Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

This is the eighth in a series of articles about health care reform.

This Q&A focuses on new joint interim final regulations from the Internal Revenue Service, the Department of Labor, and the Department of Health and Human Services. The regulations address the internal and external benefit claims review procedures for nongrandfathered group health plans.

Q.1 Which employer sponsored plans must comply with these regulations?
A.1 These regulations apply to nongrandfathered group health plans—including insured plans, self-funded plans, church plans and nonfederal governmental plans—offering health benefits to employees. A nongrandfathered group health plan is a health plan that was not in existence on March 30, 2010, or one which has made changes relinquishing its grandfathered status. Go here to read more about retaining or relinquishing grandfathered status.

Q.2 Does this include cafeteria, vision-only or dental-only plans?
A.2 Plans that offer “excepted benefits” are not subject to these claims procedure regulations. Most vision-only, dental-only and limited medical flexible spending arrangements are considered “excepted benefits” and therefore plans offering such benefits are not considered group health plans for purposes of the claims procedures. Of course, since the procedures apply only to health plans, 401(k) plans and other pension plans do not need to implement them.

Q.3 Who is responsible for implementing compliant claims procedures?
A.3 If either the plan or insurer complies with the internal claims procedure regulations, then both are considered compliant. Therefore, most employers will probably rely upon their health plan insurer to implement compliant procedures. Only the insurer needs to comply with the external claims procedures for an insured plan. A self-funded plan must comply with both the internal and federal external claims procedure regulations.

Q.4 What changes must be made to the internal claims process?
A.4 Six new requirements have been added to the existing ERISA claims procedures:

-A rescission is now considered an adverse benefit determination and is subject to appeal under the claims procedures.

-Urgent care claims must now be decided within 24 hours of receipt in most cases. The timeframe was previously 72 hours.

-Claimants must be allowed to receive the claim file and be given any new evidence (or rationale) relied upon, considered or generated in the claim process sufficiently in advance of the plan’s decision to be able to respond to the information.

-Stricter standards for avoiding conflicts of interest to ensure independence and impartiality of the claim reviewer must be followed.

-Benefit denial notices must contain more information, such as dates, treatment/diagnosis/denial codes, identification of health care provider and discussion of the determination process, in a “culturally and linguistically appropriate manner.” Model notices in English can be found here and, if a significant portion of employees cannot read English, substitute notifications in a non-English language must be provided.

-A plan’s failure to adhere strictly to all of the internal claims processes will result in “deemed exhaustion” by a claimant of internal claims procedures. Claimants can then pursue external review or judicial review without further exhaustion of the claims procedures, and any decision by the plan or insurer will be reviewed de novo rather than under a more plan-friendly abuse of discretion standard (learn more here). During the internal review and appeals process, the plan must continue to provide coverage pending the outcome of the appeal.

Q.5 When must internal claims procedures be modified?
A.5 Although the modifications should be effective for plan years beginning on or after September 23, 2010 (January 1, 2011, for calendar year plans), a September 20, 2010, technical release from the DOL has provided an enforcement safe harbor for items II, V and VI above. If a group health plan works in good faith to implement these standards, then the DOL, IRS and DHHS will not take enforcement action against it in connection with these standards.

Q.6 How are state external review procedures affected?
A.6 Insurers subject to state regulation must follow state external review procedures if they meet minimal standards established in the regulations. These minimal standards address issues of timing, notice, conflict of interest, assignment of independent reviewer organizations (IROs), state or issuer payment of review costs and prohibition of a minimum claim amount threshold. A state which does not currently require external review procedures which meet these requirements will need to amend its laws to be compliant. If the state procedures are not compliant or if the state does not have such procedures, then insured plans must follow the federal procedures. Plans not subject to state regulations, such as self-funded medical plans, may choose to use compliant state procedures or can use federal procedures if a state makes these procedures available to such plans. Existing state procedures are considered compliant until plan years beginning on or after July 1, 2011. The DHHS will be evaluating state procedures and will list on this Web site state programs that meet federal standards.

Q.7 What do the federal external review procedures require?
A.7 On August 23, 2010, the Employee Benefits Security Administration (EBSA), the enforcement agency within the DOL focused on ERISA, published Technical Release 2010-01. It provides guidance on an interim enforcement external review procedure safe harbor for nongrandfathered, self-insured group health plans. The safe harbor applies to plan years beginning on or after September 23, 2010, and runs until it is superseded by future guidance. Under the guidance, the DOL and IRS will not take action against a plan that follows a compliant state procedure or a method that meets the requirements set forth in the guidance.

