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New Federal Rules on Employer Health Insurance Plans

HHSThe Health and Human Services Secretary Kathleen Sebelius has announced new federal rules that employers who offer health insurance plans will have to follow.

These new regulations are designed to keep employers from changing their group health insurance policies by charging employees more or by offering fewer benefits.

If employers change their group plans, they will lose their “grandfather ” status and will be subject to new regulations under the health care legislation.

According to The Associated Press, two-thirds of small businesses will lose their grandfather status by 2013, along with half of all large businesses.

An employer will lose their grandfathered status if they:

  • Cut or reduce benefits for particular health problems.
  • Raise copayments or deductibles. Copayments can not be increased by $5 or a medical inflation rate plus 15 percentage points (whichever is greater).
  • Lower the portion of health coverage premium paid by the employer by more than 5 percentage points (this would increase the amount an employee pays).

Consumer groups are applauding the new regulations but businesses are a little apprehensive.

Randel K. Johnson, the senior vice president of the U.S. Chamber of Commerce said, “Once grandfathered status is lost, employers will be forced to follow a number of expensive new insurance rules — which will increase costs for employers and employees, threatening the coverage Americans currently have. ”

These regulations are meant to deliver on the government’s promise that people can keep their current health plans if they like it; however, a majority of these plans will be changing by 2013.

Politics and Legislation