Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Draft Reg: Half of Employer Plans Would Lose 'Grandfather' Status by 2014

By John Reichard, CQ HealthBeat Editor

June 11, 2010 -- A draft version of a federal regulation circulating in recent weeks estimates that about half of employer health plans will lose their status by 2014 as "grandfathered" plans exempt from certain requirements under the health care overhaul law.

Employer plans on the market when the legislation was signed into law March 23 are considered to be grandfathered, meaning they are not subject to some of the requirements under the law although they do have to meet others.

For example, grandfathered plans do not have to meet requirements that new plans provide full coverage of preventive care, create appeals mechanisms for plan enrollees and pay the same rates for in-network and out-of-network emergency care.

The draft notes, however, that "to ensure access to coverage with certain particularly significant provisions, even grandfathered plans must comply with a subset" of the law's provisions. Thus they are barred from "rescissions" canceling benefits when an enrollee becomes sick and they must eliminate limits on lifetime payouts of medical care.

But the law doesn't address at what point a plan changes so much that it loses its grandfathered status.

That's where the regulations step in. The draft reg says plans would lose that status if they "significantly decrease the benefits covered, materially increase cost sharing by participants in ways that might discourage covered individuals from seeking needed treatment or substantially increase the cost of coverage borne by participants."

The draft document estimates that 22 percent of employer plans will lose grandfather status in 2011 and 51 percent in 2013.

Republicans charged Friday that the figures show that President Obama spoke falsely when he told Americans that if they like their current coverage, they can keep it. The draft shows, Republicans said, that most workers will be in plans subject to new requirements.

An Obama administration official who requested anonymity said that "it is difficult to predict how plans and employers will behave in the coming years, but if plans make changes that negatively impact consumers, then they will lose their grandfather status."

He added, "This is a draft document, and we will be releasing the final regulation when it is complete." He said, "The president made a promise to the American people that if they liked their health care plan, they can keep it. The regulation, when finalized, will uphold that promise."

Publication Details