Under the guidance, within five business days of receipt of a claim, a plan must perform a preliminary review of a claim. To be timely, the claim must be submitted within four months after an adverse benefit determination. The preliminary review checks for exhaustion of appeals, forms submitted and the eligibility of the claimant under the plan. Next, the claim must be assigned on a random or rotating basis to one of at least three IROs with whom the plan must contract. The guidance details the required content of such contracts, including time lines and procedures for reviewing claims. The IRO will then make a benefit determination according to the standards in the guidance as incorporated into the contract. An expedited process is detailed for urgent care claims.

Q.8 What actions should employers take?
A.8 Fully insured plans should verify that the insurance company has or will have in place compliant internal review procedures. As even de minimus noncompliance with internal review procedures results in deemed exhaustion of the review process, plan administrators need to fully understand the procedures that apply to their plan and to train benefits personnel as needed. Additionally, all plan sponsors should evaluate the extent to which notifications will be required to be available in a foreign language.

Self-funded plans will need to incorporate these new internal review procedures into their documents. They will also need to implement either the federal external review process or, if available, the state external review process. Current Minnesota external claims review law can be found at Minn. Stat. 62 Q. 73, which you can view here.

 

This is the seventh in a series of articles about health care reform.

Q.1 What do the new rules require?
A.1 The new rules require nongrandfathered group health plans and group and individual health insurance polices see previous grandfathered article to provide certain preventive services to enrollees under the plan without cost-sharing. Generally speaking, this means that preventive care must be provided without charges such as co-pays, co-insurance or deductibles. However, see Question 3 for some exceptions to this general rule.

Q.2 What services are considered preventive for purposes of this mandate?
A.2 The regulations pull in recommendations from existing governmental agencies to determine what constitutes preventive care, specifically:

-Services with a rating of A or B in the current recommendations of the United States Preventive Services Task Force,

-Routine immunizations for children, adolescents and adults as recommended by the Centers for Disease Control and Prevention,

-Preventive care and screenings for infants, children and adolescents under guidelines supported by the Health Resources and Services Administration (HRSA), and

-Screenings for women that are being developed by the Department of Health and Human Services and are expected to be issued no later than August 1, 2011.

These guidelines will be available in a Web site that plans can review annually. A newly recommended service will not be required to be covered until the plan year beginning 12 months after the recommended service is added to the list. Therefore, plans would have to update their preventive care offerings only once a year.

Q.3 Are there situations in which a plan can charge enrollees for preventive services?
A.3 There are a couple situations in which a plan can impose patient cost-sharing charges for preventive services.

First, a plan can limit the preventive services covered without charge to in-network providers. Therefore, enrollees obtaining preventive services from out-of-network providers can be required to pay the ordinary out-of-network deductibles and other cost-sharing charges.

Second, there is a special rule for charging for the office visit. According to the regulations, if the primary purpose of an office visit is something other than preventive care but an enrollee receives preventive care as part of the office visit, the enrollee can be required to pay for the office visit. For example, if an enrollee sees a physician for the primary purpose of treating the enrollee’s diabetes and, if in connection with that visit, the enrollee’s blood pressure is taken, the plan can require the enrollee to pay for the office visit even though blood pressure monitoring is generally considered preventive care. On the other hand, if the primary purpose of the office visit is preventive care, the plan cannot impose a cost-sharing charge on the enrollee for the office visit unless the plan imposes charges separately for the preventive services and the office visit. The regulations give the example of an office visit in which the enrollee receives a cholesterol screening test that is separately billed. In that situation, the plan cannot impose cost-sharing charges on the enrollee for the cholesterol test but can impose such charges for the office visit.

It is difficult to know how often this office visit charge can be imposed with respect to preventive services. Some of the items covered as preventive services include blood pressure screening (as mentioned above), obesity and tobacco counseling, screening for depression and counseling for a healthy diet. Currently, most providers do not generally bill these items separately from the office visit itself. If that is the case, then it is unlikely that the plan could require the enrollee to pay anything for an office visit, the primary purpose of which was preventive services, even if certain services (such as a cholesterol screening blood test) are separately billed. On the other hand, if an enrollee schedules a preventive visit, then raises during the visit a medical concern that results in a diagnosis and treatment (e.g., a nagging cough or sore throat that is diagnosed and treated during the visit), there may be disputes about the “primary purpose” of the visit. Enrollees who disagree with the plan’s determination of the primary purpose of a visit may appeal that decision under the plan’s claims review procedures.

