New York Labor and Employment Law Report : New York Employment Lawyer & Attorney : Bond Schoeneck & King Law Firm : NY Labor Relations, Employee Benefits

September 22 Deadline: On June 17, 2011, the CCIIO issued supplemental guidance which includes procedures for obtaining an extension of existing waivers, and revisions to the application process for new applicants. Additionally, the supplemental guidance requires plans or policy issuers to provide eligible participants and policy subscribers with an "Annual Notice," provide HHS with an annual update, and retain waiver-related records in case of an HHS audit, as described below. Significantly, HHS announced that all waiver extension requests and new applications for waivers must be received on or before September 22, 2011. New application and extension request forms are available on the CCIIO's website. Plans or policy issuers that do not receive approval for an extension or waiver will be required to come into compliance with the annual limit rules under the Act and the IFR.

Extensions for Plans or Policy Issuers with Existing Waivers: Plans and policy issuers that wish to extend existing waivers (i.e., those received for the plan or policy year beginning on or after September 23, 2010, but before September 23, 2011) must request a waiver extension by submitting the extension request form described above. The request should include updated contact information, enrollment information for the plan or policy, the plan's or policy's current annual limit, and a signed attestation that the plan or policy continues to satisfy the eligibility criteria for obtaining a waiver. Once the initial waiver extension is granted, plans or policy issuers must submit the same information at the end of each applicable calendar year (i.e., December 31, 2012 and December 31, 2013).

Existing waivers may be extended until January 1, 2014, so long as the plan or policy issuer: (1) provides the information described above by the end of each calendar year for which the extension applies; and (2) retains all records pertaining to the waiver application in the event of an HHS audit (see discussion below).

For New Waiver Applicants: Under the supplemental guidance, a plan or policy-issuer is eligible to apply for a new waiver if: (1) the plan or policy was issued prior to September 23, 2010; (2) the plan or policy issuer (with respect to the policy) has never applied for or been granted a waiver; and (3) the plan or policy coverage does not exceed the RAL amount for the applicable plan year (see footnote 1). New applications will be reviewed using factors listed in the CCIIO's November 5, 2010 guidance. Applicants may also submit optional supplemental information to demonstrate how the plan's or policy issuer's compliance with the IFR (in the absence of a waiver) would result in a "significant decrease in access to benefits" or a "significant increase in premiums."

Annual Notice Requirement: Under the CCIIO's December 9, 2010 guidance, plans or policy issuers with existing annual limit waivers must provide an "Annual Notice" informing all eligible participants and subscribers that the plan or policy does not satisfy the minimum restricted annual limits for essential health benefits and has received a waiver of the requirement. Mandatory language for the Annual Notice is provided in the June 17, 2011 supplemental guidance. Plans or policy issuers may not use other notice language to satisfy this requirement, unless the plan or issuer obtains permission from the CCIIO. The Annual Notice must be provided each year the annual limit requirements are waived, and must be provided conspicuously, in bold 14-point font, on the front of plan or policy materials that describe the plan's or policy's terms of coverage (e.g., summary plan descriptions).

Record Retention: Plans or policy issuers with existing waivers must retain all waiver-related records (including documentation used in supporting the plan's or issuer's original waiver application). If, during audit, HHS determines the waiver data provided by an applicant contains material mistakes or omissions, HHS may withdraw the waiver or extension, and require the plan or policy issuer to come into compliance with the annual limit rules under the Act and IFR.

ACTION REQUIRED: Plans or policy issuers seeking to extend existing waivers or to apply for new waivers should prepare (or have prepared) extension requests or new applications in accordance with the requirements and procedures contained in the CCIIO's June 17, 2011 supplemental guidance, for submission on or before September 22, 2011.

Plans or policy-issuers that have been granted a waiver or extension should review the revised compliance requirements described in the supplemental guidance, which include providing an annual update to HHS, providing an Annual Notice to all eligible participants and policy subscribers, and retaining all waiver-related records to avoid issues that could arise in an HHS audit.
 

Additional Guidance For Grandfathered Health Plans
On April 1, 2011, the Departments issued a sixth set of FAQs regarding the implementation of the PPACA . For a summary of the FAQs, click here.

