Is Grandfather Status Worth It?

Employers are confused. The Patient Protection and Affordable Care Act, all 2000+ pages of it, makes for difficult reading. Even attorneys, it seems, have a hard time understanding the bill. 

Anxious employers are turning to their brokers or independent consultants to calculate how the new health care reform law will impact their plans.

The most talked about provision of the bill revolves around maintaining “Grandfathered” status. The accepted consensus seems to be “it’s better to maintain a grandfather status than to lose it.”

What we believe is that in most cases, employers will choose to forgo grandfathered status for their plans in order to maintain more control over the design of their plan. 

While Plans that qualify for grandfathered status are exempt from certain requirements, such as providing full coverage for preventive services, grandfather status prevents employers from increasing coinsurance requirements or increasing the percentage of the premium paid by the employees by more than 5% per year.

So, what is the cost impact to the employer? Do non-grandfather status mandates cost more than the ability of a grandfathered plan to avoid them…………..and retain the ability to cost shift to the employees?  The pratical implications are that being grandfathered is a very expensive proposition for most employers, and the trade-off may be nominal.

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