The Implications of Losing “Grandfathered Plan” Status

September/October 2010Articles Garden State Focus

As many employers may already know, the new health care reform law has created a special status for health care plans that allows them to be exempt from many of the law's new requirements - a status referred to as "grandfathered plan status."

What many employers may not know, however, is that under new interim final regulations, if a fully-insured health plan loses its grandfathered plan status, it will have to comply with the requirements of the tax code's "nondiscrimination" provisions - provisions that prohibit a plan's more favorable treatment of highly compensated individuals. Prior to these regulations, these nondiscrimination requirements only applied to self-insured plans.

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