Health Care Reform: Grandfathered status not an option for most employers

Wondering where other employers stand on the grandfathering issue? A recent survey of employers by Hewitt Associates shows that most employers expect their health plans to lose grandfathered status in the next couple of years, with 90 percent expecting to lose grandfathered status by 2014. The survey shows that just over half (51 percent) of employers with self-insured plans expect to lose grandfathered status in 2011, and nearly half (46 percent) of employers with insured plans expect to lose grandfathered status in 2011. Plan design changes were cited by 72 percent of employers as being the cause of their plan losing grandfathered status.

Tips: Grandfathered status allows your plan to avoid compliance with some federal health care reform mandates, but the rules on maintaining grandfathered status are very restrictive and will prevent you from making the kinds of plan or premium contribution changes that you need to in order to manage costs. For most employers, with the kinds of cost increases they and their plans are experiencing, it simply won’t be feasible to hang on to grandfathered status for more than a year or two at the most. If you’re not sure whether grandfathering is best for your business, contact Kristine Cienfuegos at Vigilant for assistance.