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  • New Rules on Group Health Benefits

    New Rules on Group Health Benefits

    New Federal regulations were announced yesterday designed to discourage employers from reducing their employee  health benefit plans.

    The new rules place new requirements on employers that have health plans. These plans (commonly referred to as “grandfathered” plans) were in operation when the president signed the new healthcare law on March 23.  Employers   have an incentive to retain this grandfather status because it exempts them from some of the healthcare law’s new mandates, as they were in existence before the reform laws were passed.    Employers with “grandfathered” plans will now be able to charge more for health benefits,  but with some limits.

     The rules limit how much companies could raise co-pays, deductibles and other employee contributions.  Co-pays, for example, could not be raised more than $5 or a percentage equal to 15 percentage points plus the rate of medical inflation, whichever is greater.  Employers also could not lower their contribution to their employees’ premiums by more than 5 %. Employers would also be able to adjust benefits, but not eliminate them entirely.  As an example, if a plan currently covers prescription drugs, it could not remove this coverage  although it could change the covered prescriptions available.

    An employer can choose to give up grandfathered status and still offer health benefits, however the company’s health plan would then be considered a new plan and would be subject to new regulations. Such as covering  cancer screenings with no co-pays or other cost sharing.

    There will be more changes coming  in 2014. Businesses then will have to offer plans with a minimum standard of health coverage, which will be outlined by the federal government. Grandfathered plans would not have to meet this standard.

    Both new and grandfathered plans are already subject to some mandates starting next year, including a prohibition on lifetime benefit limits and a requirement that plans cover dependent children to age 26.

    Beginning in 2014, small businesses will be able to shop for benefits for their employees in new insurance exchanges designed to improve coverage options.  Large employers could face penalties if they do not offer coverage to their employees.

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