Form W-2 Cost Of Coverage Reporting
On March 29, 2011, the IRS issued interim guidance (Notice 2011-28) regarding the PPACA requirement that employers report the “aggregate cost of applicable employer-sponsored coverage” to employees on IRS Form W-2. Included in the interim guidance is a set of Q&As that addresses, among other things: (1) which employers are subject to the reporting requirement; (2) methods of cost-reporting in specific circumstances (e.g., termination from employment, successor employers, retirees, etc.); (3) how to determine the aggregate cost of applicable employer-sponsored coverage; (4) the coverage required to be reported; and (5) calculating the dollar amount of reportable coverage costs. The IRS emphasizes that cost of coverage reporting to employees is for informational purposes only, and will not cause otherwise excludable employer-provided health benefits to become taxable income.

Although voluntary for the 2010 and 2011 tax years (Notice 2010-69), most employers that provide health coverage to their employees are required to report cost information beginning with the 2012 tax year. (Note, employers that choose to report the cost of coverage for 2010 and/or 2011 may rely on Notice 2011-28.) Transitional relief may be available, however, for: (1) small employers (i.e., employers that file less than 250 Forms W-2 for the 2011 tax year); (2) terminated employees to whom Forms W-2 are provided before the end of the year; (3) multiemployer plans; (4) health reimbursement arrangements; (5) stand-alone dental and vision plans; and (6) self-insured plans not subject to COBRA continuation coverage or other federal law requirements (e.g., church plans).

Automatic Enrollment Requirement For Large Employers
The PPACA requires large employers (those with more than 200 full-time employees) that are subject to the Fair Labor Standards Act to automatically enroll new full-time employees (or continue enrollment for current employees) in one of the employer’s health benefit plans. Employers are not required to comply with the automatic enrollment provisions until regulations are issued and effective, which the DOL intends to complete by 2014. To assist in the development of proposed regulatory guidance, the DOL hosted a public forum (held April 8, 2011) for individual and organizational stakeholders to exchange information and ideas regarding the automatic enrollment requirements. Forum topics included the definition of “full-time employee,” selecting the appropriate plan/benefit package (for employers that maintain multiple health plans or benefit packages) and type of coverage (e.g., single or family) in which employees would be automatically enrolled, and notice requirements for employees who wish to opt out of coverage. A transcript of the forum will be available on the DOL’s website at www.dol.gov/ebsa/healthreform.
 

Section 2716 of the Affordable Care Act (the preferred moniker for the Patient Protection and Affordable Care Act, or “Healthcare Reform”) requires insured group health plans to satisfy the requirements of section 105(h)(2) of the Internal Revenue Code (“Code”). Code Section 105(h)(2) prohibits discrimination in favor of highly compensated individuals as to eligibility to participate, and benefits provided. A highly compensated individual is defined as one of the five highest paid officers of the employer, a 10 percent or greater shareholder, or (with some exclusions) an individual among the highest paid 25% of all employees when ranked by compensation. Section 2716 also provides that “rules similar to” the nondiscriminatory eligibility classification test, nondiscriminatory benefits test and the controlled group rules of Code Section 105(h)(3), (4) and (8), respectively, shall apply. Failure to satisfy these requirements could result in a hefty excise tax being imposed on the employer: $100 per day per individual discriminated against.

In September, Notice 2010-63 requested comments about the guidance needed in order to satisfy the nondiscrimination requirements. In addition to guidance concerning the meaning of “rules similar to” Code Section 105(h), commentators noted that compliance prior to 2014, when the State Exchanges and individual and employer responsibility and penalty provisions take place, would be difficult without substantial guidance. The Notice acknowledges that guidance is required with respect to such questions as whether the rate of employer contribution is a “benefit” that must be provided on a nondiscriminatory basis, whether the nondiscrimination standards can be applied separately to distinct geographic locations, how the rules apply to expatriates and inpatriates, treatment of employees who voluntarily waive coverage, and whether paying for the coverage of highly compensated individuals on an after-tax basis affects the nondiscrimination requirements, among other things.

Comments will be accepted by the IRS on the application of the nondiscrimination requirements until March 11, 2011. It seems unlikely we will see proposed regulations until close to the end of 2011, at best.

Employers who have already adjusted health plan eligibility and premium contributions in an effort to comply with the Affordable Care Act may wish to re-evaluate the changes made. Keep in mind, however, the Code Section 125 rules for changing pre-tax premium payments once the plan year has begun: changes in elections are only permitted in limited circumstances -- unless, of course, we get Section 125 relief in connection with this 11th hour nondiscrimination reprieve.
 

