To: Ms. Karen Levin 

 Room 5205 

 Internal Revenue Service, Department of the Treasury 

1111 Constitution Avenue, NW 

Washington, DC 20224 

Attention: CC:PA:LPD:PR (REC-118412-10) 

 

Ms. Amy Turner 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

U.S. Department of Labor 

200 Constitution Avenue NW 

Washington, DC 20210 

Attention: RIN 1210-AB42 

Mr. Jim Mayhew 

Office of Consumer Information and Insurance Oversight 

Department of Health and Human Services 

Room 445-G, Hubert H. Humphrey Building 

200 Independence Avenue, SW 

Washington, DC 20201 

Attention: OCIIO-9991-IFC 

Re: Comments on Interim Final Rules for Group Health Plans and Health Insurance Coverage 

Relating to Status as a Grandfathered Health Plan under the Patient Protection and 

Affordable Care Act (75 Fed Reg 34538-34570) 

Date: August 16, 2010 

Dear Ms Levin, Ms. Turner, and Mr. Mayhew, 

Health Care for All (HCFA) and Community Catalyst (CC) greatly appreciate the opportunity to 

comment on the rules for grandfathered health plans and look forward to working with the 

Department of the Treasury, Department of Labor, and Department of Health and Human 

Services on this issue in the future. 

Developing a definition of a “grandfathered” health plan is a critical step in implementing the 

Patient Protection and Affordable Care Act (ACA). We believe that it is paramount that these 

regulations strike the proper balance between allowing consumers to keep the health coverage 

they were enrolled in prior to March 23, 2010, if they wish to do so, and ensuring that all health 

coverage complies with the most significant protections enacted by the ACA. 

HCFA and CC generally endorse the interim final rules for group health plans and health 

insurance coverage relating to status as a grandfathered health plan under the ACA. Overall, we 
are pleased that the regulations will provide consumers with stronger protections, while allowing 

flexibility for people to keep their insurance if they like it. However, we have a few concerns 

about the regulations as they are currently drafted. Our recommendations regarding the rules for 

grandfathered health plans, in light of these concerns, are outlined below. 

1. Mandatory Steps for Maintaining Grandfathered Status, Paragraph (a)(2)-(3) 

We understand Paragraphs (a)(2)-(3) of the interim final regulations to require that a plan must 

take three steps in order to maintain status as a grandfathered health plan: include a statement, in 

plan materials, that the plan believes it is a grandfathered health plan; provide contact 

information for questions and complaints; and maintain, and make available for examination, 

records documenting the plan’s terms. 

Overall, we support the three requirements. The model disclosure language in Paragraph 

(a)(2)(ii), however, could be improved by requiring plans to explain which of the ACA consumer 

protections do not apply to grandfathered health plans. Many consumers are unaware of 

precisely what benefits and protections they give up by choosing a grandfathered plan. We fear 

that few consumers will take the additional suggested steps of accessing a government website or 

calling their plan administrator in order to access this information. 

The disclosure should be required to include a clear, comprehensive list and concise description 

of the ACA benefits and consumer protections that do not apply to grandfathered plans. We 

understand that disclosure language included in plan materials may be considered part of a health 

plan’s contract and that health plans will likely want substantial discretion over the wording of 

their contracts. However, the disclosure statement must be consumer-friendly in order to be 

meaningful. The disclosure should be included at the beginning of plan materials—not buried at 

the end of a document—so that consumers will see the disclosure, even if they only skim the 

materials. An eye-catching and easy-to-read format, like the warnings on cigarette boxes, would 

be helpful. A table (like the table available at http://www.dol.gov/ebsa/pdf/ 

grandfatherregtable.pdf) or bullet-point list would be ideal ways to convey the information in a 

consumer-friendly manner. 

2. Constraints on the Maintenance of Grandfathered Status, Paragraph (g) 

We support the clear limits that have been placed on the ability of plans to maintain 

grandfathered status, but would suggest making some of them even stronger. We recommend the 

following additional limitations to be added to this paragraph: 

• Constraint on Reduction of Benefit Scope, (g)(1)(i): Under the interim final regulation, a 

plan ceases to be a grandfathered health plan if all or substantially all benefits to 

diagnose or treat a particular condition are eliminated. The elimination of benefits for 

any necessary element to diagnose or treat a condition is considered the elimination of all 

or substantially all benefits to diagnose or treat a condition. 

We think that this is an important restriction, but would like “necessary element” to be 

defined in such a way that it is clear who decides when an element is necessary—
preferably the doctor, rather than the insurer. If a doctor says a treatment is necessary for 

a particular patient, we believe it should be treated as such under these regulations. 

In addition, we believe that a plan change that reduces access to physical therapy and 

occupational therapy—for example, by limiting the number of visits per patient—is a 

substantial constraint. However, the interim final regulations do not address this issue. 

We ask that they be revised to ensure that reductions of this kind constitute a substantial 

elimination of benefits, triggering loss of grandfathered status.

• Fixed-Amount Cost-Sharing Requirements Other than a Copay, (g)(1)(iii): The interim 

final regulation allows a plan’s fixed amount cost-sharing requirements (other than 

copays) to increase by as much as the maximum percentage increase (medical inflation, 

from March 23, 2010, plus 15 percentage points), before the plan loses grandfathered 

status. We believe this allows cost-sharing requirements to increase too much. We ask 

that the rule only allow cost-sharing increases in keeping with medical inflation—rather 

than exceeding it by 15%. 

