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The Department of Labor's Employee Benefits Security Administration issued a sixth set of frequently asked questions April 1 regarding grandfather plan status under the Patient Protection and Affordable Care Act.
DOL, which prepared the guidance jointly with the departments of Treasury and Health and Human Services, outlined a number of circumstances under which a plan transferring an employee from a grandfathered plan to another plan for a “bona fide employment-based reason” would not lose grandfather status.
Those circumstances include transferring an employee to another plan if the issuer is leaving the market or discontinues the product. Grandfather status also will continue if a benefits package has low or decreasing participation, making it “impractical” for a plan sponsor to continue to offer it, the departments said. Circumstances outlined in the FAQs are not an “exhaustive list” of cases that will satisfy the bona fide employment-based reason condition, the agencies said.
A plan will not relinquish grandfather status if the cost-sharing level of a plan increases because the generic equivalent of a brand name drug comes onto the market, the FAQs said.
Additionally, plans increasing the copayment for preventive services received in an in-network hospital setting would not cause a plan to give up its grandfather status, provided there is no change to the copayment in an in-network ambulatory surgery center, the FAQs said. The departments added that they are gathering further information on value-based insurance design and wellness programs and will address issues relating to those designs and programs in future guidance.
Amendments to plan terms set to become effective on the first day of the next plan year will lose grandfather status once the amendment to the plan becomes effective, the departments said. The same approach is taken on amendments to plans “operating on a calendar plan year” becoming effective in the middle of a plan year, the FAQs said.
Employer contributions to retiree health plans lose grandfather status when the contributions decrease below 5 percent of the contribution amount that was provided March 23, 2010, the departments said.
Sets of FAQs regarding PPACA requirements were previously posted by the departments last year on Sept. 20, Oct. 8, Oct. 12, Nov. 2, and Dec. 23 (28 HRR 1016, 9/27/10; 28 HRR 1102, 10/18/10; 28 HRR 1186, 11/8/10; 29 HRR 13, 1/10/11).
The latest FAQs are available at http://op.bna.com/dlrcases.nsf/r?Open=mcan-8fltkr.
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