Amendment to Interim Final Regulations

Under the interim final regulations, a group health plan could lose grandfathered status if the plan changed from one insurer to another after March 23, 2010. This restriction only applied to insured group health plans. A self-insured plan may change third-party administrators without losing its grandfathered status (provided the plan otherwise satisfies the grandfathered plan requirements). The amendment to the interim final regulations provides generally that a group health plan does not cease to be a grandfathered plan merely because the plan (or plan sponsor) enters into a new policy, certificate, or contract of insurance after March 23, 2010. However, grandfathered plan status can be maintained, notwithstanding a change in insurers, only if the plan does not make coverage or cost-sharing changes that would result in the loss of grandfathered plan status. To maintain status as a grandfathered health plan, a group health plan entering into a new policy, certificate, or contract of insurance must provide the new health insurance issuer with documentation of the plan terms that is sufficient to determine whether the health plan has lost grandfathered status based upon the otherwise applicable grandfathered plan rules.

The interim regulation does not apply to a group health plan that entered into a new policy, certificate, or contract of insurance after March 23, 2010, that is effective before November 15, 2010 (the effective date of the regulation). Such a plan would cease to be a grandfathered plan based upon a change in insurers.

FAQs

Changes That Result In Loss of Grandfathered Status:  The FAQs confirm that the six specific changes identified in the interim final regulations are the only changes that a plan existing on March 23, 2010 needs to consider when evaluating its grandfathered status. In general, the six changes are described in the FAQs as:

1. the elimination of all, or substantially all, benefits to diagnose a particular condition;

2. an increase in a percentage cost-sharing requirement (e.g., raising an individual’s coinsurance requirement from 20% to 25%);

3. an increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points;
 

4. an increase in a copayment by an amount that exceeds medical inflation plus 15 percentage points (or, if greater, $5 plus medical inflation);

5. a decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points; and

6. the imposition of annual limits on the dollar value of all benefits below specified amounts.

Multiple Benefit Packages: The FAQs provide that the grandfathered plan analysis applies on a benefit-package-by-benefit-package basis. Accordingly, if a single group health plan offers three benefit packages (e.g., a PPO, a POS arrangement, and HMO), and only one of the benefit packages loses grandfathered status, that fact alone does not affect the grandfathered status of the other benefit packages.

Tiers of Coverage: As noted above, one of the ways a group health plan may lose grandfathered status is if the employer decreases its contribution rate towards the cost of coverage by more than 5 percentage points. The interim final regulations indicated that this analysis applies on a tier-by-tier basis. The FAQs clarify that, if a group health plan modifies the tiers of coverage it had in effect on March 23, 2010 (e.g., from employee-only and family to employee-only, employee-plus one, employee-plus-two), the employer contribution for any new tier is tested by comparison to the corresponding tier on March 23, 2010. Accordingly, if the employer contribution rate for family coverage was 50 percent on March 23, 2010, the employer contribution rate for any new tier of coverage other than employee-only (i.e., employee-plus-one, employee-plus-two, employee-plus-three or more) must be within 5 percentage points of 50 percent.

However, if a plan adds one or more new coverage tiers without eliminating or modifying previously tiers, and those new coverage tiers cover classes of individuals not previously covered, the new tiers would not cause the plan to lose grandfathered status. For example, if a plan that previously offered employee-only coverage (i.e., did not offer family coverage) added a family tier, the level of contribution toward the family tier would not cause the plan to lose grandfathered status.

Different Copayment Levels: The Departments clarified that if a plan sponsor raises the copayment level for one category of services (e.g., outpatient primary care) by an amount that exceeds the permissible copayment increase standards, but retains the copayment for other categories of services, the change in the copayment for the one category of services will cause the entire plan to lose grandfathered status. Each change in cost sharing is tested against the applicable grandfathered standard in the interim final regulations.

Wellness Programs: The FAQs indicate that penalties (such as cost-sharing surcharges) imposed by wellness programs may implicate the grandfathered rules and should be analyzed carefully (e.g., the imposition of a surcharge could result in a decrease in the employer’s contribution rate by more than 5 percent in violation of the grandfathering rules).

Disclosures: Under the interim final regulations, in order to maintain grandfathered status, a group health plan must include a statement that the plan is intended to be a grandfathered plan in materials provided to a participant or beneficiary describing the benefits provided under the plan . The FAQs provide that such a statement need not be provided each time a plan sends an explanation of benefits to a participant. The Departments do indicate that plan sponsors should attempt to identify other plan communications (such as a plan’s summary plan description) in which the disclosure of grandfathered plan status would be appropriate.

