Publications: Healthcare Reform - Relief for Insured Plans

Yesterday, all three federal agencies regulating healthcare plans under the Patient Protection and Affordable Care Act announced significant relief for insured, non-grandfathered healthcare plans. These plans will not be required to comply with PPACA’s nondiscrimination rules until after the regulators issue guidance on those rules. In a nod to the significant lead time employers and plan administrators typically need to make significant plan changes, the announcement says the regulators anticipate establishing a compliance period after guidance is issued and before it becomes effective.

The PPACA nondiscrimination rules require insured health plans, once they cease to be grandfathered, to operate in a way that does not unduly favor an employer’s more highly paid employees, as to either benefits provided or participation in the plans. (Self-insured health plans have been subject to similar rules for many years.) For this purpose, fully one-quarter of the employer’s workforce is considered to be highly compensated.

PPACA’s nondiscrimination rule has posed particular concerns for employers who sponsor “mini-med” plans for their rank and file employees. Many such employers feel constrained to offer the mini-med plans in order to meet insurers’ underwriting requirements.

We will follow the development of the nondiscrimination rules. In the meantime, if you have questions about how the healthcare reform law affects your benefit plans, please contact your Ungaretti & Harris lawyer.