New! PPACA Grandfathered Regulations Released

Eye On Washington: Health Care Reform

Updated: June 22, 2010

Last Week in Washington

Interim Final Rules on "Grandfathered" Health Plans Released

On June 14, the Departments of Health and Human Services, Labor, and Treasury released coordinated regulations implementing the "grandfathered" provision of the Patient Protection and Affordable Care Act (PPACA). The regulations state that grandfathered health plan coverage is coverage provided by an issuer of health insurance or a group health plan in which an individual was enrolled on March 23, 2010. In order for a plan or coverage to maintain its status as a grandfathered plan, the plan cannot make significant changes that reduce benefits or increase costs for consumers. Plans are not allowed to raise co-insurance charges, add or tighten annual limits, and cannot change insurance companies. Plans cannot significantly cut benefits, significantly raise deductibles or copayment charges, or significantly lower employer contributions (these stipulations are according to an accompanying fact sheet, the IFR goes into greater detail).

In addition, to maintain grandfathered status, plans must provide a disclosure to participants describing their benefits and the plan’s belief that it is grandfathered under the PPACA; a model disclosure is provided. Plans must also maintain records of benefits that were in place on March, 23, 2010, and any documents necessary to verify its status as a grandfathered plan.

The regulations were published in the Federal Register on June 17, 2010, and comments are due by August 16, 2010. A Health Reform Fact Sheet and "Grand-Fathered" Health Plan FAQ document are also available.

Sebelius Announces Investments to Strengthen Primary Health Care Workforce and IRS Expands Tax Benefit to Health Professionals Working in Underserved Areas

On June 16, Department of Health and Human Services Secretary Kathleen Sebelius announced a series of new investments worth $250 million to increase the number of health care providers and strengthen the primary care workforce, made possible by the new Health Care Reform Law. The investments in the primary care workforce are the first allocation from the new $500 million Prevention and Public Health fund for fiscal year 2010, created by the Affordable Care Act. Half of this fund will be used to boost the supply of primary care providers by offering new resources for: creating additional primary care residency slots, supporting physician assistant training in primary care, encouraging students to pursue full-time nursing careers, establishing new nurse practitioner-led clinics, and providing funds for states to plan for and address health professional workforce needs. A primary care workforce fact sheet on the new investments is also available.

In addition, the IRS announced an Affordable Care Act that under the Health Care Reform Law, health care professionals who received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 Federal Income Tax returns as well as a tax cut going forward. This announcement pertains to a provision in the new law that expands a tax exclusion for amounts received by health professionals under loan repayment and forgiveness programs. Prior to the new law, only amounts received under the National Health Service Corps Loan Repayment Program or certain state loan repayment programs were eligible for a qualified tax exclusion. The new law expands this exclusion to any state loan repayment or loan forgiveness programs intended to increase the availability of health care services in underserved areas.

Justice Department Cites Commerce Clause in Motion to Dismiss State Attorneys General Suit

The U.S. Justice Department’s brief dated June 16 indicated that the suit brought by state attorneys general against the new Health Care Reform Law lacks standing to challenge the individual mandate requirement. In support of a motion to dismiss, filed in the U.S. District Court for the Northern District of Florida, the government argued that even if the plaintiffs had standing to sue on those issues, their arguments would fail under Congress' authority under the commerce clause of the U.S. Constitution.

Attempt to Modify Health Law Defeated

On June 15, the House defeated a Republican motion to recommit that would have repealed the health care reform’s individual mandate to maintain coverage with a vote of 187-230. BNA reports that Republicans felt the individual mandate needed to be repealed in order for a related small business bill to work, but Democrats said the motion to recommit would guarantee that health insurance premiums for middle-income families would increase. The procedural motion did not have a realistic chance of passing, however, it was a move by Republicans to get Democrats on the record again to support a law requiring uninsured Americans to purchase health insurance.

States Moving Forward with Plans for Health Data Exchanges

According to iHealthBeat, the Office of the National Coordinator for Health IT has approved plans from Maryland, New Mexico, and Utah, to begin implementing regional health information exchanges. Maryland’s not-for-profit health IT organization has received nearly $10 million to build a statewide health data exchange, while New Mexico received $7 million. Utah has received $15.8 million and has announced that most of the grant money will go toward helping small clinics and health care provider offices implement electronic health records and connect with the health data exchange.

In Case You Missed It:

Delivering on the Promise: A State Guide to the Next Steps for Health Care Reform, a new report issued by the U.S. Public Interest Research Group June 16, urged states to create strong health insurance exchanges that provide clear coverage options for consumers as well as information about insurance plans' quality, customer service, and out-of-pocket costs.

Sebelius: Making the Health Care Reform Law Work, Roll Call, Kathleen Sebelius (Opinion), 06/21/2010

Even With The ‘Grandfather Clause’ Protection, Change Is Coming To Most Health Plans, Kaiser Health News, Jonathan Cohn (Opinion), 06/21/2010

New Health-Care Rules Could Add Costs, and Benefits, to Some Insurance Plans, Washington Post, David S. Hilzenrath and N.C. Aizenman, 6/15/2010

ADP is committed to obtaining the most current information on health care reform to help ensure that our Benefits, HR and Payroll outsourcing solutions remain compliant with the changing laws while you focus on your business. This content is subject to change. We will continue to provide updates on this page through our partner, AON Consulting, as the situation continues to evolve.

Helpful Links

Understanding FSA Benefits Post-PPACA

Understanding the Affordable Care Act: Timeline: What's Changing and When 

Click here to view The White House’s Web site for employers with information about the new reform law. This site includes a section with frequently asked questions.  

Click here to access SHRM's Health Care Reform page which includes a wealth of information to assist HR professionals in implementing the new law in their workplaces.

AN EMPLOYER GUIDE:ARE YOU PREPARED TO COMPLY WITH KEY IMPACT POINTS? Download PDF.

IRS Issues final Guidance on the small employer tax credit

Click here to learn more.