Recommended Actions

Plan sponsors that are in the process of evaluating changes to their group health plans should consider the grandfathered plan rules as part of that process. In undertaking the grandfathered plan analysis, plan sponsors will need to decide whether the additional mandates imposed by PPACA for non-grandfathered plans outweigh the ability of the plan sponsor to modify plan cost-sharing, premiums, and other provisions without constraint.
 

Certain limited benefit plans or policies (i.e., "mini-meds") may be eligible for a waiver program, in cases where annual dollar limits fall below the RAL minimums, and compliance would result in a significant decrease in access to benefits or a significant increase in premiums for enrollees or policyholders. HHS Guidance on the waiver application process is expected to be issued in the near future.

Lifetime Limit Notice. Individuals who have lost coverage because of reaching lifetime limits, and who would otherwise be eligible for coverage, must be given notice that the lifetime limit no longer applies. If such individual is no longer enrolled in the plan or policy, he or she must be given notice of the opportunity to enroll (during a special 30-day enrollment period) no later than the first day of the first plan year beginning on or after September 23, 2010. Model language is available at http://www.dol.gov/ebsa/lifetimelimitsmodelnotice.doc .

Rescissions. Effective for plan years beginning on or after September 23, 2010, all group plans are prohibited from rescinding coverage except in the case of fraud or an intentional misrepresentation of material fact. If such rescission is permitted, plans and issuers must provide participants with 30 days notice prior to the date coverage is rescinded. The term "rescission" means any cancellation or discontinuance of coverage that has retroactive effect. Note, retroactive cancellation of coverage due to nonpayment of premiums or contributions does not constitute a "rescission" under the rules.

Patient Protections. For plan years beginning on or after September 23, 2010, all new group plans and issuers that use provider networks must comply with the following rules relating to patient protections:

Choice of Health Care Provider. If an enrollee is required to designate a primary care provider ("PCP") under a plan or policy: (i) the plan or issuer must permit the enrollee to designate any PCP who is available to accept the enrollee; (ii) the plan or issuer must permit a child-enrollee to designate an in-network pediatrician as his or her PCP (if available to accept the child); and (iii) if a plan or issuer covers obstetrics/gynecological care, the plan or issuer must not require preauthorization before an enrollee seeks services from an in-network OB/GYN provider. Notice of changes required by the choice of provider rules must be provided when the plan or issuer provides an enrollee with an SPD or other summary of benefits. Model language is available at http://www.dol.gov/ebsa/patientprotectionmodelnotice.doc.

Coverage of Emergency Services. If a plan or issuer covers emergency care in a hospital, the plan or issuer may not require prior authorization for services even if the health care provider is out of network. In addition, plans must not impose coinsurance rates or copayments for out of network emergency services in excess of the amounts that would have otherwise been required for services provided in network. Out of network providers, however, may bill participants for any remaining balance after the plan or policy pays, provided the plan or policy complies with certain cost-sharing requirements.

Claims, Appeals and Review Procedures. For plan years beginning on or after September 23, 2010, all new plans and issuers must comply with the new rules related to internal claims and appeals and external reviews of adverse benefit determinations, including rescissions of coverage. These new procedural requirements add to the existing claims and appeals procedures currently required under ERISA, and requires that plans or issuers: (1) notify claimants as soon as possible, but no later than 24 hours after receipt of an urgent care claim; (2) provide claimants with any new or additional evidence that arises in connection with the claim; (3) ensure that claims are processed in a manner that avoids any conflict of interest; (4) ensure notices are culturally and linguistically appropriate, and contain certain required information; (5) strictly adhere to the required internal claims and appeals procedural requirements; and (6) continue to provide coverage pending the outcome of an internal appeal. A claimant is deemed to have exhausted administrative remedies if a plan or issuer fails (even if the failure is de minimis) to strictly adhere to the new internal claims and appeals procedural rules, and may immediately pursue external review. All new plans and issuers (applies only to the insurance issuer for insured plans) must comply with either a state or the Federal external review process, whichever is applicable under the rules. In certain cases, claimants may be permitted to simultaneously proceed with both the internal appeals process and expedited external review.

New individual health insurance issuers are subject to all the internal claims and appeals rules that apply to group plans and issuers, and must adhere to three additional standards: (1) decisions on initial eligibility are subject to internal claims and appeals procedures; (2) only one level of review is permitted for determinations of individual health coverage; and (3) all claims and notice records must be maintained and made available upon request for at least 6 years.

