DOL, HHS finalize rule to give more flexibility to ACA grandfathered plans

A signpost with the words Affordable Care Act
The Trump administration issued a final rule that gives more flexibility to grandfathered Affordable Care Act plans. (Getty/kroach)(Credit: Getty/kroach)

The Trump administration finalized a rule that lets grandfathered group health plans raise cost-sharing requirements such as deductibles without losing their grandfather status.

The rule, finalized Friday by the departments of Labor and Health and Human Services (HHS), is intended to give grandfathered group health plans more flexibility. The rule doesn't have any major changes from a proposal released in July.

“This final rule helps provide Americans with access to affordable insurance from employers and unions by ensuring flexibility to adjust their plans in changing circumstances,” said HHS Secretary Alex Azar in a statement Friday.

The Affordable Care Act (ACA) allowed certain health plans that existed before enactment to continue to offer coverage that does not meet all of the law’s requirements.

The rule is in response to a 2017 executive order that calls for more flexibility for grandfathered group health plans.

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The rule clarifies a grandfathered group health plan that is a high-deductible health plan can increase its “fixed amount cost-sharing requirements, such as deductibles, to the extent necessary to maintain its status as a [high-deductible health plan] without losing grandfather status,” a release said.

The change also will ensure beneficiaries can contribute to a health savings account.

In addition, the final rule gives plans an alternative method for measuring any permitted increase in fixed-amount cost-sharing. A plan could lose its grandfathered status if its cost-sharing reaches a certain amount.

The final rule is the latest move by the Trump administration to shore up grandfathered plans. Back in 2017, the White House delayed when the plans had to become fully compliant with ACA regulations.

The Centers for Medicare & Medicaid Services (CMS) issued guidance last year that allowed states to choose whether to extend grandfathered plans for a year or less and whether to extend such plans to the individual and small group markets.

CMS Administrator Seema Verma said in March when the guidance was issued that the grandfathered plans enable more people to get affordable coverage as the ACA has increased premiums.

Data from the Kaiser Family Foundation show that last year 22% of firms offered at least one grandfathered health plan, and 13% of covered workers are in one such plan. The percentage of people in a grandfathered plan was similar to the same percentage in 2018 with 16%.