Why Are Some Employers Hell Bent On Keeping Grandfather Status?

horseRecently we met with a client to discuss PPACA and implications expected in 2014. During the meeting, the CFO said “Of course, we want to maintain our grandfather status!.”

“Why do you want to do that?” I asked. “Well, tell me why I shouldn’t!” replied the CFO.

My response went something like this: “We have discussed this before. I am surprised you don’t seem to “get it.” Do you want to continue to allow the government to handcuff you, immobilize you and subject your bottom line to ever increasing health care costs by prohibiting you from properly managing your plan using prudent business practices and keeping in line with your fiduciary duties?”

I reminded the CFO that ” a  White House health reform document lists many aspects of your current health insurance plan that cannot change if you want to keep grandfathered status. For example, you:

  1. Cannot Significantly Cut or Reduce Benefits.
  2. Cannot Raise Co-Insurance Charges.
  3. Cannot Significantly Raise Co-Payment Charges.
  4. Cannot Significantly Raise Deductibles.
  5. Cannot Significantly Lower Employer Contributions.
  6. Cannot Add or Tighten an Annual Limit on What the Insurer Pays.

These restrictions leave few, if any, ways to off-set the ever-increasing cost of health insurance. And, one thing everyone agrees on is that PPACA does little, if anything, to reduce the cost of health care. As of today, it appears that the only way to offset the rising cost of health insurance is to forego the option of grandfathering.

The CFO’s final response was “You haven’t sold me yet! I’m keeping my grandfather status!”

Editor’s Note: You can lead a horse to water…………………………


From an insurance consultant:

I agree. It seems that maintaining grandfather status is perceived as a good thing, yet most can’t tell you why. They might as well tattoo “Dumb Ass” across their forehead.