Secretaries Sebelius, Solis, and Geithner
August 16, 2010
Page 3

elimination of benefits, increases in percentage cost sharing and the other cost-sharing
parameters, annual and lifetime limit changes and so on, are consistent with the “modest
changes” approach.

In terms of any additional considerations the Departments may make in future rulemaking on
plan changes that should result in cessation of grandfathered plan status, AARP offers the
following comments:

Changes to plan structure. AARP supports a policy of terminating grandfather status if a plan
switches from a health reimbursement arrangement to major medical coverage or from an
insured product to a self insured product. These are modifications that potentially alter the
character of a plan in significant ways, some of which may result in changes in benefit value or
enrollee rights and protections.

Changes in a network's plan provider network, and if so, what magnitude of changes would have
to be made. AARP believes that loss of grandfather status should be tied to non de-minimus
changes to a plan’s provider network that may result in changes in the availability of providers. It
may be helpful to plans and consumers if such non de-minimus changes are linked to objective
standards of network adequacy.

Changes to a prescription drug formulary and if so, what magnitude of changes would have to
be made. AARP believes that loss of grandfather status should be tied to non de-minimus
changes to a plan’s formulary that are unfavorable to the enrollee. An objective standard would
be helpful here. For example, if a plan formulary dropped an entire class of prescriptions in the
absence of sound evidence, that would constitute a non de-minimus change resulting in the loss
of the plan’s grandfather status.

Changes to design of certain benefits. Some policies have dollar limits, visit limits, or separate
deductibles on certain benefits. If such limits are changed in ways that have a significant
negative impact on enrollees, AARP believes this should be a factor in whether the plan retains
its grandfathered status. While the IFR addresses overall annual limits, it is not clear how the
tules for changes to that limit or percentage cost sharing, for example, would be considered in
relation to changes that may also be made on limits or cost sharing on a specific benefit.

Thank you for the opportunity to comment on this important matter. If you have questions,
please contact Nora Super on our Government Relations staff at (202) 434-3770.

Sincerely,
David Certner

Legislative Counsel and Legislative Policy Director
Government Relations and Advocacy


Page 1 of 1

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REC \)P4)2-/0

As of: September 09, 2010

PUBLIC Status: Posted

Posted: September 09, 2010
SUBMISSION comments Due: August 16, 2010

Submission Type: Web

LEGAL PROCESSING DIV;

PUBLICATION & R G DIVISION
EGULAT)

— RANCH TONS

Docket: IRS-2010-0010
Group Health Plans and Health Insurance Coverage Rules Relating to Status as a Grandfathered
Health Plan Under the Patient Protection and Afforable Care Act

Comment On: IRS-2010-0010-0001
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: IRS-2010-0010-0931
Comment on FR Doc # 2010-14488

Submitter Information

Name: Nora Super
Address:

601 E Street

Washington, DC, 20049
Email: rgreenwood@aarp.org
Organization: AARP

General Comment

See attached file(s)

Attachments

IRS-2010-0010-0931.1: Comment on FR Doc # 2010-14488

https://fdms.erulemaking net/fdms-web-agency/component/submitterInfoCoverPage?Call=P... 9/9/2010


The power to make it better.

August 16, 2010

The Honorable Kathleen Sebelius

Secretary

U.S, Department of Health & Human Services
200 Independence Avenue, S.W.

Washington, D.C. 20201

The Honorable Hilda Solis
Secretary

U.S. Department of Labor
200 Constitution Ave., N.W.
Washington, D.C. 20210

The Honorable Timothy Geithner
Secretary

U.S. Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

Dear Secretaries Sebelius, Solis, and Geithner:

AARP is pleased to comment on the Interim Final Rule (IFR) implementing section 1251 of the
Patient Protection and Affordable Care Act (ACA) providing that certain plans or coverage in
effect as of March 23, 2010 are exempt from certain provisions of the Act. These plans, which
may be either insured or self-insured group health plans or health insurance coverage purchased
from health insurance issuers by individuals or groups, are referred to as grandfathered plans or
coverage.

AARP appreciates the challenge to the Departments in implementing Section 1251. The rules
need to ensure that Americans who are satisfied with their existing coverage are able to retain it
and minimize the impact on employers already offering coverage, while also honoring the
purpose of the ACA in providing for patient protections and important insurance reforms that
safeguard individuals from practices that lead to denials of coverage or to underinsurance i in the
event of a serious illness or accident.

The Interim Final Rules (IFR) address what changes an insurer or plan sponsor may make to a
plan without loss of its “grandfather” status and the steps that must be taken to maintain that
status. In addition, clarifications are provided with respect to the treatment of retiree-only plans.


Secretaries Sebelius, Solis, and Geithner
August 16, 2010
Page 2

AARP commends the exemption provided for retiree-only plans. The erosion of retiree health
benefits has been well documented over the past two decades and our members are particularly
anxious about policy changes that contribute to that erosion. Retirees who rely upon early retiree
health benefits to provide them with coverage until they become eligible for Medicare want these
benefits safeguarded. The exemption of these plans from application of the grandfather rules, an
exemption that is fully consistent with the statute, will help to reassure retirees in such plans that
their plans can remain as is and be preserved. This is particularly important at a time when sc
many people looking to retire in the next few years, or who have already taken retirement prior
to becoming eligible for Medicare, face great uncertainty and anxiety about their health and
economic security.

AARP also commends the Departments for clarifying in the IFR that grandfather status does not
extend to plans that are sold to new entities after March 23, 2010. We do recommend, however,
that the term “entities” be clarified to include groups (employers and unions, for example).

In addition, we appreciate the emphasis in the IFR on providing adequate disclosure of a plan’s
grandfather status to participants or beneficiaries, in the case of a group plan, or subscriber, in
the case of individual coverage and provide contact information for questions and complaints
This requirement, however, has to be carefully implemented to ensure that the disclosure is
helpful and does not lead to confusion and frustration. The model disclosure statement appears to
seek a middle ground in terms of the amount of information that must be provided to the
individual by providing one example only of a patient protection that is not required to be
provided by a grandfathered plan. For more information, the model notice refers the individual to
a government website, such as healthreform.gov for additional information.

For a group health plan, decisions related to plan design are generally made by the plan sponsor
and not employees. Thus, the information that is disclosed to employees about the grandfather
status of their plan may simply have the effect of letting them know that some of the reform
changes do not apply to them. On the other hand, a disclosure requirement in the context of
individual policies seems more necessary because the purchasing decision is in the hands of the
subscriber/consumer, In that case, we urge that the model notice include a table of ACA
protections that do and do not apply to grandfathered health plans versus non-grandfathered
plans. Because this is complex information, AARP suggests that the Departments conduct some
research to see whether the notice achieves its purpose of helping individuals and employers
choosing between grandfathered and new plans to make informed decisions. The research may
suggest ways to improve the notice.

AARP supports the general thrust of the IFR -- that plans not lose their grandfather status for
changes that are modest in nature, This is consistent with the need to balance the objectives in.
the ACA of preserving the right of individuals to keep their existing coverage with the goal of
ensuring access to affordable, essential coverage and improving the quality of that coverage. The
specific policies adopted by the IFR with respect to maintenance of grandfather status, such as