An amendment to the Interim Final Rule on Grandfathering will be published in the Federal Register on Wednesday, November 17, 2010. The amendment enables a group health plan to change insurers without losing grandfathered status, with some caveats. The change cannot trigger any of the other conditions that cause a plan to lose grandfathering status (e.g., no decrease in benefits, no change in coinsurance; increase in deductible cannot exceed 15% plus medical inflation, etc.).
Previously Renewed Plans Not Affected
The amendment is not retroactive. Instead, it applies only to effective dates on or after the date the amendment is filed for public inspection, which was November 15, 2010.
For this purpose, the date the new coverage becomes effective is the operative date, not the date a contract for a new policy, certificate or contract of insurance is entered into. Therefore, for example, if a plan enters into an agreement with an issuer on September 28, 2010 for a new policy to be effective on January 1, 2011, then January 1, 2011 is the date the new policy is effective and, therefore, the relevant date for purposes of determining the application of the amendment to the interim final regulations. If, however, the plan entered into an agreement with an issuer on July 1, 2010 for a new policy to be effective on September 1, 2010, then the amendment would not apply and the plan would cease to be a grandfathered health plan.
~Excerpt from the Amendment Preamble
Documentation is Required
Also, the group health plan must provide – and the insurer must require – documentation of the terms of the plan under the prior insurance carrier sufficient to determine if any of the triggers for losing grandfathered status will be tripped.