2
5) Decrease in an employer’s contribution rate towards the cost of coverage by more than 5
percentage points.
6) Imposition of annual limits on the dollar value of all benefits below specified amounts.
For a plan that is continuing the same policy, these six changes are the only changes that would
cause a cessation of grandfather status under the interim final regulations. (As noted, the
Departments are separately considering under what circumstances otherwise grandfathered
plans may change issuers without relinquishing their status as grandfathered health plans.)
Q2: My plan offers three benefit package options – a PPO, a POS arrangement, and an
HMO. If the HMO relinquishes grandfather status, does that mean that the PPO and
POS arrangement must also relinquish grandfather status?
A2: No. The grandfather analysis applies on a benefit-package-by-benefit-package basis. In this
situation, it is permissible to treat the PPO, POS arrangement, and HMO as separate benefit
packages. Accordingly, if any benefit package ceases grandfather status, it does not affect the
grandfather status of the other benefit packages.
Q3: How do the Departments’ interim final grandfather rules regarding changes in
employer contributions apply where an employer restructures its tiers of
coverage?
A3: The interim final grandfather regulations provide that the standards of paragraph (g)(1)(v) for
employer contributions (listed above as item (5) in Q&A-1) apply on a tier-by-tier basis. As a
result, if a group health plan modifies the tiers of coverage it had on March 23, 2010 (for
example, from self-only and family to a multi-tiered structure of self-only, self-plus-one, self-plus-
two, and self-plus-three-or-more), the employer contribution for any new tier would be tested
by comparison to the contribution rate for the corresponding tier on March 23, 2010. In this
example, if the employer contribution rate for family coverage was 50 percent on March 23,
2010, the employer contribution rate for any new tier of coverage other than self-only (i.e., self-
plus-one, self-plus-two, self-plus-three or more) must be within 5 percentage points of 50
percent (i.e., at least 45 percent).
If, however, the plan adds one or more new coverage tiers without eliminating or modifying any
previous tiers and those new coverage tiers cover classes of individuals that were not covered
previously under the plan, the new tiers would not be analyzed under the standards of
paragraph (g)(1). Therefore, for example, if a plan with only a self-only coverage tier added a
family coverage tier, the level of employer contribution toward the family coverage would not
cause the plan to lose grandfather status.
Q4: If an employer plan sponsor raises the copayment level for a category of services
(such as outpatient or primary care) by an amount that exceeds the standards set
forth in paragraph (g)(1) of the interim final regulations, but retains the copayment
level for other categories of services (such as inpatient care or specialty care), will
that cause the plan to relinquish grandfather status?
A4: Yes. Each change in cost sharing is separately tested against the paragraph (g)(1) standards of
the Departments’ interim final grandfather regulations.