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When the Affordable Care Act was first passed, many employers were under the impression that if they were happy with their current health plan offerings, they could keep them intact. But when they examined the fine print, “they soon understood that keeping their current health plan offerings and maintaining their grandfathered status would not be an easy task,”
Amy M. Gordon, a partner in the employee benefits practice at law firm McDermott Will & Emery, told
With respect to grandfathered health plans, the guidance explains that numerous types of changes will cause a plan to lose its grandfathered status, Gordon noted, including:
“Once a plan loses its grandfathered status, it cannot get it back,” Gordon emphasized. “Although employers that self-insure their employees’ group health coverage will not discontinue that coverage, they will need to add additional coverages once they lose their grandfathered status.” For instance, nongrandfathered group health plans must:
“These do not seem like big changes, but each will drive up the cost of coverage,” Gordon said.
In addition, to avoid the shared-responsibility (or “pay or play”) mandate that takes effect Jan.1, 2015, for calendar-year plans, an employer’s group health plan must provide
affordable coverage that meets the minimum value requirements. “This means that for employees whose household income falls within 100 to 400 percent of the federal poverty line, those employees may not be charged greater than 9.5 percent of their annual household income for individual health coverage,” Gordon explained.
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