This week the government released an amendment relating to grandfathered health plan status under the Patient Protection and Affordable Care Act (PPACA). The amendment permits certain changes in group health plans and other health insurance policies, certificates or contracts without loss of grandfathered status.

Comments received in response to the previously released interim rules raised concerns: 

• Insured group health plans were treated differently from self-insured group health plans;
• Questioned the circumstances in which a group health plan changes its issuer involuntarily yet the plan sponsor wants to maintain its grandfather status with a new issuer;
• Provisions would unnecessarily restrict the ability of issuers to reissue policies to current plan sponsors for administrative reasons; and
• Provisions terminating grandfather status upon any change in issuer gives issuers undue and unfair leverage in negotiating the price of coverage renewals.

Under the amended rules, a group health plan is allowed to change health insurance coverage without ceasing to be a grandfathered health plan, provided the plan continues to comply fully. The term "group health plan" applies the grandfather provision uniformly to both self-insured and insured group health plans. Simply put, changing a carrier or TPA no longer guarantees that a group will lose its grandfathered status.

The amendment to the interim final rules is effective November 15, 2010. A fact sheet is also available for more in-depth information.

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