Q.4 Can a plan impose limits on the frequency, method, treatment or setting for preventive care?
A.4 Yes. The regulations allow a plan to impose reasonable medical management techniques with respect to preventive services. Therefore, a plan can limit the number of screenings it will cover without additional charges to the enrollee and can limit the preventive coverage to in-network providers.

Q.5 What if the guidelines change and a particular service is no longer a preventive service? Can the plan drop that service?
A.5 A plan is not required to provide as a free preventive service a service that the government no longer lists as preventive on its Web site. However, under health care reform, a reduction in plan benefits can be imposed only after 60 days’ advance notice is given to the enrollee. Therefore, a plan will have to give that advance notice before dropping the benefit or imposing cost sharing for it.

Q.6 When is this new mandate effective?
A.6 For nongrandfathered plans, these new rules are effective for plan years/policy years beginning on or after September 23, 2010, or as of January 1, 2011, for calendar-year plans.

 

This is the fifth in a series of articles about health care reform.

Q.1 What is a grandfathered plan?
A.1 A grandfathered plan is a group health plan or individual insurance policy that was in existence on March 23, 2010. These plans are able to take advantage of certain delayed effective dates for changes required by the health care reform law and, in other cases, the waiver of requirements for as long as grandfathered status is retained. This article focuses only on retaining grandfathered status. For more information about grandfathered plans, please see our previous article here.

Q.2 Can changes be made to the benefits offered under a grandfathered plan?
A.2 The elimination of all or any necessary element of a benefit to diagnose or treat a particular condition will cause a plan to lose grandfathered status. For example, eliminating counseling services previously offered under the plan to treat, in conjunction with medication, a particular mental health condition will result in the loss of grandfathered status. There does not appear to be a prohibition against increasing the types of benefits offered, subject to the cost limitations discussed below. Please see the previous grandfathered plan article for required changes to annual/lifetime limits. No new annual or lifetime limit may be added to a grandfathered plan without losing grandfathered status. Plans which previously imposed an annual limit may not decrease the dollar value of that limit. A plan with a previous lifetime limit may impose an annual limit on the dollar value of benefits as long as it is not lower than the dollar value of the lifetime limit on March 23, 2010.

Q.3 Can changes be made to who is covered under a plan?
A.3 Employees enrolled in the plan can add family members during open enrollment or other eligible enrollment times. New employees, including newly hired and newly enrolled employees, may also be added to the plan. Caution should be taken during any mergers or acquisitions if maintenance of grandfathered status is a goal. Grandfathered status will be lost if the primary purpose of a corporate transaction or change in eligibility rules is to transfer or sell the grandfathered status. If at any time no person is covered by an option under the plan, that option shall lose grandfathered status.

Q.4 Can changes be made to eligibility criteria for employees/covered beneficiaries?
A.4 The elimination of a group of employees from eligibility to participate in a grandfathered plan and subsequent transfer to another plan or option will result in the loss of grandfathered status for both plans if there is no employment-based reason for the change in eligibility.

Q.5 Can changes be made to the plan design in terms of cost-sharing with employees?
A.5 Limited changes may be made to the plan design affecting cost-sharing between employees and employers.

-No increase in a percentage-based cost-sharing formula (such as a co-insurance requirement) can be made without losing grandfathered status.

-For fixed amount cost-sharing other than co-payments, increases which cause a total percentage increase in the cost-sharing required above the “maximum percentage increase” will result in the loss of grandfathered status. The “maximum percentage increase” means medical inflation plus 15 percentage points. Medical inflation is the overall medical care component of CPI-U.

-For fixed-amount co-payments, grandfathered status will be lost if the total increase in the co-payment exceeds the greater of: A) an amount equal to $5 times medical inflation plus $5 or B) the maximum percentage increase determined by expressing the total increase in the co-payment as a percentage.

-Finally, grandfathered status will also be lost if the employer decreases its contribution rate (percentage of contributions paid) towards the cost of any tier of coverage for any class of similarly situated individuals by more than 5% below the contribution rate in place on March 23, 2010.

Q.6 What if the plan has already made changes since March 23, 2010?
A.6 Any changes that were adopted before March 23, 2010, even if effective after March 23, 2010, are considered part of the grandfathered plan in effect on March 23, 2010. Any changes that normally would result in the loss of grandfathered status that have been approved or made since March 23, 2010, but before the publication of the regulations and that are revoked before the first day of the plan year on or following September 23, 2010, will not affect the plan’s grandfathered status.

