Tag Archive for: Benefits

Maintaining Grandfathered Health Plan Status

Group health plan coverage that was in place on March 23, 2010 (the date that health care reform was enacted), and continuously thereafter are exempt from some health care mandates that otherwise apply to group health plans. This rule providing exemption is known as the “grandfather rule,” thus the plans are referred to as grandfathered health plans.

However, plans can permanently lose grandfathered status if certain coverage or design changes are made. As a result, employer-sponsors who wish to preserve a plan’s grandfathered status should understand the plan design changes that are permissible and must take care to avoid implementing any change that would cause an unintended loss of grandfathered status.

The Significance of Grandfathered Status
Grandfathered health plans are exempt from some, but not all, of the health care reform mandates. This includes the patient protection provisions; the appeals and external review processes; coverage of preventive health services and the ten categories of essential health benefits; and the guaranteed renewability and availability requirements. Importantly, other mandates apply regardless of a plan’s grandfathered status, which include the prohibitions on rescissions of coverage and annual and lifetime limits; the requirement to provide dependent coverage up to age 26; the 90-day limit on waiting periods; and the distribution requirement of Summaries of Benefits and Coverage (SBCs).

Because these plans remain subject to some health care reform mandates, the decision as to whether to maintain grandfathered status requires a cost-benefit analysis by the employer-sponsor on an ongoing basis. The advantages of avoiding the application of some mandates will need to be weighed against the considerable constraints that are placed upon the plan’s design and flexibility.

Plan Changes That Jeopardize Grandfathered Status
The regulations governing grandfathered health plans contain detailed rules regarding the plan design changes that will cause a loss of grandfathered status. Grandfathered status is lost as of the effective date of the impermissible plan design change and once lost, it cannot be regained.

  • (1) Elimination of Benefits
    The elimination of all or substantially all benefits under a plan to diagnose or treat a particular medical condition will cause a loss of grandfathered status. There is no clear rule for determining whether a plan has eliminated substantially all benefits to diagnose or treat a condition; rather, the determination is made based on facts and circumstances, with consideration to the coverage that was in place on March 23, 2010, as compared to the benefits that would be in place following the change.
    Changes in prescription drug formularies may constitute an impermissible elimination of benefits if the change eliminates drugs used to treat a particular medical condition.
  • (2) Any Increase in Percentage Cost-Sharing
    Any increase in percentage cost-sharing under the plan, such as an increase in coinsurance, will cause a loss of grandfathered status. The increase is measured from the cost-sharing in place as of March 23, 2010.
  • (3) Increase in Fixed-Amount Cost-Sharing
    Increases in fixed-amount cost-sharing, like deductibles and out-of-pocket limits, that exceed 15% above medical inflation will cause a loss of grandfathered status. Increases may be determined by reference to the greater of either: 1). The overall medical care component of the Consumer Price Index for All Urban Consumers published by the Department of Labor; or, 2). the most recent premium adjustment percentage published by the Department of Health and Human Services.
    Plans may make increases to fixed-amount cost-sharing that are necessary to maintain the plan’s high deductible (HDHP) status without jeopardizing grandfathered status.
  • (4) Decrease in Rate of Employer Contributions
    A decrease in the rate of employer contributions by more than five percentage points below the contribution rate in place on March 23, 2010, will cause a loss of grandfathered status. Changes to the rate of employer contributions may occur where the employer changes its contribution formula, or where the employer implements a wellness program or working-spouse carve-out that incorporates premium surcharges.
    Because any decrease in employer contributions is measured against the rate in place on March 23, 2010, an employer can decrease its contribution rate across multiple plan years so long as the cumulative reduction does not exceed five percentage points.

Changes that are not expressly prohibited by the regulations will not cause a loss of grandfathered status. Therefore, an employer-sponsor may make a change not listed here without impacting the grandfathered status of their plan.