• Fixed-Amount Copay, (g)(1)(iv): Similarly, the interim final regulation allows fixedamount copays to increase by the greater of (A) the maximum percentage increase or (B) 

$5 increased by medical inflation, before a plan loses grandfathered status. For some, 

particularly the sick and the poor, even a slight increase in cost sharing can be a 

substantial financial burden.1

 For example, the Center for Studying Health System 

Change reports that as health plans have substantially increased prescription drug cost 

sharing over the last ten years, more Americans, especially those living with chronic 

conditions, are forgoing necessary prescription drugs due to cost issues.2

 The Kaiser 

Family Foundation reported that 13% of those with insurance have chosen not to fill a 

prescription because of cost.3

 Thus, we ask that the rule only allow grandfathered plans to 

increase copays in keeping with medical inflation. 

• Constraints on Decreases in Employer Contributions, (g)(1)(v): Health care coverage is a 

financial burden on both employers and employees. It is reasonable to allow modest 

changes in the employer contribution. However, employees may find that their health 

plan has become unaffordable if their employer’s contribution rate falls by 4-5%, as 

allowed by this interim final regulation. A contribution rate change of 4-5% would 

change a health plan in a very real way for consumers. We believe that any reduction in 

employer contribution rates should cause a plan to lose grandfathered status. 

• The “Good Faith” and “Modestly Exceed” Exceptions: We understand the intent of the 

“good faith” and “modestly exceed” exceptions, included at the end of paragraph (g), 

however, the parameters appear overly flexible for the carriers. 

 

1 See Jonathan Gruber, Kaiser Family Foundation, Report #7566, “The Role of Consumer Copayments for Health 

Care: Lessons from the RAND Health Insurance Experiment and Beyond,” 1 (2006), 

http://www.kff.org/insurance/upload/ 7566.pdf.

2

 “Impact of Copays on Vulnerable Populations,” 12 AM. J. MANAGED CARE S359, S359 (2006), 

http://www.ajmc.com/media/pdf/A166_06NovImpactofS359to63.pdf. 

3 Id. 
In recent months, many health plans have not demonstrated “good faith.” For example, 

California’s Anthem Blue Cross recently withdrew its request to raise individual health 

plan premiums by as much as 39% after “substantial errors” were found in its rate filing.4

We worry that these exceptions will create loopholes for health plans that are making 

calculated, self-interested changes to their plans with the intent of earning shareholders 

money rather than consumers. Therefore, we recommend further definition of these 

exceptions. 

• Other changes: We are pleased that the above changes will result in loss of grandfathered 

status, but we think it is crucial that other changes be included in the constraints listed in 

(g)(1). For example: 

o Changes in plan structure: Significant changes to plan structure, like reducing the 

number of covered visits per year, should trigger loss of grandfathered status. 

o Changes in a network plan’s provider network: While we recognize that there are 

always fluctuations within provider networks (as doctors relocate or change jobs), 

significant changes in a provider network (such as a switch to a limited-type 

network) should result in loss of grandfathered status. One way to regulate 

network changes could be by tying the standard into network adequacy standards 

like those established by Medicare. 

o Changes to a prescription drug formulary: Minimal changes to drug formularies 

are reasonable; however, we ask that plans lose grandfathered status if they make 

more significant changes to their prescription drug benefits. Changes such as 

cutting coverage for an entire class of drugs, or requiring people to fill 

prescriptions through the mail rather than at their local pharmacy, should result in 

health plans losing grandfathered status. 

o Changes to family coverage: Dropping coverage for a spouse or child or 

increasing costs beyond the limits outlined in the interim final rule should 

constitute changes to family coverage that trigger loss of grandfathered status. 

o Changes from fully-insured to self-insured: Because self-insured plans do not 

have to comply with a number of ACA’s consumer protections, it is critical that 

plans that switch from fully-insured to self-insured should trigger the loss of 

grandfathered status. 

Any changes to a health plan that enhance benefits without increasing costs for consumers, 

however, should not trigger loss of grandfathered status. For example, we would like 

 

4

 Duke Helfand, Los Angeles Times, “New reviews of health insurance rate hikes in California due soon” (Jul. 15, 

2010), http://latimesblogs.latimes.com/money_co/2010/07/new-reviews-of-health-insurance-rate-hikes-in-californiadue-soon.html; Fran Matso Lysiak, “President of WellPoint's Anthem Blue in California Leaves Post” (Jul. 21, 

2010), http://insurancenewsnet.com/article.aspx?id=209236. 
grandfathered plans to be able to eliminate cost sharing requirements for preventive care without 

losing grandfathered status. 

As always, we remain committed to making healthcare coverage affordable and accessible for all 

consumers. We thank the Departments of the Treasury, Labor, and Health and Human Services 

for their consideration and seek to be a resource as they tackle this issue. If you have any 

questions or concerns please contact Georgia Maheras at 617-275-2922 or 

gmaheras@hcfama.org or Christine Barber at 617-275-2914 or cbarber@communitycatalyst.org. 

Sincerely, 

 Rob Restuccia Amy Whitcomb Slemmer 

Executive Director Executive Director 

Community Catalyst Health Care For All