Grandfathered Plans Get More Leeway on Hiking Cost-Sharing

The Trump administration has proposed a new rule that would give more leeway to group health plans that have grandfathered status under the Affordable Care Act.

Under the proposed rule, these plans could increase their cost-sharing requirements for enrollees at a higher level than they can now without losing their grandfathered status.

Grandfathered plans were in existence before the ACA took effect in March 2010 and as long as they are continually offered with only a small amount of certain changes, they do not have to comply with a number of the law’s provisions. The only ACA provisions that apply to grandfathered plans are a ban on the following:

  • preexisting condition exclusions.
  • excessive waiting periods.
  • lifetime and annual dollar limits.
  • policy rescissions.
  • plans must cover dependents up to age 26.
  • enrollees must receive a summary of benefits and coverage.

Grandfathered plans do not have to comply with a number of major ACA provisions, including:

  • Covering essential health benefits without cost-sharing.
  • Covering preventive services without cost-sharing.
  • Capping out-of-pocket costs for enrollees.
  • Guaranteeing an enrollee’s right to appeal a coverage decision.
  • Patient protections like the right to choose a primary care provider designation, OB/GYN access without a referral, and coverage for out-of-network emergency department services.

The proposed changes

All of the above is left untouched by the proposed rule, issued by the departments of Health and Human Services, Labor and Treasury. Here are the changes on tap:

1. A “special rule” for high-deductible health plans. Under the proposed rule, plans would not risk losing their grandfathered status if they increase fixed-amount cost-sharing requirements for enrollees as long as they have to make the change to comply with HDHP rules that require a minimum deductible. 

The concern is that annual deductible cost-of-living adjustments that are set by the Centers for Medicare and Medicaid Services will start increasing at a higher rate than grandfathered plans are allowed to increase their own cost-sharing requirements.

This way, even grandfathered plans can increase fixed-amount cost-sharing requirements at whatever level is required to meet a future deductible requirement.

2. New way to calculate “maximum percentage increase.” The proposed rule would allow grandfathered plans to use an alternative method for calculating the maximum percentage increase for fixed-amount cost-sharing requirements. 

Currently, grandfathered plans cannot increase cost-sharing requirements by more than $5, or a percentage equal to medical inflation (an amount published annually by the Department of Labor) plus 15%, whichever is greater.

The proposed rule would permit plan sponsors to use the “premium adjustment percentage” published annually by HHS as an alternative method for measuring permitted increases in fixed-amount cost-sharing.

The departments stated that the premium adjustment percentage might be a more appropriate measurement of changes in health care costs for the private sector because, unlike the medical inflation amount, it does not reflect changes in price for self-pay patients and Medicare.

Critics say it could mean that plans are able to increase copays at a higher rate than they currently can.

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