IRS/DOL Issues Proposed Rules Concerning Grandfathered Plans

The IRS, DOL, EBSA, CMS, and HHS have issued proposed rules concerning grandfathered group health plans and grandfathered group health insurance coverage that would, if finalized, amend current rules to provide greater flexibility for certain grandfathered health plans to make changes to certain types of cost-sharing requirements without causing the loss of grandfather status. These rules are currently proposed and have not been finalized. The agencies will receive comments before the rules are finalized.

The proposal affects grandfathered group health plans and grandfathered group health insurance coverage. The proposal specifies that plans that have lost their grandfather status still cannot regain that status. These proposed changes only apply to those plans that remain grandfathered.

Specifically, if accepted as final rules, the proposed rules would amend the 2015 final rules in two ways. First, these proposed rules would specify that grandfathered group health plans and grandfathered group health insurance coverage that are HDHPs may make changes to fixed-amount cost-sharing requirements that would otherwise cause a loss of grandfather status without causing a loss of grandfather status, but only to the extent that those changes are necessary to comply with the requirements of HDHPs under section 223(c)(2) of the Internal Revenue Code.

Second, these proposed rules include a revised definition of “maximum percentage increase” in paragraph (g)(4), which provides an alternative method of determining that amount based on the premium adjustment percentage. This alternative method would be available only for grandfathered group health plans and grandfathered group health insurance coverage with changes that are effective on or after the effective date of the final rule.

As always, our team will continue to monitor these changes and keep everyone apprised as new information becomes available.


This document is provided for general information purposes only and should not be considered legal or tax advice or legal or tax opinion on any specific facts or circumstances. Readers are urged to consult their legal counsel and tax advisor concerning any legal or tax questions that may arise.


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