Plan Changes in Response to the COVID-19 Emergency Period
Special guidance was provided to grandfathered health plans in light of the COVID-19 public health emergency. To the extent a group health plan added benefits, or reduced or eliminated cost-sharing, for COVID-19 diagnosis and treatment or for telehealth and other remote care services, its grandfathered status would not be jeopardized if these coverage changes are later reversed following the end of the emergency period. In other words, even though reversing these changes might ordinarily constitute an impermissible elimination of benefits or an increase in cost-sharing, it will not adversely affect a plan’s grandfathered status.
Preparing for the Loss of Grandfathered Status
There are many reasons why an employer-sponsor may choose to relinquish a health plan’s grandfathered status. For example, the costs of maintaining the employer contribution rates may become too high when faced with rising coverage costs, the employer may prefer to work with a third-party administrator that isn’t able to accommodate a grandfathered plan design, or the employer may be contemplating a business reorganization that will necessitate plan design changes.

Regardless of the rationale, employer-sponsors should prepare for the loss of grandfathered status to avoid unintended violations of health care reform mandates. Plan details should be reviewed to ensure adequate coverage for preventive care services and essential health benefits; plan documents, SPDs, and SBCs should be amended to reflect the effective date of the loss of grandfathered status; and any plan service providers, like claims administrators or other third-party administrators, should be promptly notified.

Click here to download a copy of this AHERN Benefits Brief.


*This Benefits Brief is not intended to be exhaustive, it is for informational purposes only and should not be considered legal or tax advice. A qualified attorney or other appropriate professional should be consulted on all legal compliance matters.

It is my pleasure to extend to you a warm invitation to our upcoming virtual HR Leaders Compliance Summit (HRLCS 2023), which starts next Tuesday, March 7, 2023!

Over the course of this summit, you will hear from numerous subject matter experts that specialize in various HR-related disciplines covering topics ranging from labor & employment regulation updates, employee benefits trends, and human capital management best practices…all made infinitely more complex given today’s unprecedented times.  Each day is also pre-approved by SHRM/HRCI for 2 hours of continuing education (CE) credits.

We are also extremely excited to welcome Robin Arzón and Mike Abrashoff as our keynote speakers.  In addition to both being New York Times best-selling authors, Robin and Mike lend a valuable and unique series of insights to the challenges facing HR teams and their organizations today.  We are thrilled to have them participating in this year’s event!

For a full agenda overview, along with registration information, please visit the HRLCS 2023 event registration site.  When registering, please be sure to use our agency’s complimentary code of AIB to waive the admission cost.

We look forward to seeing you next week at HRLCS 2023!

Plan sponsors of group health plans providing prescription drug coverage to individuals who are eligible for Medicare Part D prescription drug coverage are required to satisfy certain notice requirements.

Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the prescription drug coverage is creditable.

The creditable coverage disclosure notice alerts individuals as to whether their plan’s prescription drug coverage is at least as good as the Medicare Part D coverage (in other words, whether their prescription drug coverage is “creditable”). Medicare beneficiaries who are not covered by creditable prescription drug coverage and who choose not to enroll in Medicare Part D before the end of their initial enrollment period will likely pay higher premiums if they enroll in Medicare Part D at a later date.

CMS has provided two model notices for employers to use:

Please click here to continue reading our AHERN Benefits Brief. This Benefits brief covers how to determine whether a prescription drug plan is creditable, notice requirements, whether there is a penalty for noncompliance, as well as CMS reporting.

It is our pleasure to extend to you a warm invitation to our upcoming virtual HR Leaders Compliance Summit in early February!

This year’s event is an expanded virtualization of a longstanding on-site gathering of Acrisure Agency Partner offices and the transformational Human Resources professionals they support. Over the course of this summit, you will hear from numerous subject matter experts that specialize in various HR-related disciplines including labor regulations, employee benefits trends, and human capital management best practices. Coming off the heels of 2020, we think you will find the agenda to be timely, relevant, and impactful.

We are also extremely excited to welcome Annie Duke as our keynote speaker on February 9, 2021. In addition to being a nationally recognized bestselling author and the only woman to have won the World Series of Poker Tournament of Champions, Annie is a respected decision strategist and business thought leader. Her background and expertise lend a valuable and unique series of insights to the challenges facing HR leaders and their organizations today.

Below is a general overview regarding topics that will be covered, as well as our keynote speaker. To view the detailed agenda, or for more information on how to register, please click here.

Here’s to a prosperous year of partnership in 2021!



AHERN Insurance Brokerage and Acrisure Compliance Solutions are excited to present the third edition (Sept-Dec) of our webinar series calendar for 2020. These webinars are open to anyone interested in learning more about these topics. Registration links to each webinar are linked below.


