Nearly all employers expect to lose ACA grandfathered status by 2014

While many U.S. companies initially hoped they could preserve much of their pre-reform plan design for their group health plans by maintaining so-called grandfathered status under the Affordable Care Act, that's no longer the case. A recent survey by Hewitt Associates reveals that almost all companies now believe they will not hold on to grandfathered status. Ninety percent of companies report they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.

Under the Act, companies can lose their grandfathered status if they make certain changes to plan terms, including reducing benefits, significantly raising co-payment charges, significantly raising deductibles, or (for insured plans) changing insurance carriers.

According to input from over 450 companies--representing nearly 7 million employees--most companies expect to lose grandfathered status either because of health plan design changes (72 percent) or changes to company subsidy levels (39 percent). Employers also cited consolidation of health plans (16 percent), changes to insurance carriers (16 percent) and union negotiations (15 percent) as additional reasons.

The story's the same for both self-insured and fully insured plans. Of those companies with self-insured plans, most (51 percent) expect to first lose grandfathered status in 2011, while another 21 percent plan to lose the status in 2012. For those with fully insured medical plans, loss of grandfathered status is expected to occur either in 2011 (46 percent) or 2012 (18 percent).

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