Q: A health insurance issuer has received from HHS a waiver of the annual dollar limit requirements pursuant to section 2711 of the PHS Act for a group health insurance product. Can this issuer sell that product to a self-insured grandfathered group health plan that has itself been granted a waiver and wishes to switch from being a self-insured plan to a fully insured plan?
A: Yes, if the group health plan and the health insurance coverage satisfy the criteria below. In the December 9, 2010, CCIIO Supplemental Guidance: “Sale of New Business by Issuers Receiving Waivers,” HHS stated that it is permissible for a group health plan that is fully insured with a waiver of the annual limit requirement to purchase a new policy from a different issuer that has also obtained a waiver of the annual limit requirement. The December 9, 2010 guidance was published in light of an amendment to the interim final rule concerning grandfathered health plans. The amendment permits a group health plan to maintain its grandfathered status despite entering into a new insurance contract, 26 CFR 54.9815-1251T(a)(1)(ii), 29 CFR 2590.715-1251(a)(1)(ii), 45 CFR 147.140(a)(1)(ii). The amendment permits a self-insured group health plan to become a fully insured plan while maintaining its grandfathered status, so long as the group health plan is not altered in a way that would violate paragraph (g)(1) of the grandfathering rule.
While the December 9, 2010, guidance only addressed the scenario of switching from one fully-insured insurance policy to another, the same policy rationale for permitting the change of insured policies applies to a self-insured group health plan that received a waiver of the annual limits requirement pursuant to section 2711 of the PHS Act and wishes to purchase a new policy from a health insurance issuer that has obtained a waiver of the annual limit requirement for that policy.
Accordingly, a self-insured group health plan that has obtained a waiver can purchase a group health policy with a waiver from a health insurance issuer under the following conditions, which are similar to those established in the December 9, 2010, guidance: