Proposed Rule Grants Grandfathered Health Plans More Flexibility

The Trump administration issued a new proposed rule that would provide greater flexibility to grandfathered health plans. Under the Affordable Care Act (ACA), a grandfathered health plan is not required to comply with certain patient protection provisions of the ACA, such as covering preventive benefits with no cost-share. In order to maintain grandfathered status, a health plan generally must maintain the same benefits it provided before the ACA, including by not increasing participant fixed-dollar cost-share beyond a threshold amount.

This new proposed rule would allow more flexibility in increasing cost-sharing, Currently, health plans may only increase fixed-dollar cost-share amounts, such as copays, relative to inflation. Health plans must rely on the “medical inflation” amount published by the DOL to determine the appropriate inflation rate. Critics of the current rule argue that the DOL’s medical inflation rate is not an accurate indication of inflation that private health plans face, as this rate also includes pricing for self-pay patients and Medicare patients. Under the new proposed rule, plans may rely on either the DOL’s medical inflation rate or HHS’s “premium adjustment percentage” when making cost-sharing changes to the plan. The premium adjustment percentage is similar to the medical inflation rate, except it does not reflect pricing for self-pay patients and Medicare patients.

The proposed regulations are currently open to public comment. While this proposed rule is not yet final, it would provide greater flexibility to grandfathered plan seeking to increase cost-share.