The U.S. Departments of Health and Human Services, Labor and Treasury issued regulations regarding the grandfathering of healthcare plans, essentially the rules on what changes and adjustments employers can make to their healthcare plans.
Unfortunately, the restrictiveness of these regulations removes the already limited choices small businesses have to try to keep up with the ever-increasing cost of plans. The Administration is essentially making it harder for small firms to continue offering healthcare, much less keep what they’ve got.
Currently, when small-business owners are faced with premium increases they are forced to evaluate their budget and their employees’ needs to determine how they can best adapt to this increased cost. These decisions are difficult, and are even harder in this economic environment. When an increase comes, employers often discuss their options and possible changes with their employees. Sometimes they choose to make a modest adjustment, for example, increasing a deductible from $30 to $45 – the Administration now deems that a ‘drastic change’ and would result in a small employer losing their grandfathered status.
Last fall, 4.7 million individual health insurance policies were cancelled. The Administration responded in March 2014 that there may be a two-year extension for individual and small group policies that do not meet the requirements for the healthcare law. The ultimate decision on whether these non-compliant policies can continue to exist rests with state policymakers and regulators, and individual insurance companies. There’s still no guarantee you can keep your plan.
Details about what routine changes insurers and employers can make without losing their grandfathered status, and the projected impact on large and small employer plans and the individual plan market can be found here.