Employers can switch health insurance carriers without losing special “grandfathered” status under the health reform law, federal regulators announced in a rule reversal.
Rule on 'grandfathered' status reversed
HHS and the Labor and Treasury departments said that employers offering the same level of coverage through a new insurer will retain grandfathered status, as long as the change doesn't mean significant cost increases or fewer benefits to workers.
Grandfathered status means plans are allowed to bypass certain new benefit requirements of the Patient Protection and Affordable Care Act, such as paying the full cost of preventative care.
The agencies made the rule change for several reasons: an insurer may exit a certain market or switch ownership; an insurer could have “undue and unfair leverage in negotiating the price of coverage renewals” if employers had to stick with a certain carrier; and the prior rule unfairly favored self-insured employers, who were always allowed to change carriers without losing grandfathered status.
“Allowing employers to shop around can help keep costs down while ensuring individuals can keep the coverage they have,” the HHS said in a fact sheet about the rule amendment.
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