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LEGAL PROCESSING DIVISION 


PUBUCATION & REGULATIONS 
 As of: August 25, 2010 

BRANCH Received: August 10, 2010 

Status: Posted 

Posted: August 25, 2010 

Tracking No. 80b2dlb6 

PUBLIC 

SUBMISSION Comments Due: August 16, 2010 

Submission Type: Web 

Docket: IRS-2010-0010 

Group Health Plans and Health Insurance Coverage Rules Relating to Status as a GrandfathE:red 

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-2010-0010-0360 

Comment on FR Doc # 2010-14488 

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Submitter Information 

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General Comment 

For benefits advisors there has been a disturbing realization that our clients will NOT be ablE! to 

maintain grandfathered status unless the Final rules are clarified for insurance carriers. In the 

past week I have been informed by three insurance carriers my clients will not be able to 

maintain grandfathered status, because the carriers has put practices in place that will force my 

clients off of their plan and they have no choice but to accept a plan with higher cost, higher outof-pocket limits and fewer benefits in many respsects. Each carrier has informed me that th4~ir 

legal team has reviewed the law and the interim final rules and have determined they do not 

have to allow the groups to remain grandfathered. My clients are upset and it feels like my hands 

are tied. This needs to be clarified for everyone's understanding in the final rules. One carriE'r has 

indicated they will not administer ANY grandfathered plans whatsoever. I am attaching a 

document that explicitly says as much. Another carrier indicates they received permission from 

the state to remove plans before health reform passed and therefore are not subject to the 

provision, while the third indicated their sales department made the decision to remove plans 

from their offering and their legal department assures them they are within their right to do so 

and grandfathered status has no bearing on it, and they are not required to allow groups to 

remain grandfathered. 

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Attachments 

IRS-2010-0010-0360.1: Comment on FR Doc # 2010-14488 

https:/ Ifdms.erulemaking.netlfdms-web-agency/componentlsubmitterInfoCoverPage?Call=... 8/25/2010 
This Information is to assist you when responding to customer and broker Inquiries about 

grantlfathering. This document should not be distributed externally. 

Health Care Reform and Grandfathering Talking Points 

The enactment of the Patient Protection and Affordable Care Act (PPACA) represents a significant 

achievement toward expanding access to many who do not currentl~ have health insurance coverage. As 

we stated after the legislation passed, the Principal Financial Group has long advocated for health c:are 

reform and believes every American citizen should have access to affordable health insurance. 

However, this legislation does not go far enough to cover all Americans, and as a result, will shift a cost 

burden to those who currently have health insurance coverage and to small businesses. The law als,o 

lacks a system-wide approach to address quality of care and rising health care costs. 

We will provide more training and communications about all of the more immediate health care reforms 

before August 1. In the meantime, we know there are some plans renewing soon that want to consider 

grandfathering, so we are providing some details just about that provision. Only plans in effect as of 

March 23, 2010, are considered by the law to be "grandfathered," and the more immediate reforms do not 

apply to HIPAA excepted benefits (like dental, vision, etc.). 

During the debate, the President promised that people who liked their health care plan could keep it. 

However, after careful review of the interim final rules issued in June, Principal Life Insurance Company 

has determined grandfathering is not in the best interests of our insured medical employers and members 

because grandfathered plans: 

Are costly for employers and Principal Life, which will impact pricing 

Restrict flexibility in changes in contribution and plan designs 

Offer few advantages -- we're already offering many of the non-grandfathered provisions 

To provide more detail: 

• 	 Grandfathered plans are not exempt from many of the new provisions. Grandfathered plans 

would still need to incorporate many of the new PPACA provisions, including extending the 

eligibility age for children to 26, eliminating pre-existing condition waiting periods for enrollees 

under age 19, eliminating lifetime and annual limits on essential benefits and more. 

• 	 The rules for maintaining grandfathered status are restrictive and potentially costly. The 

interim rules to keep grandfathered status are much more restrictive than anticipated. In fact. the 

regulations do not allow for any changes to a coinsurance percentage and only very limited 

changes to the other cost-sharing provisions in a policy including copayments, deductibles and 

out-of-pocket limits, 

• 	 Many of the reform changes provide a great deal of value. Most of the reform changes from 

which a grandfathered plan would be exempt are those that provide important advantages for 

individuals and employers, such as first dollar coverage of preventive care. 

• 	 Some of the reform requirements are already incorporated in many of our plans. For 

example, we currently do not rescind coverage (except in the case of fraud or intentional 

misrepresentation) and in many plans, we cover out-of-network emergency care at the same 

benefit level as in-network care. 

• 	 Based on government and industry forecasts, most grandfathered plans will only be in 

existence short-term. The Department of Health and Human Services estimates that 80% of 

small plans will have lost their grandfathered status within three years. 

• 	 Administering grandfathered plans is inefficient and will increase costs for employers, 

while only small cost sharing increases can be passed along to members. Principal Life is 

committed to delivering the highest value in health care coverage to our members. Part of thslt 
commitment requires that we become as efficient as possible in supporting our high standards for 

customer service and member experience. Maintaining grandfathered plans could actually 

increase costs for employers and members because of the need to administer two different Illans. 

Communicating this information to your brokers and employers 

If you have a plan that renews in the near future, you can use the above talking points with those bwkers 

and employers to help them understand why we are not going to administer grandfathered plans. As 

mentioned above, we will provide more communications and tools in the coming weeks to help you (and 

your brokers) discuss all of the more immediate health care reforms and our decisions about them. I"f you 

have questions or need more information. please contact your market leader. 

Principal Life remains committed to our customers and brokers and will work with them to navigate all of 

the changes around health care reform, while delivering quality, cost-effective care. 

This summary is an overview ofthe impact ofhealth care reform grandfathering options. It is not a 

complete statement ofthe impacts or changes that may result from health care reform. 

GP 59055 © Principal Financial Services, Inc. 07/2010