August 16, 2010 

Submitted Electronically 

The Honorable Hilda L. Solis 

Secretary of Labor 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Room S-2018 

Washington, DC 20210 

RIN 1210-AB42 

Re: 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 (June 17, 2010) 

Dear Madam Secretary: 

The Food Marketing Institute (FMI) appreciates the opportunity to respond to the interim final rules 

(IFRs) implementing the regulations for group health plans and health insurance coverage in the 

group market under provisions of the Patient Protection and Affordable Care Act1 (PPACA) 

regarding status as a grandfathered health plan. FMI is submitting these comments to the 

Department of Labor (DOL) with the understanding that they will be shared with the Department of 

Health and Human Services (HHS) and the Department of the Treasury (Treasury). 

FMI is the national trade association that conducts programs in public affairs, food safety, research,

education and industry relations on behalf of its 1,500 member companies—food retailers and 

wholesalers—in the United States and around the world. FMI’s members in the United States 

operate approximately 26,000 retail food stores and 14,000 pharmacies. Their combined annual 

sales volume of $680 billion represents three quarters of all retail food store sales in the United 

States. FMI’s retail membership is composed of large multi-store chains, regional firms, and 

independent supermarkets. 

The food retail and wholesale industry ranks among the largest industries in our country, providing 

nearly 4 million wage-and-salary jobs.2

 These workers are employed in a wide range of settings 

from small corner stores to large supercenters and million square foot distribution centers. The 

 

1

 P.L. 111-148. 

2

 Food Marketing Institute, Supermarket Facts <http://www.fmi.org/facts_figs/?fuseaction=superfact>. 
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August 16, 2010 

industry provides a diverse range of employment opportunities and requires a combination of fulltime and part-time workers to operate. For many employees, the grocery industry is their entry or 

re-entry point into the workforce. The industry has a constantly changing workforce at entry level 

positions and is also reliant on seasonal employees. Part-time employees in the industry include 

students, retirees and others with unique training or scheduling needs. Many Americans first enter 

the workforce through the grocery industry. Young workers between the ages of 16-24 held nearly 

a third of grocery jobs which the Bureau of Labor Statistics attributes to “the large number of jobs 

in this industry open to young workers who have little or no work experience.”3 

The diverse nature of our workforce requires the flexibility to design and create benefit packages 

that meet the needs of our employees, and react to changes in how our industry operates as well as 

medical cost trends. We encourage the DOL, HHS and Treasury to build upon their statement in 

the IFRs that recognizes that retaining grandfathered status is important in “fulfilling a goal of the

legislation, which is to allow those that like their health care to keep it”.4 

Plan Design and Employer Contribution 

The IFRs impose restrictive limits on the plan design changes with respect to benefits, cost-sharing 

and employer contribution rates that would effectively freeze the plan and policy terms effective on 

March 23, 2010. As a result, many plans will have to give up grandfathered status unless more 

flexibility is provided. Employers (and bargaining parties in collectively bargained plans) must be 

allowed to make basic changes to plans—provided that the fundamental benefits to the beneficiary 

remain the same—to accommodate changes in the marketplace and overall industry. 

Employer Premiums 

Under the IFRs, grandfathered plans effectively may not increase the employee portion of the cost 

of coverage relative to the portion of such cost paid for by the employer by more than five percent 

from March 23, 2010. However, the HIPAA regulations permit employers to provide incentives of 

up to a 20 percent reduction in the cost of coverage for employee participation in certain wellness 

programs. A change in PPACA will allow employers to provide incentives of up to a 30 percent 

reduction in the cost of coverage for employee participation in certain wellness programs beginning 

January 2014. This allows employers to reward employees for making healthy living choices. 

Employers should be able to implement such wellness programs in compliance with the law without 

jeopardizing their grandfathered status. 

 

3

 Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, 2010-11 Edition, Grocery Stores 

<http://www.bls.gov/oco/cg/cgs024.htm>. 

4

 75 Fed. Reg. 34546 (June 17, 2010). 
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August 16, 2010 

Cost-Sharing 

Grandfathered plans must have the ability to make needed and appropriate changes in cost-sharing 

without jeopardizing grandfathered status. For example, plans need to be able to adjust cost-sharing 

amounts to react to medical cost trends, demographic changes and changes in benefit utilization that 

can have a significant impact on plan costs. In addition, cost-sharing with respect to non-essential 

benefits should be allowed. 

Administrative Changes 

Plans should be able to make administrative changes without losing grandfathered status. These 

types of changes would include changes in the plan structure (e.g., insured to self-funded, switch 

from health reimbursement arrangement to major medical coverage, changes to drug formulary or 

pharmacy network, changes to a provider network) that do not cause a meaningful change in 

coverage or the benefits received. 

Issuance of a New Policy by an Issuer 

Grandfathered status should not be lost if the benefits under a new insurance policy are 

substantially the same as the prior policy. 

Collectively Bargained Plans 

Over 40 percent of FMI’s members employ union members and therefore are subject to the 

application of these regulations to collectively bargained plans.5 PPACA states in part that "[i]n the 

case of health insurance coverage maintained pursuant to one or more collective bargaining 

agreements, . . . the provisions of [subtitles A and C of Title I of PPACA] (and the amendments 

made by such subtitles) shall not apply until the date on which the last of the collective bargaining 

agreements relating to the coverage terminates.”6 Notwithstanding the fact that this language on its 

face clearly appears to provide for a delayed effective date, the regulation provides only that certain 

collectively bargained plans are treated as grandfathered plans. Plans maintained pursuant to one or 

more collective bargaining agreements ratified before March 23, 2010, should be provided with a 

delayed effective date, as provided in PPACA, and this delayed effective date should apply to both 

fully-insured and self-funded collectively bargained plans. 

 

5

 FMI - The Food Retailing Industry Speaks 2009, p. 49.

6

 PPACA § 1251(d). 
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Multiemployer Plans 

Multiemployer plans should not lose grandfathering status if a new employer joins the plan and the 

new employer’s prior plan was more favorable as to one or more of the factors on which the 

regulations limit changes. In addition, multiemployer plans typically offer many different “plans of 

benefits” that provide different levels of benefits. Under current rules, bargaining parties may 

choose to move to a different plan of benefits in collective bargaining. If the bargaining parties 

move to a plan of benefits that provides a lower level of benefits than previously provided, 

grandfathered status should not be lost. 

* * * 

FMI appreciates the opportunity to submit comments on this important matter and is available to 

discuss any impact that these regulations will have on our members. In conclusion, FMI believes 

that it is vital that DOL, HHS and Treasury provide as much flexibility as possible to help ensure 

that those that wish to keep the coverage they currently have are able to do so. 

 

Sincerely, 

Erik R. Lieberman 

Regulatory Counsel