Q.7 Are all benefit options treated the same?
A.7 Different benefit options or structures within the same plan are considered separately in determining grandfathered status. For example, if a company health plan offers a preferred provider option and a high deductible/HRA option, either option could retain or lose its grandfathered status independently from the other.

Q.8 How is insurance maintained pursuant to a collective bargaining agreement treated?
A.8 Health insurance coverage maintained pursuant to a collective bargaining agreement is grandfathered until at least the date on which the last of the collective bargaining agreements relating to the coverage that was in effect on March 23, 2010, expires. The insurance policy need not be the same policy in effect on March 23, 2010, as long as each policy conforms to the collective bargaining agreement. After the collective bargaining agreement expires, the coverage in place at that time will be compared to the coverage that was in effect on March 23, 2010, in order to determine if grandfathered status will continue to be retained. Self-insured plans maintained pursuant to a collective bargaining agreement will be subject to the normal grandfathered plan rules.

Q.9 Are there recordkeeping and disclosure requirements to retain grandfathered status?
A.9 To retain grandfathered status, a plan must disclose to participants during the first plan year beginning on or after September 23, 2010, the fact that it believes it has grandfathered status in any communication describing the benefits provided under the plan along with contact information for questions and complaints. The regulations contain model language that can be used for this disclosure. Additionally, a plan must maintain records documenting the terms of the coverage in effect on March 23, 2010, and all subsequent amendments to the plan for as long as grandfathered status is retained. Regulators, such as Health and Human Services or the Treasury, as well as plan participants, have the right to inspect the documents.

Q.10 Does it make sense to retain grandfathered status? Do insured plans have much choice?
A.10 Plan sponsors should carefully consider whether trying to retain grandfathered status is beneficial for their company. The costs associated with retaining grandfathered status should be compared to the cost of complying with all of the health reform provisions. The intangible costs associated with the flexibility allowed by relinquishing grandfathered status should also be considered in the context of the makeup of each employer’s workforce. The intangibles include the ability to change to a provider who offers a lower cost product or the ability to amend the benefits provided. However, for insured plans, the decision to retain grandfathered status may ultimately be made by the insurance company. If insurers choose not to offer two different types of products (reform compliant and grandfathered compliant), then the employers will have no choice but to purchase the reform compliant plans and lose grandfathered status. As mentioned above, changing insurers will cause a plan to lose grandfathered status, as will failing to renew the same policy with the same insurer. Therefore, if the insurance company decides not to offer the same insurance policy anymore, the employer will be forced to give up the grandfathered status of its health plan.
Stay Tuned
We will address other noteworthy topics related to Health Care Reform in future articles. In the meantime, if you have any questions about retaining grandfathered plans, contact one of the Compensation and Employee Benefits attorneys below or the Leonard, Street and Deinard attorney with whom you regularly work.

Go to Health Care Reform page.

This is the fourth in a series of articles about health care reform.

Q.1 I have heard that there are provisions in the Act to encourage the development of wellness programs in health plans. Is that true?
A.1 Yes. One provision in the Act requires the Secretary of Health and Human Services to develop requirements for group health plans and other health insurance issuers to report on plan provisions to improve health outcomes through activities such as case management, the use of medical homes, etc. Group health plans would also have to report on their wellness and health promotion activities, including efforts around smoking cessation, weight management, stress management, physical fitness, nutrition, heart disease prevention, healthy lifestyle support and diabetes prevention. These reports will be available to the public generally and to enrollees during open enrollment periods. Grandfathered health plans will not need to file these reports. See our previous article regarding grandfathered plans here.

The reporting requirement is generally in effect for plan years after September 23, 2010, or January 1, 2011, for calendar year plans. However, since compliance depends to a certain extent on the issuance of regulations, it is unclear when the first reports will be required.

