On June 17, 2010, the Internal Revenue Service, the Employee Benefits Security Administration, and the Department of Health and Human Services issued new regulations regarding the "grandfathered" status of group health plans and health insurance coverage under the health care reform legislation enacted in March (1). The new regulations specify whether a plan or coverage has grandfather status and is thus exempt from certain requirements under the health care legislation. Among other exemptions, a plan or coverage with grandfathered status is not required to comply with provisions of the new legislation which require non-grandfathered plans or coverages to ensure guaranteed availability and renewability of coverage. Grandfathered plans and coverages are likewise exempt from the provisions mandating coverage of preventative services and non-discriminatory premium rates.

Pursuant to the new regulations, a grandfathered plan or coverage may be modified within limits described by the new regulations without forfeiting its grandfathered status. Conversely, any changes made to the scope of benefits provided, cost-sharing requirements, employer contributions, or annual limits which exceed those allowed will forfeit the grandfather status of a plan or coverage. Changes made between March 23, 2010 and June 14, 2010 which would otherwise act to forfeit the grandfathered status of a plan or coverage may be revoked, thereby restoring grandfathered status, if done so in the first plan year on or after September 23, 2010.

The new regulations also include disclosure and documentation requirements which must be followed in order to maintain the benefits of grandfathered status. A statement informing participants or beneficiaries that a plan or coverage believes it is a grandfathered health plan, as well as contact information for questions or complaints, must be included in any plan materials which describe the benefits of the plan or coverage. Model disclosures and notices are available from the Department of Labor. Group health plans or group health insurance coverage must maintain records to verify grandfathered status and make the records available for inspection upon request.

The Firm's Health Care Reform Response Team continues to monitor federal regulations to keep clients up-to-date on important changes related to health care reform. If you have questions about preserving "grandfathered" status for your group health plan(s) or health insurance coverage or other questions regarding health care reform, please feel free to contact one of the Firm's Health Care Reform Response Team attorneys.

You can also view an informative presentation on the health care reform legislation on the Firm's website, as well as download the slides that accompany the presentation. These materials are available at: http://fraserstryker.com/NewsStory.aspx?IdArticle=228.

(1) The Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (codified as amended in scattered sections of U.S.C.), amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029.

This article is provided by Fraser Stryker for general informational purposes and is not intended to be and should not be construed as legal advice on any specific facts or circumstances.

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