Most of the rules discussed above are effective for plan years beginning on or after September 23, 2010. Employers that maintain group health plans, and insurers that maintain group or individual policies, should evaluate and determine the extent to which current plan or policy provisions may need to be updated to comply with the new rules by the applicable effective date.
 

Preventive Care Services

The Affordable Care Act requires that group health plans and health insurance issuers provide first dollar coverage for:

• Evidence-based items or services that are highly rated by the U.S. Preventive Services Task Force. The regulations list those recommended items and services as of July 14, 2010. The list details 44 items, including such services as screenings for diabetes, blood pressure, cervical, colorectal and breast cancer, certain sexually transmitted diseases, and many services related to pregnancy and childbirth.
• Immunizations recommended for routine use in children, adolescents and adults by the Centers for Disease Control and prevention, which the regulations define to include such routine childhood vaccines as Measles, Mumps, Rubella, Hepatitis A and B, Tetanus, Diphtheria, Pertussis, and Inactivated Poliovirus, as well as adult immunization for HPV, Meningococcal, Influenza and Zoster, among others.
• Evidence-informed preventive care and screenings for women, infants, children and adolescents that are contained in guidelines supported by the Health Resources and Services Administration.

A complete list of required preventive services and items required under the Regulations is available at http://www.HealthCare.gov/center/regulations/prevention.html. If additional preventive care services and items are added to the list, the Affordable Care Act requires that there be a minimum interval of one year between the date the recommendations are issued and the plan year in which first dollar coverage must be provided. If a preventive service or item is dropped from the list, the plan may drop the coverage, or impose cost-sharing, with 60 days advance notice to the enrollee.

A group health plan or issuer may provide additional preventive care services beyond those contained in the current requirements, with or without cost-sharing, in its discretion.

If the preventive care recommendation or guideline does not specify how, or how often, the service or item is to be delivered, the Regulations permit the health plan or issuer to use reasonable medical management techniques to determine coverage limitations, such as the frequency, method, treatment, or setting in which the recommended preventive service will be available without cost-sharing.

When Preventive Care is Provided with Other Services

The Regulations recognize that many preventive care services are rendered in connection with other services in an office visit, and contain guidance regarding how the "first-dollar" rule applies in those circumstances. The standard rule is, if the preventive service is billed separately, cost-sharing may be imposed with respect to the office visit. In cases where the preventive service is not billed separately (or, in capitation or similar payment situations, there is no separate tracking of the individual encounter data), the following rules apply:

• If the primary purpose for the office visit is the preventive service, no cost-sharing may be imposed for the office visit; and
• If the primary purpose of the visit is not the preventive service, the health plan may impose the applicable cost-sharing requirements to the office visit.

In-Network vs. Out-of-Network Preventive Services

The Regulations specify that a health plan that differentiates between services provided by in-network providers and those available from out-of-network providers is not required to provide coverage for recommended preventive services and items delivered by an out-of-network provider. If such services are delivered by an out-of-network provider, they may be subject to the cost-sharing requirements of the health plan.

The Economic Impact of First Dollar Preventive Services

One of the key considerations employers face regarding whether to maintain grandfather status in a health plan is the cost effect of first-dollar preventive services (see the June, 2010, BS&K Employee Benefit Information Memorandum to determine what plan changes affect grandfather status). The federal Office of Management and Budget has determined that these regulations are economically significant because they are likely to have an annual effect on the economy of $100 million in any one year. For non-grandfathered group health plans, because preventive care expenses that were previously paid out-of-pocket will be covered by group health plans and issuers, the demand for these services will likely increase, and the cost of these services will likely result in higher premiums. Your insurer, insurance broker, or health plan actuary may be able to estimate the actual cost to any particular group health plan.
 

Significance of Grandfathered Plan Status

A grandfathered plan is not subject to a number of the provisions of PPACA, including the preventative care mandate, certain nondiscrimination requirements, mandatory internal and external appeals rules, and restrictions on pre-authorizations for OB/GYN, pediatric and emergency care services. However, grandfathered plans are subject to many of the most significant PPACA requirements, including the tax penalties on employers for failing to provide affordable health coverage, restrictions on annual and lifetime limits, adult children coverage to age 26, limits on waiting periods, and the prohibition on pre-existing condition exclusions.

