U.S. companies that were initially hopeful about preserving much of their existing group health plans under the new grandfather provision have changed their tune, a recent survey reveals.
Hewitt Associates’ poll of 466 companies shows that 90% of companies said they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.
Under the “grandfather” provision of the U.S. Patient Protection and Affordable Care Act, companies can maintain many of their current health care coverage provisions and are required to make fewer changes to plan documents and administrative procedures in order to comply with the new law. Companies can lose their grandfather status if they take certain steps such as reducing benefits, significantly raising co-payment charges, significantly raising deductibles or changing insurance carriers.
“Employers reviewing their existing health care strategies in light of reform are focused on answering two questions: what changes do I need or want to make to my health care plans; and how can I make them without significantly increasing costs?” says Ken Sperling, leader of Hewitt’s health management practice.
“After assessing the grandfather provision, large companies realize they already comply with many of the requirements of non-grandfathered plans, so the changes they’ll need to make aren’t likely to add a significant cost or administrative burden. Most large employers would rather have the flexibility to change their benefit programs than be tied down to the limited modifications allowed under the new law.”
