December 17, 2010

The Honorable Phyllis C. Borzi

Assistant Secretary, Employee Benefits Security Administration

U.S. Department of Labor

Jay Angoff

Director, Office of Consumer Information and Insurance Oversight

U.S. Department of Health and Human Services

The Honorable Michael F. Mundaca

Assistant Secretary of the Treasury

U.S. Department of the Treasury

Attention: OCIIO-9991-IFC2

Submitted via the Federal Regulations Web Portal, http://www.regulations.gov

Re: Comments on the Amended Interim Final Rule Relating to “Grandfather” Status 

Under the Affordable Care Act, RIN 0950–AA17

Dear Assistant Secretary Borzi, Director Angoff, and Assistant Secretary Mundaca:

The Blue Cross and Blue Shield Association (“BCBSA”) appreciates the opportunity to 

provide comments to the Departments of Health and Human Services, Labor, and the 

Treasury (“the Departments”) regarding the Amended Interim Final Rule (“Amended Rule”)

for Group Health Plans and Health Insurance Coverage Relating to Status as a 

Grandfathered Health Plan Under the Patient Protection and Affordable Care Act (“ACA”). 75 

Fed. Reg. 70114 (November 17, 2010).

BCBSA is a national federation of 39 independent, community-based and locally operated 

Blue Cross and Blue Shield Plans (“Plans”) that collectively provide healthcare coverage for 

more than 98 million members – one-in-three Americans.

We thank the Departments for the Amended Rule and the additional guidance they have 

provided to help group health plans and insurers understand how to address practical 

implementation issues related to the Interim Final Rule. 

We are providing additional comments below, based on the Departments’ request for 

comments. 

1. General Provision that Change in Insurers Should Not Affect Grandfather Status

Plans support the changes in the Amended Rule. The Interim Final Rule provided that a 

change in insurers or policies automatically would result in a change in grandfather status, 
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Relating to “Grandfather” Status

even if no substantive changes were made to the policy. BCBSA was concerned that this

rule treated insured group health plans less favorably than self-funded plans, who were 

permitted to change third party administrators and maintain grandfather status, as long as no 

changes were made that otherwise triggered the grandfather rules. In addition, group health 

plans or insurers sometimes change insurers or policies for administrative reasons, such as 

when an insurer withdraws from the market and is succeeded by a different insurer, or due to 

a business reorganization. 

The Amended Rule provides a practical solution for these situations and puts group health 

plans – whether insured or self-funded – on the same footing. Under the Amended Rule, 

group health plans must analyze whether a triggering change has occurred that could affect 

grandfather status – rather than simply a change in the policy number or insurer’s name.

Recommendation: We support this change to the Interim Final Rule. When issued, the final 

Rule should include a provision stating that a change in insurers does not, by itself, result in 

a change in grandfather status. 

2. Any Change in Policy Alone Should Not Affect Grandfather Status

The Amended Rule states that a plan does not cease to be grandfathered merely because 

the plan enters into a new policy, certificate, or contract of insurance and cites examples of a 

plan changing insurers or an insurer issuing a new policy. Previously, the Interim Final Rule 

requested comments as to whether a change in the type of policy (for example, a change 

from HMO to PPO) should trigger a change in grandfather status. It is not clear if the 

Amended Rule was intended to address these situations, although we believe this action

simply would be a change in policies that should not cause a change in grandfather status 

where there is no other substantive change. 

We believe that any change in policy, whether a change in insurer, change in policy of the 

same type of coverage, change in policy to a different type of coverage, or change from selffunding to insured (or vice versa) – should fall under the Amended Rule. For these changes, 

an insured group or individual should look to whether entering into the new policy included a 

change that otherwise would trigger a change in grandfather status under the events listed in 

the Interim Final Rule.

Recommendation: The final Rule should make it clear that a change of policies within the 

same insurer does not affect grandfather status as long as there is nothing in the new policy 

that would cause a change in grandfather status. 

3. Effective Date for the Amended Rule

The Amended Rule provides that a change in insurers, in and of itself, will not cause a 

change in grandfather status without a substantive change as listed in the Interim Final Rule 

otherwise occurring. However, the Amended Rule only applies to a change in insurers or 

policies with an effective date after November 15, 2010 (when the Amended Rule was 

available for public inspection). The Departments specifically asked for comments on this

selected effective date. 

Some Plans feel that the Amendment to the Interim Final Rule should apply retroactively to 

March 23, 2010, so that it applies to all group health plans. They argue that the rationale for 
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the change in the first place was that the Departments recognized that simply changing 

insurers should not trigger a change in grandfather status, where substantive benefits 

remained the same. Further, plan participants would still be protected where a policy makes 

a change that the Interim Final Rule identifies as affecting grandfather status. Thus, these 

Plans conclude that there is no basis to establish a cutoff date for the Amendment to the 

Interim Final Rule. 

Other Plans, however, feel that the Amended Rule should not apply retroactively because it 

would be difficult to administer and could cause confusion in the marketplace. Plans and 

employers selecting to retain grandfather status for employers who switched insurers prior to 

November 15, 2010 not knowing there would be future consequences would have to be able 

to identify whether an employer’s group health plan would be entitled to grandfather status. 

This means the Plan would have to gather the information needed to for this inquiry and 

employers would have to provide the information. This is a considerable administrative task. 

Recommendation: The Departments should evaluate the effective date taking into account 

these competing considerations. We would be happy to provide additional insights on this 

issue if needed.

* * *

We appreciate your consideration of our comments. If you have any questions, please 

contact Kris Haltmeyer at (202) 626-4814 or kris.haltmeyer@bcbsa.com. 

Sincerely,

Justine Handelman

Executive Director, Legislative and Regulatory Policy

Blue Cross Blue Shield Association