Employers Given More Leeway to Switch Providers Under Obamacare

November 16, 2010

U.S. employers offering health insurance to workers will not lose protected status under the new healthcare law if they decide to switch healthcare plan providers, U.S. administration officials said Monday.

At issue is President Barack Obama’s pledge that people can keep their current healthcare plan if they liked it and administration officials have said the protected status aims to minimize disruption in coverage.

Under the overhaul passed earlier this year, employers must adhere to certain rules to keep special “grandfathered” status that exempts them from imposing other provisions in the law such as an appeals process and mandatory preventive care.

Any plan that made significant changes to their employees’ coverage, such as reducing workers’ benefits, increasing costs or changing health insurance carriers, would lose protection.

But officials at the U.S. Departments of Health and Human Services, Labor and the Treasury said, if an employer chooses another health insurance company to provide coverage, they can keep their protected status.

“The purpose of the grandfather regulation is to help people keep existing health plans that are working for them,” the agencies said in a statement.

“This amendment furthers that goal by allowing employers to offer the same level of coverage through a new issuer and remain grandfathered, as long as the change in issuer does not result in significant cost increases, a reduction in benefits, or other changes described in the original grandfather rule.”

The change comes after complaints that preventing companies from choosing another insurer would restrict “their ability to shop around for the best deal,” one official told reporters in a conference call speaking on background.

Health insurance providers include Aetna Inc., Cigna Corp. and UnitedHealth Group Inc., among others.

The amended rule only affects group health insurance plans, not those sold to individuals. Only a small number of employer plans are expected to be affected, officials said.

(Reporting by Susan Heavey; editing by Andre Grenon)

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