https://fdms.erulemaking.net/.../component/submitterInfoCoverPage?Call=Print&PrintId=0900006480b321c0&Comment=true[8/17/2010 1:23:57 PM]

PUBLIC SUBMISSION

As of: August 17, 2010

Received: August 16, 2010

Status: Pending_Post

Tracking No. 80b321c0

Comments Due: August 16, 2010

Submission Type: Web

Docket: HHS-OS-2010-0015

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Comment On: HHS-OS-2010-0015-0001

Group Health Plans and Health Insurance Coverage: Interim Final Rules for Relating to Status as a Grandfathered

Health Plan under the Patient Protection and Affordable Care Act

Document: HHS-OS-2010-0015-DRAFT-0062

Comment on FR Doc # 2010-14488

Submitter Information

Name: Neil Trautwein

Organization: National Retail Federation

General Comment

The National Retail Federation represents the greater retail industry, employers of one of every five employees in

the American economy. Our members are strong supporters of employer-based coverage and thus are vitally

interested in the degree of flexibility and continuity provided by the interim final regulations addressing

grandfathered status. 

In our view, these regulations fail to provide sufficient flexibility and thus will undercut the all-important

continuity of employer based coverage in the critical interim between now and 2014. Our comment letter

(attached) makes specific recommnendations to increase flexibility.

Attachments

HHS-OS-2010-0015-DRAFT-0062.1: Comment on FR Doc # 2010-14488
August 16, 2010 

Office of Consumer Information and Insurance Oversight 

Department of Health and Human Services 

Attention: OCIIO–9991–IFC 

P.O. Box 8016 

Baltimore, MD 21244–1850 

Submitted Electronically 

Re: OCIIO–9991–IFC, 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 

Dear Sir or Madam: 

The National Retail Federation (NRF) represents the greater retail industry, 

employers of one of every five employees in the American economy. As the world's 

largest retail trade association and the voice of retail worldwide, NRF’s global 

membership includes retailers of all sizes, formats and channels of distribution as well 

as chain restaurants and industry partners from the U.S. and more than 45 countries 

abroad. In the U.S., NRF represents the breadth and diversity of an industry with more 

than 1.6 million American companies that employ nearly 25 million workers. 

Our members are strong supporters of employer-based health coverage and thus 

are vitally interested in the degree of flexibility and continuity provided by the interim 

final regulations addressing grandfathered status. In our view, these regulations fail to 

provide sufficient flexibility and thus will undercut the all-important continuity of 

employer-based coverage in the critical interim between now and 2014, when health 

insurance exchanges and individual tax subsidies will become available. We will also 

seek to address the four additional issues raised in the preamble that the agencies 

sought comment on. 

NRF has also joined in separate coalition comments submitted by the Small 

Business Coalition for Affordable Healthcare and the Coalition for Affordable Health 

Coverage. We recognize and appreciate that these comments will also be shared with 

the Department of Labor and the Internal Revenue Service. 

 
National Retail Federation 

August 16, 2010 

OCIIO–9991–IFC

2 

Continuity 

 

 The Patient Protection and Affordable Care Act (PPACA) is a complex law, 

designed to be phased in between now and 2018. Many significant provisions – 

including new purchasing options through Health Insurance Exchanges and individual 

subsidies to assist in purchasing – are not effective until 2014. The interval between 

enactment in 2010 and key affordability provisions in 2014 will be difficult for employers 

and employees alike. One of NRF’s greatest objections to PPACA was its failure to 

provide both short and longer term relief from rising health care costs. 

 Congress sought in PPACA to build from the existing base of the employerbased system, especially between 2010 and 2014. Thus, Section 1251 of PPACA (as 

modified by Section 10103 of the Reconciliation Act) attempts to provide for continuity of 

coverage for both employees and employers through “grandfathered plan” status. With 

limited statutory provisions, Congress sought to hold in place coverage at date of 

enactment: March 23, 2010. 

 The interim final regulation (IFR) has gone beyond Congress’ intent, making it 

very difficult to maintain grandfathered status. In fact, the IFR’s own estimates1 are that 

a majority of employers will lose grandfathered plan status by 2013. Unless the IFR is 

changed and improved to provide greater necessary flexibility, Congress’ goal of 

ensuring continuity of coverage will be frustrated. More individuals will lose coverage 

without a reasonable marketplace alternative available in advance of 2014. 

 

Grandfathered Plan Status 

 The following summarizes our understanding of the IFR: 

Generally 

• Plans must assert grandfathered status based on coverage in existence as of 

March 23, 2010. 

• There is a limited grace period to revoke non-conforming changes before 

September 23, 210. 

 

1

 Agencies estimate that between 39% and 69% of all employer plans will have relinquished 

grandfathered plan status by 2013. 

• 2011 – Low-end estimate: small 20%, large 13%, all 15%. 2011 – Mid-range estimate: small 

30%, large 18%, all 22%. 2011 – High-end estimate: small 42%, large 29%, all 33%. 

