Grandfathered health plans pros and cons

[Francis]

Can anyone comment on the pros and cons of maintaining grandfathered status for a health plan? Is losing the plan's grandfathered status that much of a negative?

[leevena]

That depends on what they employer wants to do. If an employer views their employee benefits (health plan in particular) as an important part of company, then they probably do not want to be required to operate under the new health care reform environment. This leaves them two options; the first being to become self-insured (which HC reform affects very little), or the second being to keep the grandfather status.

By the way, read the grandfathering rules, because very few, if any groups will be grandfathered. So in the end, it's either submit to health care reform, or self-fund.

Hope this helps, or answers your question.

[Guest Nate Ogden - OBA]

Can anyone comment on the pros and cons of maintaining grandfathered status for a health plan? Is losing the plan's grandfathered status that much of a negative?

You also need to look at the cost. I have seen estimates that losing grandfathered status might cost you 5-10%. 3 years of 20+% renewals are not worth saving 5-10%.

Hewitt just did a survey and 72% of employers expect to give up their grandfathered status

[leevena]

Yes, I saw the same Hewitt survey. My comment about very few should have been clarified. What I meant was that after you take into account the larger, self-funded groups that can avoid HCR, of the small (under 500 or so) very few of them will be in a grandfather status within the next few years. Hope this clarification helps.

[Francis]

Wonder if anyone has thoughts on this... I just read a technical summary from BlueCross/BlueShield on PPACA and a few select words from the document concerning non-grandfathered plan are below...

"employers pay full cost...based on recommendations of the U.S. Preventative Services Task Force and other agencies, "to be defined in future regulation", and "to be further defined by the Department of Health and Human Services".

One thought is that non-grandfathered plans could be financially riskier from the employer's perspective given some of the above open-ended wording. If a task force or government agency comes out with something that's expensive for an employer, it appears that non-grandfathered plans will not have a choice other than to follow the guidelines and pay the bill. Probably all will work out okay and the requirements will be reasonable but it seems there is added financial risk for employers with non-grandfathered plans.