Final Rule Gives More Flexibility For Grandfathered Health Plans

Federal regulators have finalized two changes they had proposed on July 15, 2020, that would give employers more flexibility to maintain grandfathered health plan status.

1. High deductible health plans (HDHPs) designed to be compatible with health savings accounts (HSAs) will always be allowed to increase deductibles to the extent required to meet minimum thresholds, even if such increases would otherwise exceed the allowed inflation index
2. Employers can determine fixed-amount cost-sharing indexing using:
   1. The current medical inflation +15% method (using CPI-U for medical care since March 2010), or
   2. For plan years beginning on/after June 15, 2021, using the “premium adjustment percentage” since 2013 +15% (the premium adjustment percentage is currently used to index non-grandfathered plan out-of-pocket limits and large employer ACA penalties each year and is likely to result in higher indexed allowances)

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.