The empty promise – “if you like the health benefits you have, you can keep them.” Annual enrollment for 2012 and the loss of grandfathering under the Patient Protection Affordable Care Act

Tell me it isn't' so

During the health care reform debate the point was repeatedly made that workers who liked their benefits would not lose them, they could keep the benefits they had. Somebody should have checked with employers first before making that promise.

While it is true that the Affordable Care Act does grandfather existing plans and thus exempts them from some requirements of the law, such as providing preventive services without deductibles or co-payments applied, there is a catch. Employers can maintain their grandfathered status only if they do not make changes to their plan.

Here are changes that will cause a plan to lose its grandfathered status:

Elimination of a Particular Benefit

Increase in Coinsurance

Increase in Deductible or Out-of-Pocket Maximum ((by more than medical inflation plus 15%, as measured from 3/23/10)

Increase in Copayment: (by more than greater of: (1) $5 (adjusted for medical inflation), or (2) medical inflation plus 15%, as measured from

Decrease in Employer Contribution (if an employer decreases its contribution rate toward the cost of coverage by more than 5 percent below the contribution rate on March 23, 2010)

Changes in Annual Limits

– No Previous Limits: (if the plan imposes a new overall annual limit on the dollar value of benefits that did not exist before the law).
– Previous Lifetime Limits: (if there is new overall annual limit that is less than the value of an existing lifetime limit)
– Previous Annual Limits: (if the existing annual limit is decreased)

Here is the dilemma employer’s face; either they maintain grandfathering to avoid additional costs because of benefit mandates under the law or attempt to manage costs and make changes to the plan design and/or cost sharing. As we approach the 2011 open enrollment period, employees will quickly find out what decision employers have made. The choice is not hard.

 Making benefit changes such as raising deductibles or the percentage of premiums paid by the employee will save more money than the additional cost of the new mandates (at least until HHS expands the mandate). It’s the old give with one hand and take with the other. Nobody should be surprised at this outcome.

When the “promises” were made that you could keep the plan you like, the regulations had not been written that eventually mitigated the value of grandfathering, essentially making it impossible for employer and other plan sponsors to maintain the grandfathering status.

When you receive your open enrollment material to make benefit selections for 2012 do not be surprised if the plan you like has disappeared or changed substantially. You see, the “affordable” part of the Patient Protection Affordable Care Act is still missing.

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