'Grandfathered' health plans could be scarce under PPACA regs

New regulations defining which existing health plans are "grandfathered"--and consequently exempt from several key provisions of the Patient Protection and Affordable Care Act (PPACA), such as an upcoming prohibition on charging co-payments for certain preventive health services--will push employers to maintain benefits and limit the growth of employee costs, Obama administration officials tell the New York Times. But more than half (51 percent) of employer health plans could lose their grandfathered status in 2013 according to the mid-range estimate included in a leaked draft copy of the interim regulations that has been posted on the website of Rep. Bill Posey (R-Fla.), reports the Wall Street Journal. Including low and high estimates, the number of plans losing their grandfathered status by 2013 could range from 39 to 69 percent.

Breaking up the projections by small vs. large plans, "the mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfathered status by the end of 2013," say the draft regulations. "The low-end estimates are for 49 percent and 34 percent of small and large employers, respectively, to have relinquished grandfathered status, and the high-end estimates are 80 percent and 64 percent, respectively."

Multiple circumstances could trigger the loss of grandfathered status, reports the New York Times. For example, a health insurance plan that ends all benefits for the diagnosis or treatment of a particular condition would lose its exemption. Also, a plan that increases deductibles or co-payments by more than the rate of medical inflation plus 15 percentage points would no longer be grandfathered. Other events that would force health plans to meet all PPACA coverage requirements include the employer reducing its share of the total cost of coverage by more than 5 percent.  

To learn more:
- read this New York Times article
- read this Wall Street Journal article
- read this Investors Business Daily article
- review the leaked early draft regulations
- read this Associated Press report in the Washington Post
- read this Business Insurance article

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