EB Flash: Final Rule Provides More Flexibility For Grandfathered Group Health Plans
Employee Benefits Alert
On December 11, 2020, the Internal Revenue Service (IRS), Employee Benefits Security Administration, and Centers for Medicare & Medicaid Services issued final regulations regarding grandfathered group health plans and group health insurance coverage. The guidance provides more flexibility to make changes to certain types of cost-sharing requirements without causing a loss of grandfather status under the Affordable Care Act.
The tri-agency rulemaking finalizes without substantive change the guidance as initially proposed in July. As briefly summarized in the regulations, its two major provisions:
- Specify that any grandfathered group health plan and grandfathered group health insurance coverage that is an HDHP may change fixed-amount cost-sharing requirements, such as deductibles, without causing a loss of grandfather status, but only to the extent those changes are necessary to comply with the requirements for HDHPs under section 223(c)(2)(A) of the Code (and thus ensuring that participants and beneficiaries enrolled in the coverage remain eligible to contribute to a health savings account); and
- Provide an alternative method of measuring permitted increases in fixed-amount cost-sharing that relies on the premium adjustment percentage, rather than medical inflation, to account for changes in health care costs over time.
The final regulations are set for publication in the Federal Register on December 15, 2020. They are to take effect 30 days after publication with an applicability date of June 15, 2021.
The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.
This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.