Navigating the Complex Landscape of Wellness Programs

Wellness programs encompass a wide variety of benefits and present a particularly challenging set of regulations and requirements for employers. During this webinar, we’ll cover common features of wellness programs, highlight important compliance considerations, and offer tips for tackling some of the trickiest issues.

Speaker: Deborah Hyde, JD

September 17, 2020

2:00 pm EST


Timely ADA Issues for Employers

The ADA continues to evolve as one of the more complicated components of Human Resources made even more difficult for employers as a result of the pandemic. This webinar will analyze some of the difficult traditional areas of the ADA to administer, as well as some novel issues that only exist as a result of the COVID-19 pandemic.

Speaker: Jeremy Hertz, JD

October 15, 2020

2:00 pm EST


2020 ACA Reporting: Preparations for ALEs and Sponsors of Self-Insured Coverage

As employers begin preparing for another year of ACA reporting under Internal Revenue Code Sections 6055 and 6056, we will provide an overview of the reporting requirements, detail the mechanics of the reporting process, cover state-specific reporting requirements, and discuss IRS actions related to these obligations. This webinar is suitable for both experienced employers and employers new to the reporting process.

Speakers: Deborah Hyde, JD and Colleen Gole, JD

November 19, 2020

2:00 pm EST


HR Considerations for 2021

2020 was a rollercoaster for employers and Human Resources departments as a result of the COVID-19 pandemic. Heading into 2021 there are many issues both immediate and well into the future that will be impacted by the pandemic. However, traditional Human Resources initiatives and strategies are still just as important as they have ever been. This webinar will address both pandemic-related concerns heading into the New Year as well as more traditional initiatives that HR departments should be considering moving forward.

Speaker: Jeremy Hertz, JD

December 17, 2020

2:00 pm EST

AHERN is excited to present the first edition (January-April) of our webinar series calendar for 2020!

These webinar programs are valid for one (1) Professional Development Credit towards the SHRM (Society for Human Resource Management) SHRM-CP/SHRM-SCP designations and meets the HR Certification Institute’s (HRCI) criteria for recertification credit pre-approval. Please note that these webinars do not qualify for MCLE credit.

We encourage you to take advantage of these free and informative webinars.

Click on the below invitations to register.

Where are law firm employee benefits heading? What new benefits are being offered and what’s being taken away? Join us as we take a comprehensive look at the latest trends arising in the legal market.

Reid Middleton | AHERN Insurance Brokerage

Tuesday, June 26, 2018

11:30 am to 12:00 pm | Check-In/Networking
12:00 pm to 1:00 pm | Lunch and Program

Bonne Bridges Mueller O’Keefe & Nichols
355 S. Grand Avenue, Suite 1750
Los Angeles, CA 90071-1562

Hosted parking available at Wells Fargo Center.
Entrance to parking at 330 S. Hope Street.

COST: Free

CLM: Pending

RSVP BY: June 22, 2018 at www.glaala.org

Click here for more information.


On October 12, 2017, President Trump issued an executive order on healthcare.  The operative provisions of the order relate to association health plans (AHPs), short-term limited duration insurance (STLDI) and health reimbursement arrangements (HRAs).  While the order does not have any immediate impact on existing law or regulations, it directs the federal regulatory agencies (the Departments of Treasury, Labor and Health and Human Services) to consider drafting new regulations that could ultimately have significant impact on health insurance markets.

So what does it all mean?

Click here to continue reading this Benefits Bulletin…

The 2016 general election has had its fair share of twists and turns. On the Democratic side, we witnessed a titanic clash in the form of the moderate Democratic candidate, Secretary Hillary Clinton, and the more left-leaning Sen. Bernie Sanders (D-Vt.). Meanwhile, the Republican camp quickly turned into an “anyone’s game” situation, out of which emerged one of the most unlikely dark horses in electoral history: Republican presidential candidate Donald Trump.

Regardless of who ends up in the Oval Office next January, this much is certain: there exists a multitude of dynamics that could result in seismic shifts within the US healthcare system.

In this white paper, we’ll look at the key policy issues that have potential to significantly shake up employer-sponsored insurance, and how the candidates have aligned themselves with each issue.

Click here to continue reading…