Definition of Grandfathered Plan

Under PPACA and the regulations, a grandfathered plan is coverage provided under a group health plan in which an individual was enrolled on March 23, 2010. The regulations make clear that the grandfathered plan rules apply separately to each benefit package made available under a group health plan. Thus, if an employer's group health plan offers three different coverage options (e.g., an HMO, a PPO and a high deductible health plan), the grandfathered plan rules apply separately to each coverage option. Thus, the loss of grandfathered plan status for one of the options does not affect the grandfathered plan status of the other two options, even though all three options are components of the same group health plan.

Changes that Will Not Result in Loss of Grandfathered Plan Status

The regulations and their preamble list a number of changes that will not affect a plan's grandfathered status. Most importantly, the enrollment of new employees or new beneficiaries in a plan after March 23, 2010 will not affect a plan's grandfathered status. However, the regulations include anti-abuse rules designed to prevent employers from circumventing the grandfathered plan rules by transferring employees from one plan to another without a bona fide business reason or through a merger, acquisition or similar business transaction (if the principal purpose of the transaction is to cover new employees under a grandfathered plan).

An increase in the premium for a coverage option does not result in the loss of grandfathered plan status, although a decrease in the share of such premium paid by the employer may (see below). In addition, changes made to a plan to comply with Federal or State legal requirements, voluntary changes to comply with the provisions of PPACA, and a change in third party administrators for a self-funded plan generally will not result in the loss of grandfathered plan status.

Changes that Will Result in Loss of Grandfathered Plan Status

The changes listed below will result in an immediate loss of grandfathered plan status. Once grandfathered plan status is lost, it cannot be regained.

New Policy or Contract of Insurance -- Grandfathered plan status will be lost if the employer enters into a new policy or contract of insurance after March 23, 2010. However, the renewal of an existing policy or contract will not result in the loss of grandfathered plan status.

Elimination of Benefits -- The elimination of all or substantially all benefits to diagnose or treat a particular condition will result in loss of grandfathered plan status. For example, a plan that eliminates benefits for cystic fibrosis would no longer be a grandfathered plan, even if the change affects relatively few individuals.

Increase in Co-insurance -- Any increase in a co-insurance requirement (measured from March 23, 2010) will result in loss of grandfathered plan status.

Increase in Deductible or Out-of-Pocket Limit -- An increase in a deductible or out-of-pocket limit will result in the loss of grandfathered plan status, if the total percentage increase (measured from March 23, 2010) exceeds a "maximum percentage increase" (essentially, the medical inflation rate determined under the regulation, plus 15%).

Increase in Co-payments -- An increase in a co-payment amount will result in the loss of grandfathered plan status, if the increase (measured from March 23, 2010) exceeds the greater of $5 (increased by medical inflation) or the maximum percentage increase (as defined above).

Decrease in Employer Contribution Rate -- A decrease in the employer's contribution rate (based upon cost of coverage) for any tier of coverage for any class of similarly situated individuals by more than five percentage points below the contribution rate for the coverage period that includes March 23, 2010 will result in the loss of grandfathered plan status. Essentially, this means that, to maintain grandfathered plan status, an employer must continue to pay the same percentage (subject to the five percentage point allowance) of the total cost of coverage that it was paying on March 23, 2010.

Change in Annual Limits -- The imposition of a new annual limit or a reduction of an existing annual limit will result in the loss of grandfathered plan status.

Notice Requirements

In order to maintain its grandfathered plan status, a group health plan must disclose to participants and beneficiaries that it is being treated as a grandfathered plan. An appropriate notice must be included in any plan materials provided to participants and beneficiaries describing the benefits provided under the plan (e.g., summary plan descriptions, benefit booklets, and open enrollment materials). The regulations provide model language which, if included in the appropriate documents, will be deemed to satisfy the notice requirement.

Recommended Actions

Employers should keep the grandfathered plan rules in mind when considering any changes to their group health plans. While PPACA and the regulations allow certain changes to be made without loss of grandfathered plan status, many changes (particularly changes to a plan's cost sharing provisions) may result in the loss of grandfathered plan status and the application of all of PPACA's requirements. Employers will need to weigh the benefits of maintaining grandfathered plan status against the need or desirability of plan changes that may jeopardize such status. For many employers, the loss of grandfathered plan status may be inevitable. In fact, the Federal government estimates that, by 2013, only 55 percent of all large employer plans and 34 percent of all small employer plans will remain grandfathered.