore, if a grandfathered health plan entered into a new policy, certificate or contract of insurance after March 23, 2010, but prior to November 15, 2010, the plan would have lost its grandfathered health plan status.

If you have questions or need additional information about these or other employee benefit matters, contact one of our attorneys or visit our Employment Law Resource Center.  

This Legal Alert is a periodic publication of Lindquist & Vennum LLP. and is intended to provide basic information about new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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