On November 15, 2010, the U.S. Departments of Labor, Treasury and Health and Human Services released an amendment to the previously issued interim final regulations (the “Interim Regulations”) concerning the “grandfathered plan” provisions of the Patient Protection and Affordable Care Act (PPACA). The departments also issued a fact sheet along with the amendment.

As we have previously reported, certain group health plans (referred to as “Grandfathered Plans”) which existed on March 23, 2010, are not required to comply with certain requirements (for example, the requirement for coverage of preventive care at no cost to the participant and the requirement that insured plans comply with nondiscrimination requirements). The Interim Regulations provided that Grandfathered Plans will lose their status if “they choose to make significant changes that reduce benefits or increase costs to consumers." Among the changes which the Interim Regulations identified as causing the loss of Grandfathered Plan status was changing insurance carriers for fully insured plans.

The new amendment provides that an insured group health plan does not lose grandfathered status merely by changing issuers or insurance contracts so long as the change in issuers and/or contracts complies with the other prior rules regarding grandfathered plan status.