Long awaited clarification on what plans must do to keep their grandfather status under PPACA has been released. In short, there are limits on the changes to benefits and cost sharing that are permitted.
According to the interim final rule, a plan will lose its grandfathered health plan status if it:
— Eliminates all or substantially all benefits to diagnose or treat a particular condition;
— Increases by any amount a percentage cost sharing requirement (such as coinsurance);
— Increases fixed amount cost sharing requirements (such as deductibles or out-of-pocket maximums) by more than the rate of medical inflation (from March 23, 2010) plus 15 percentage points;
— Increases copayments that exceed the greater of: 1) the rate of medical inflation plus 15 percentage points; or 2) $5 increased by medical inflation;
— Reduces employer contributions by more than 5 percentage points below the contribution rate on March 23, 2010; and
— Reduces or adds certain new annual or lifetime limits on the dollar value of benefits.
Plans must also provide notice to participants or beneficiaries that the plan believes it is a grandfathered plan and maintain plan documents and records necessary to verify, explain, or clarify its status as a grandfathered health plan.
QUINNSCOMMENTARY 
It seems to me that that there need to be some careful calculations about the cost of giving up grandfather status versus the restrictions on changes to the existing plan.
One major consideration is where your current plan stands on such provisions as lifetime or annual limits, guarantee issue, pre-existing conditions, clinical trials, cost sharing for prevention and wellness and the appeals process.
Part of the issue is understanding what ‘fair health insurance premiums’ will mean operationally.
Currently, plan sponsors have incomplete information from which to make educated and informed decisions as more and more regulations are released. Plan sponsors must remember that proposed regulations are not the same thing as final regulations. It is highly likely that regulations will NOT be finalized before 2011 plan design decisions must be finalized. Therein lies the both the intellectual and financial trap.
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