New Rules on Grandfathered Plans May Limit Health Plan Changes

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One of most controversial provisions of the new health care reform law is the so-called "grandfathered health plan" rule, which exempts health plans in existence on March 23, 2010 (the date of enactment) from many of the new law's requirements. The law itself doesn't state what actions by plan sponsors, if any, might cause a grandfathered plan to lose its protected status.

On June 14, 2010, the three federal agencies primarily responsible for administering the health care reform law issued guidance on the grandfathered health plan exemption. The interim final rule identifies a number of plan changes that will cause a plan's grandfathered status to terminate, including a simple change of health insurer. Accordingly, the new regulations create challenging issues and decisions for sponsors of health plans that pre-date health care reform.

On a more positive note, the regulations also confirm that retiree-only plans and certain stand-alone dental and vision plans are not subject to the insurance market reforms enacted by health care reform.

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