Grandfathered plans should be careful when modifying wellness programs

While employers maintaining a grandfathered health plan under the Patient Protection and Affordable Care Act (ACA) may add or modify their wellness programs, these employers should be very careful not to do anything to lose their grandfathered status, according to Larry Grudzien, an ACA expert attorney at a recent ACA Wellness Compliance webinar sponsored by ACAenroll.com.

Grandfathered status. Under Sec. 1251(a)(1) of the ACA, individuals may keep their individual and group health plans that were in effect as of March 23, 2010. Grandfathered plans are exempt from many (but not all) of the individual and group market reforms in the ACA. Interim final regulations identified six types of changes that will cause a plan to lose grandfathered status. Companies with grandfathered plans may not increase employee cost-sharing or decrease employer cost-sharing. If a plan does this, it will lose grandfathered status.

Wellness programs. Wellness plans that offer incentives to for employees to participate were greatly expanded by the ACA. A 2013 final rule increased maximum permissible rewards under health-contingent wellness programs to 30 percent of the cost of coverage, increased permissible rewards to 50 percent for programs preventing or reducing tobacco use, and provided clarification regarding plan designs and reasonable alternatives that must be offered by wellness programs to avoid discrimination, which is prohibited.

According to Grudzien, “In order to maintain grandfathered status, your plan has to stay in place, the way it was on March 23, 2010. If you increase or decrease any employer contributions to deductibles, copays or coinsurance, you will lose your grandfathered status. Therefore, you have to be very careful when designing wellness programs that include incentives. If the incentive makes the employer contribution go up or down, you could lose your grandfathered status. And then all of the ACA requirements that you were trying to avoid will come rushing in.”

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