Q.2 I have also heard that the Act makes it easier for employers to apply penalties to employees who choose not to participate in wellness programs. Is that true?
A.2 Yes, that is generally true. The Act codifies the general regulatory provisions on wellness programs that became effective for plan years beginning on or after July 1, 2007. Those regulations provide no limit on the amount of a wellness incentive or penalty if the incentive or penalty is not based on the results of satisfying a health standard, e.g., if an award is available to participants who learn their cholesterol level without regard to whether the level is high or low. If a program provides a reward based on satisfying a health standard, then under the Act the same general requirements of the prior regulations must be met, specifically, the program must be designed to improve the health or prevent disease of participating individuals; it must not be overly burdensome; it must not be a subterfuge for discrimination based on a health factor; and it cannot be highly suspect in the method chosen to prevent disease or promote health. The program must give individuals the opportunity to qualify for the reward at least once a year. The program must provide a reasonable alternative standard or waiver for any individual for whom it is unreasonably difficult to meet the standard. Program materials must describe the standard and the availability of the alternative.

The regulations allow for a reward or penalty of up to 20% of the cost of the health care coverage, considering both the employer’s and the employee’s share of the premium. Under the Act, effective for plan years beginning on or after January 1, 2014, the reward can be up to 30% of the cost of the employer and employee premiums under the plan. If in addition to covering the employee as a participant in the wellness program, any class of dependents can also participate, the reward cannot exceed 20% (30% effective in 2014) of the cost of coverage for the employee and the dependents. In addition, the Secretaries of Labor, Health and Human Services, and the Treasury may increase the reward/penalty available to up to 50% of the employer and employee premiums if they determine that such an increase is appropriate. These provisions will give employers greater latitude in designing their wellness programs.

Q.3 Are there other ways in which wellness programs are encouraged under the Act?
A.3 Yes. The Secretary of Health and Human Services is required to develop demonstration projects by 2014 to test the effectiveness of wellness programs. In addition, wellness services (together with preventive and chronic disease management services) are part of “minimum essential services” that health plans must provide if they want to participate in the insurance exchanges that will be established in each state. The Secretary of Health and Human Services must determine which services are essential, but wellness services of some type will be part of that mix. There are also provisions in the act to reward wellness strategies in the Medicare program. It should be noted, however, that although workplace wellness programs are to be encouraged, they cannot be mandated under the statute.

Q.4 Are there any new limits on wellness programs?
A.4 Yes. Under the Act, a wellness and health promotion activity that is reportable under Question 1 is not allowed to require the disclosure or collection of any information relating to the presence or storage of lawfully possessed firearms or ammunition in the residence or on the property of an individual or the lawful use, possession or storage of firearms or ammunition by an individual. The activity cannot collect the information and the information cannot be a factor in setting premium rates or eligibility for health insurance. Among other things, this may mean that health risk assessments will not be able to ask about the presence of guns in the household.

Q.5 I heard that the new law contains a provision for small businesses to get grants to provide wellness programs. Is this true?
A.5 Yes. The Act requires the Secretary of Health and Human Services to award grants to employers for comprehensive workplace wellness programs. The grant program will be in effect for five years and will be available to employers, including nonprofit employers, who employ fewer than 100 employees working 25 hours or more per week and who were not providing a workplace wellness program on March 23, 2010, the date of enactment. The Secretary must develop the criteria for a comprehensive workplace wellness program, but such a program must include components such as health awareness initiatives (including health education, preventive screenings and health risk assessments), efforts to maximize employee engagement, initiatives to change unhealthy behaviors and lifestyle choices, and a supportive environment, including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity and improved mental health. Employers will have to apply for the grants under application procedures yet to be developed. For fiscal years 2011 through 2015, $200,000,000 is appropriated. The program will end if amounts are expended before then.

Q.6 Does the Act answer all the legal questions that have been raised about wellness programs?
A.6 No. While portions of the Act encourage wellness programs, the law does not amend or repeal other laws that have made designing a legally compliant wellness program a challenge. For example, the Americans with Disabilities Act (ADA) prohibits medical inquiries that are not voluntary. The EEOC has said that penalties for failing to complete a health risk assessment may make completion of the health risk assessment involuntary. The Act does not resolve this conflict or other conflicts between encouraging wellness incentives and meeting other legal requirements.

Go to our Health Care Reform page to read other articles about the new health care reform law.

The article was reprinted with permission from Employee Benefit Plan Review.

 

This is the second in a series of articles about health care reform.

Q.1 What is a grandfathered plan?
A.1 Group health plans in effect on March 23, 2010, are considered grandfathered plans. Having grandfathered plan status significantly affects the application of health care reform. Certain deadlines for changes are extended and other changes do not apply at all. Interestingly, the Patient Protection and Affordable Care Act (PPACA) focuses on a covered individual’s ability to maintain the same coverage in place at the time of enactment, rather than an employer’s right to maintain existing plans.

