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New
Rules on Changes to Benefits
The
New York Times
By
Robert Pear
June 13, 2010
The rules limit the
changes that employers can make if they want to be exempt from
certain provisions of the health care law passed by Congress in
March. Many employers want the exemption because it allows them
to keep their existing health plans intact with a minimum of
changes. More than 170 million Americans have employer-sponsored
insurance.
The administration
said the rules would allow a smooth transition to a new, more
competitive insurance market that works better for consumers.
But in some respects, the rules appear to fall short of the
sweeping commitments
President Obama
made while trying to
reassure the public in the fight over health legislation.
In issuing the rules,
the administration said this was just one goal of the
legislation, allowing people to “keep their current coverage if
they like it.” It acknowledged that some people, especially
those who work at smaller businesses, might face significant
changes in the terms of their coverage, and it said they should
be able to “reap the benefits of additional consumer
protections.”
The law provides a
partial exemption for certain health plans in existence on March
23, when Mr. Obama signed the legislation. Under this provision,
known as a grandfather clause, plans can lose the exemption if
they make significant changes in deductibles, co-payments or
benefits.
About half of
employer-sponsored health plans will see such changes by the end
of 2013, the administration says in an economic analysis of the
rules.
The rules allow
employers and insurers to increase benefits. But, in a summary
of the rules, the administration said, “Plans will lose their
grandfather status if they choose to make significant changes
that reduce benefits or increase costs to consumers.”
Some provisions of the
new law apply to all health plans. In general, they cannot
cancel coverage when a person becomes ill, and they cannot
impose lifetime limits on benefits.
But “grandfathered
health plans” are exempt from other requirements. In general,
they do not have to provide “essential health benefits”
specified by the federal government and they do not have to
provide free preventive care.
Under the rules, a
health insurance plan can lose its exemption if it eliminates
all benefits for a particular condition or if it increases
deductibles or co-payments by more than the rate of medical
inflation plus 15 percentage points.
Likewise, a health
plan loses its exemption if an employer reduces its contribution
so that its share of the total cost of coverage declines by more
than 5 percentage points. If, for example, an employer is paying
60 percent of the cost of family coverage, it would run afoul of
the rules if it cut its share to 50 percent.
An employer would also
lose its exempt status if it increased co-payments for doctor’s
visits to $45, from $30 — a 50 percent increase — while medical
inflation was 8 percent. Some health plans require consumers to
pay a percentage of the bill, rather than a fixed dollar amount.
An insurer loses its special protection if it makes any increase
in this percentage — if, for example, it requires patients to
pay 25 percent of the bill for surgery, rather than the 20
percent charged in the past.
A health plan would
also run afoul of the rules if it eliminated coverage for
services needed to diagnose or treat a particular condition. As
an example, the rules describe a health plan that covers a
combination of counseling and prescription drugs for treatment
of a particular mental illness. The plan would lose its
exemption if it eliminated benefits for counseling.
Some insurers cap the
amount they will pay for covered services each year. If they
want to retain their grandfathered status, they cannot reduce
any annual dollar limit that was in place on March 23.
About 133 million
Americans are in group health plans from employers with 100 or
more employees, the administration said, and most “will not see
major changes to their coverage as a result of this regulation.”
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