From: Robin van Vliet

To: E-OHPSCA1251.EBSA

Cc: Robin van Vliet

Subject: OCIIO-9991-IFC - Comment on Interim Final Rules for Group Health Plans relating to Status as a Grandfathered

Health Plan under PPACA

Date: Wednesday, June 16, 2010 12:30:24 PM

OCIIO-9991-IFC

Dept of Treasury: RIN 1545-BJ51

Dept of Labor: RIN 1210-AB42

Dept of HHS: RIN 0991-AB68

http://www.federalregister.gov/OFRUpload/OFRData/2010-14488_PI.pdf

I am an employee benefits broker and am trying to understand how to apply these regulations. I (and

many of my colleagues in the industry) need further clarification. Hopefully these answers can be

provided in the next round of guidance.

1. Please define “benefits package”. It seems to mean any component coverage under an

employer’s entire Health & Welfare Plan that may be wrapped together under a single plan

document but is not defined anywhere.

2. A “group health plan” (as defined by part 7 of ERISA) includes not only Medical Insurance/HMO

plans, but also dental, vision, EAP, FSAs and HRAs. How is an employer or insurance

company supposed to apply all of the PPACA provisions to these “benefit packages”. It

creates a tremendous reporting, testing and financial burden, and does nothing to address the

core issue that PPACA was designed to address, which was access and affordability of

medical and prescription drug insurance. In order to reduce the burden on employers and

simplify the implementation of PPACA, I would suggest narrowing the scope of PPACA to

medical and prescription drug plans, and excluding dental, vision, FSA and EAP plans,

regardless of whether they are a component of the medical plan or can be elected by the

employee standalone from their medical coverage.

3. I have the following examples and would like to know if the change would impact grandfathered

status:

a) Changes to Plan components (5500): An employer has several divisions and offers various

benefit packages based on which division the employee is employed in. They are currently all

wrapped together and reported under their “501” plan for ERISA purposes. Scenario 1: The

employer wants to separate the divisions into entirely distinct plan documents, thus creating a

501, 502 and 503 plan. The benefits packages otherwise remain the same and employees

remain consistently enrolled. Have they lost their grandfathered status? Scenario 2: They

acquired another company and want to include their current benefit package under their main

plan (501). They will not be changing their medical and dental benefits package, but newly

acquired employees will be going on the same Vision, Life and Disability benefits as the parent

company. Have they lost grandfathered status?

b) Changes to contributions: An employer currently provides medical benefits with a 10%

employee contribution. For 2012 plan year, they have informed employees that they can keep

this 10% contribution if they participate in the voluntary wellness program*. If they do not

participate, their contributions will increase 30% to 40% of premium. Have they lost

grandfathered status?

 (*Note: Assuming that this scenario would be acceptable, we may need guidance from the

CDC and ADA/EEOC regarding what an acceptable wellness program would be in this

scenario so that it is not overly burdensome, e.g. participation only is required not achievement

of any health standard.)

c) Changes to deductible: An employer currently has a $500 deductible in network, with a $2,500

out of pocket maximum (total out of pocket risk: $3,000). For 2011 they want to implement a
HDHP with a $1,500 deductible for employee only with a $4,000 out of pocket maximum (total

out of pocket risk $4,000). The employer will contribute $600 to the employee’s H.S.A.

automatically, and will contribute another $400 if they complete a Health Risk Appraisal and

Biometric Screening, thus reducing out of pocket exposure to $3,000 plus now employees can

carryover any unspent funds. Have they lost grandfathered status?

d) Changes in contributions: In 2010, Employer H provides a ‘cafeteria’ style benefits contribution

of $10,000 per year towards benefits. An employee can elect to purchase any tier of benefits

they choose, but any amount above $10,000 per year is taken pre-tax from their paycheck. In

2010 most employees are covered as “Employee Only” and this $10,000 is covering nearly

100% of all of their benefits elections for medical, dental, and vision. In 2011, a large nearby

employer shuts down its factory and the families of employees from Employer H are now

added to Employer H’s plan, nearly doubling the total premiums for the current year. Employer

H’s renewal is 20%, so for 2011 the total annual premiums are 150% of what they were in

January 2010. How does Employer H calculate it’s contribution for 2011?

 

I appreciate your consideration of these comments and questions.

Sincerely

Robin van Vliet

Robin van Vliet, CWPM

Principal & Director, Well-being Consulting

CA License #0D58765

Presidio Benefits Group 142 Sansome Street, 4th Floor, San Francisco, CA 94104

Direct 415.315.9716 | Mobile 415.233.0365 | Fax 415.576.1266 | Email robin@presidiobenefits.com

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