The government has issued a new regulation that allows individuals and businesses more control over their own health plans.
The new "grandfather" regulation, issued by the Departments of Health and Human Services, Labor and Treasury, provides stability and flexibility to insurers and businesses that offer health insurance coverage as the nation transitions to a more competitive marketplace in 2014, when businesses and consumers will have more affordable choices through exchanges.
While the Affordable Care Act requires all health plans to provide new benefits to consumers, under the law, plans that existed as of March 23, 2010 are exempt from some new requirements. The "grandfather rule" makes it clear that these plans can continue to innovate and contain costs by allowing insurers and employers to make routine changes without losing grandfather status.
Plans will only lose their grandfather status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers – and consumers in plans that make such changes will gain new consumer protections.
"The Affordable Care Act gives American families more control over their healthcare by providing greater benefits, cost savings and protections," said HHS Secretary Kathleen Sebelius. "With the announcement of the new grandfather rule, we're providing the market stability and flexibility to ensure that families and businesses can make the choices that work best for them."
"The rule we are announcing will allow employers to make routine and modest adjustments to co-payments, deductibles and employer contributions to their employees' premiums without forfeiting grandfather status. This flexibility will encourage employers to continue offering health coverage to their employees and help to ensure coverage for all Americans," added Labor Secretary Hilda Solis.
Routine changes include cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustments to existing benefits, voluntarily adopting new consumer protections under the new law, or making changes to comply with state or other federal laws. Premium changes are not taken into account when determining whether or not a plan is grandfathered.
"The Affordable Care Act positions consumers, instead of insurance companies, as decision makers when it comes to their healthcare," said Assistant Treasury Secretary for Tax Policy Michael Mundaca. "The rule we're announcing preserves individuals' ability to keep their current plan and provides strong consumer protections that give Americans more control over their health insurance choices."