Providers of Financial Independence • Founded 1890

 

National Association of Insurance and Financial Advisors

2901Telestar Court • Falls Church, VA  22042‐1205 • (703) 770‐8188 • www.naifa.org

August 17, 2010 

Via Electronic Transmission 

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 

Attention: File Code OCCIIO-9991-IFC 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

Washington D.C. 20210 

Attention: RIN 1210-AB42 

Internal Revenue Service 

Room 5205 

P.O. Box 7604 

Ben Franklin Station 

Washington D.C. 20044 

Attention: REG-118412-10 

Re: Grandfathered Health Plan Interim Final Rule 

Dear Secretaries Sebelius, Solis, and Geithner: 

The National Association of Insurance and Financial Advisors (NAIFA) appreciates the opportunity to 

offer comments in response to the Interim Final Rules (IFR) for Group Health Plans and Health 

Insurance Coverage Relating to Status as a Grandfathered Health Plan. NAIFA comprises more than 

700 state and local associations representing the interests of approximately 200,000 agents and their 

associates nationwide. Our members guide a diverse universe of consumers – including Fortune 500 

companies, main street businesses, and individual consumers – through the complexities of health 

insurance purchasing and enrollment and help ensure buyers get the best policy at the most affordable 

price. These trained and licensed professionals help clients balance their desire for high-quality and 

comprehensive coverage with the reality of rapidly escalating medical treatment costs, and promoting 

access to affordable health insurance coverage is a primary objective for them. Perhaps most 

importantly, the work of our members continues throughout the life of each policy sold and typically 

includes providing guidance and assistance with claims issues, service questions, and quality 

enhancement and compliance matters. 
Providers of Financial Independence • Founded 1890

The purpose of this letter is to express our views and concerns regarding the interim final rules for 

group health plans relating to status as a Grandfathered Health Plan issued on June 14, 2010. 

As you know, grandfathering status does not exempt these plans from the major provisions of health 

reform including removal of preexisting condition exclusions, extension of dependent coverage, 

elimination of lifetime and annual limits. 

The interim final rules (IFR) notes the statute balances its objective of preserving the ability to 

maintain existing coverage with the goals of expanding access to and improving the quality of health 

coverage. The statute allows regulatory guidance to determine the points at which changes to 

grandfathered coverage are significant enough to cause the plan or coverage to cease being a 

grandfathered health plan. 

In order to achieve the statutory goal of preserving the ability to maintain existing coverage, we 

encourage the Departments to reconsider the current guidance regarding permissible cost-sharing 

changes and offer clarifications on particular areas to provide individuals, families, and employers with 

additional flexibility to preserve their grandfathered plans as affordable coverage options. 

Disclosure of Grandfather Status - The IFR provides that a group health plan or issuer must include 

a statement if a plan or coverage is believed to be a grandfathered plan, in any plan materials provided 

to a participant or beneficiary. A literal reading would require the disclosure in each and every 

communication that is sent to participants, including explanation of benefit statements and routine 

employer communications to participants. NAIFA believes the rule should clarify that a group health 

plan or issuer’s disclosure obligation is fulfilled by inclusion of the model language in the summary 

plan description distributed to participants annually. 

Carrier Selection - Currently, grandfathered status is lost if a group changes insurance companies 

even if the benefits are identical. In order to foster greater competition and bend the cost curve 

downward, plans should be allowed to maintain their grandfathered status if there is not a reduction in 

benefits. Plans should be able to shop insurance companies to match benefit level with a reduction in 

cost, thereby reducing their premium costs. This type of competition should be encouraged by allowing 

for a change in insurance companies if the underlying benefits are not changed. 

Likewise, the Departments should permit changes in stop-loss carriers without relinquishing 

grandfather status provided permissible benefit terms in the IFR are maintained. Changes in third-party 

administrators (TPAs) and stop-loss carriers do not result in a change in benefits to participants. The 

IFR allows self-funded plans to change TPAs and preserve grandfathered status. Final rules should 

clarify that changes in stop-loss carriers will not result in the loss of grandfathered status. 

Administrative Changes - Administrative changes made to a plan that do not otherwise impact the 

underlying benefits should not result in the loss of grandfathered status of the coverage. The 

Departments should allow changes to the: 

 Contractual structure of the plan - movement from a medical policy with a dental rider to a 

medical policy with a separate dental policy 
Providers of Financial Independence • Founded 1890

 Selection and utilization of third-party vendors including wellness, behavioral health 

organizations, pharmacy benefit managers, and rental network vendors 

 Financing arrangement for coverage - movement from self-funded to fully-insured coverage 

and vice versa 

 Eligibility criteria terms – addition of a tier structure including “employee” to “employee +1”, 

“employee +2”, etc 

Voluntary Buy Down – In order to contain costs, individual policyholders will voluntarily request 

increased deductibles, copayments and/or out-of-pocket maximums. Voluntary buy downs in the 

individual market should not result in a loss of grandfathered status. If a voluntary reduction in benefits 

results in the loss of grandfathered status, individuals will have the option of purchasing a likely higher 

cost new ACA policy or drop coverage. These individuals will not be eligible for the Pre-Existing 

Condition Insurance Plans for at least six months following their loss of coverage and will not be 

eligible for federal subsidies available through the Exchanges until 2014. 

Cost-Sharing – According to IFR estimates, the permissible cost-sharing changes to grandfathered 

plans will result in more than half of all employers, and two-thirds of all small employers relinquishing 

their grandfathered coverage by the end of 2013. NAIFA encourages the Departments to reconsider the 

benchmark and accompanying standards for permissible cost-sharing changes to allow consumers to 

preserve their existing grandfathered plan as an affordable option. The Departments should provide 

that changes to cost-sharing with respect to non-essential benefits will not trigger a loss of 

grandfathered status. 

Provider Networks and Pharmacy Formularies – Plan modifications are common to ensure 

prescription drug safety and access to health care providers at affordable rates for consumers. New 

drugs and lower-cost generics are continuously introduced and should be accessible to consumers by 

allowing changes to pharmacy formularies. Changes are made to networks for a number of reasons 

including the addition of new providers, changes in existing practices and to ensure all geographic 

regions remain covered. Plan modifications to provider networks and pharmacy formularies designed 

to improve quality and reduce costs should not cause the loss of grandfathered status. 

Thank you for your consideration of these comments. NAIFA members remain prepared to assist you 

on this important effort. 

Sincerely, 

Diane Boyle 

Vice President 

Federal Government Relations