When the PPACA (Patient Protection and Affordable Care Act), also known as Health Care Reform or ObamaCare, was passed one of the provisions allowed standing healthcare plans to be “grandfathered in” as long as long as they did not raise co-insurance charges, did not raise co-payment charges significantly and did not raise deductibles significantly. Well according to The Health Care Reform Survey 2011-2012 by insurance brokerage Willis Group Holdings many of those companies are now kicking “grandpa” out the door because he costs too much.
Although “grandfathered” status allowed some insulation for a health plan from certain administrative requirements and rules, including some (but not all) expanded coverage mandates many companies are now giving up that status in order to pass on costs to their employees. The U.S. Department of Health and Human Services (HHS) has been surprised at the rate companies are dropping that status. According to an article on the SHRM website posted on March 14, 2012 “The accelerated loss of grandfathered status suggests that employers have had to make many plan changes to offset cost increases and have been more willing than expected to give up grandfathered status in order to control costs.”
Many employers have indicated an increase of 2% to 5% in cumulative costs with the prime drivers being “…the provision of adult child coverage up to age 26 and the removal of the annual/lifetime limits for “essential health benefits.” Although most employers do not plan on eliminating benefits, some are considering the effect state exchanges may have on their need to supply coverage. According to Willis Group spokesperson Jay Krischbaum “the new requirements will force them to think about their benefits in a strategic manner and as part of the total rewards they use to attract, retain and motivate employees.”
If you would like to read the survey it can be found at The Health Care Reform Survey 2011-2012.
If you would like to read the SHRM article it can be found at More Drop Grandfathered Status to Control Costs.
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