Q.2 So how does an employer maintain a plan’s grandfathered status?
A.2 As with the implementation of many other aspects of health care reform, the finer details pertaining to retaining grandfathered status are still to be determined. It is clear that enrolled individuals may add family members to their coverage if on March 23, 2010, the plan permitted this enrollment. It is also clear that new employees and their families can be enrolled without jeopardizing the plan’s grandfathered status. Apart from these two allowances, PPACA is silent on the changes that may be made to a grandfathered plan without losing grandfathered status or even if grandfathered status can be lost. There is hope that some design changes are permissible, because earlier versions of health reform bills expressly prohibited changes. But before more guidance on this is issued, any changes to a grandfathered plan should be very carefully considered.

Q.3 Why does maintaining grandfathered status matter?
A.3 Grandfathered plans will have delayed effective dates for certain changes and may never have to make other changes. However, there are still provisions that apply to these plans and some changes will occur (see Q&As below). Certain features of PPACA take effect for grandfathered and other plans as of the first day of the plan year that begins six months after enactment (September 23, 2010). For a calendar year plan, the first plan year beginning after September 23, 2010, will begin January 1, 2011. Other changes must be made to grandfathered and other plans in later years.

Q.4 Can a grandfathered plan have annual or lifetime limits on benefits?
A.4 No. Effective for plan years beginning after September 23, 2010, no grandfathered or other plan may place lifetime limits based upon the dollar value of “essential benefits.” Essential benefits is a term that will be defined by the Secretary of Health and Human Services and must include services in ten categories of coverage: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services. Dollar-based annual limits can only be imposed upon essential benefits until 2014 to the extent permitted in guidance to be issued by the Secretary. After 2014, no dollar-based annual limits may be imposed on essential benefits. Certain benefits not considered essential can be subject to dollar-based lifetime and annual limits. It appears that both essential and nonessential benefits can still have non-monetary based limits (i.e., number of visits). These requirements may increase the cost of insured plans and will make stop-loss insurance more critical for self-insured plans.

Q.5 What changes regarding dependent coverage must be made?
A.5 For plan years beginning after September 23, 2010, if coverage is offered for dependent children it must be extended to adult children up to age 26. But grandfathered plans need only offer this coverage to adult children who are not eligible for their own employer provided coverage. Beginning in 2014, these dependent children must be allowed in all employer plans (whether or not grandfathered) regardless of whether or not they are eligible for other employer provided coverage. For more discussion on this coverage requirement, read our first Health Care Reform Series article.

Q.6 What about pre-existing condition exclusions?
A.6 No plan, grandfathered or new, may impose pre-existing condition exclusions on children under the age of 19 for plan years after September 23, 2010. This prohibition on pre-existing conditions exclusions expands to apply to all individuals regardless of age in 2014, for both grandfathered and other plans.

Q.7 Are eligibility waiting periods affected?
A.7 In 2014, waiting periods for eligibility purposes may not exceed 90 days for grandfathered or other plans.

Q.8 Are rescissions of coverage allowed?
A.8 For plan years after September 23, 2010, grandfathered and other plans may not rescind coverage unless the covered individual committed fraud or made an intentional misrepresentation of a material fact. A rescission is retroactive cancellation of coverage after an individual has submitted claims. This provision does not prevent an employer from completely terminating a plan.

Q.9 What are the requirements for a new plan or plan that has lost its grandfathered status?
A.9 In addition to the provisions discussed above, there are some provisions only applicable to new plans or plans that are unable to retain grandfathered status. We won’t address the full scope of these provisions here, but we will direct your attention to a few key ones. Along with the above mentioned reforms, changes to the claims appeals process will alter the continuation of benefits during appeals and incorporate external reviews. Additional restrictions on pre-approval requirements are added. Cost sharing for coverage of certain preventive care and immunization benefits will no longer be permitted. Of significant concern to some employers, Internal Revenue Code § 105(h), a tax code provision that now applies only to self-funded health plans, will apply to all non-grandfathered plans. This code section applies nondiscrimination requirements relating to coverage, eligibility and benefits under health plans. This means that fully insured non-grandfathered plans will not be able to discriminate in favor of highly compensated employees.

Stay Tuned
As with most provisions in health care reform, the sections applicable to grandfathered plans will need clarification through administrative guidance. For more information, contact one of the Compensation and Employee Benefits attorneys below or the Leonard, Street and Deinard attorney with whom you regularly work.

Go to Health Care Reform page.