• 2012 – Low-end estimate: small 36%, large 24%, all 28%. 2012 – Mid-range estimate: small 

51%, large 33%, all 38%. 2012 High-end estimate: small 66%, large 50%, all 5%. 

• 2013 – Low-end estimate: small 49%, large 34%, all 39%. 2013 – Mid-range estimate: small 

66%, large 45%, all 51%. 2013 – High-end estimate: small 80%, large 64%, all 69%. 
National Retail Federation 

August 16, 2010 

OCIIO–9991–IFC

3 

• “Good-Faith” compliance standard – “only modestly exceed” permitted changes. 

• Regulation specifies the type of notice required in summary plan descriptions. 

Plans must retain documentation. 

• Collectively-bargained plans that are grandfathered retain that status until the 

collectively bargained agreement (CBA) terminates. 

Not applicable to Grandfathered plans in 2014 

• Comprehensive insurance coverage (essential benefits). 

• Prohibit discrimination based on health status. 

• No cost sharing for prevention and wellness benefits. 

• Prohibition on discrimination in favor of highly compensated individuals. 

• Appeals (external and internal) process. 

Applicable with or without Grandfathered Status in 2014 

• Employer mandate penalties. 

• Prohibition on waiting periods more than 90 days. 

• No preexisting condition exclusions. 

• Extension of dependent coverage to age 26. 

• No Lifetime limits (plan years after October 2010). 

• No annual limits (restricted after October 2010). 

• Prohibition on recessions. 

• Application of medical loss ratio standards (fully insured). 

Prohibited changes 

• Elimination of a particular benefit. 

• Elimination of all or substantially all benefits (or necessary elements) to diagnose 

or treat a particular condition. 

• Increase in coinsurance by any amount beyond that in effect on March 23, 2010. 

• Increase in deductible or out-of-pocket maximum by more than the maximum 

percentage increase (medical inflation [March 23, 2010] plus 15 percent). 

• Decrease employer contribution rates for any similarly situated class of 

employees by more than five percent. 

• Change in insurance carrier (fully-insured). 

Allowable changes 

• Voluntary changes to increase benefits or to conform with required federal or 

state law changes or to voluntarily adopt PPACA changes in advance. 

• Add new employees and dependents. 

• Increase cost-sharing requirements by less than the maximum percentage 

increase (medical inflation [March 23, 2010] plus 15 percent). 
National Retail Federation 

August 16, 2010 

OCIIO–9991–IFC

4 

• Change employer contribution rates for any similarly situated class of employees 

by five percent or less. 

• Changes to a plan’s third party administrator (TPA). 

Lack of Flexibility 

 Our concern is that the IFR’s rigid, trip-wire rules make it entirely too possible (if 

not probable) that a plan that elects grandfathered plan status will not be able to 

maintain that status for long. Many plans may not even bother to elect grandfathered 

plan status. In order to maintain the continuity of coverage Congress sought to provide, 

we recommend the following steps to improve the IFR: 

1. Allow employers to change insurance carriers without losing grandfathered status 

provided that: 

• The coverage is actuarially equivalent or better, and that 

• Provider networks are substantially equivalent. 

• Prohibiting a change in carriers will needlessly inhibit competition bases on price 

and quality of service. 

2. Allow for improvements in prescription drug formularies and provider networks 

without jeopardizing grandfathered plan status. 

• New drugs come onto the market with great regularity and medical practice 

changes quickly. Formulary changes in the interest of plan beneficiaries are 

appropriate and necessary. 

• Provider networks require regular maintenance to allow for retirements, addition 

of new providers and to maintain network quality. Reasonable changes that do 

not compromise ongoing treatment should be allowed.

3. Provide greater flexibility to manage future medical inflation. 

• Changes in fixed dollar cost sharing should be made on a year-to-year basis 

rather than be based on March 23, 2010 and percentage increases from that. 

Additional Agency Questions 

 The IFR sough comments on whether four specific changes2 ought to result in 

loss of grandfathered plan status. We have addressed two of these questions (e.g. 

 

2

 The changes in question included: changes to plan structure (switching from a health reimbursement 

arrangement to major medical coverage or from an insured product to a self-insured product); changes in 
National Retail Federation 

August 16, 2010 

OCIIO–9991–IFC

5 

changes in formulary and provider networks) above. Our concerns in that area were to 

provide for reasonable plan improvement and evolution so long as beneficiary interests 

were preserved. Requiring actuarially equivalent coverage or better should protect 

beneficiary interest and allow for changes in benefits or plan structure. In addition, 

provider networks must be maintained and prescription drug formularies must reflect 

new medications and changes in medical thought and practice. 

Conclusion

Thank you for allowing NRF to comment on the IFR concerning grandfathered 

rule status. We again urge you to improve the flexibility allowed to employers to 

continue coverage in the interim between now and 2014 in particular. We look forward 

to continuing to work with you in the months and years ahead as PPACA phases in. 

Sincerely, 

 

E. Neil Trautwein 

Vice President 

Employee Benefits Policy Counsel 

 

a network plan’s provider network and what magnitude of change would be involved; changes to a 

prescription drug formulary; and changes to overall benefit design.