Friday, October 28, 2011
Wednesday, October 26, 2011
Grandfathering Q&A for New Healrthcare Reform
What qualifies as a grandfathered plan?
- A “Grandfathered Health Plan” is defined as a group health plan or health insurance coverage in which an individual was enrolled on March 23, 2010, regardless of whether the individual later renews coverage. Grandfathered plans are required to meet some, but not all, of the reforms contained in the Affordable Care Act.
- The Act allows for family members to be added to a current plan and for new employees (including new enrollees subject to certain anti-abuse rules) to be enrolled in a grandfathered plan.
- Beyond this, interim regulations detail what it means to be grandfathered and what benefit changes grandfathered plans can make and still retain their grandfathered status.
Which health care reform provisions apply to grandfathered plans?
Grandfathered plans will be required to meet some, but not all of the reforms.
Must grandfathered plans provide internal/external reviews under the Act?
Grandfathered plans are not required to comply with the Act’s internal and external review mandate — although plans may voluntarily comply without losing grandfathered status.
Disqualification
What disqualifies a grandfathered plan?
Can you conform benefits to reflect new state and federal laws without loss of grandfathered status?
Generally, a plan will lose grandfathered status if any of the following changes are made after March 23, 2010.* These rules apply separately to each “benefit package” offered by an employer:
- A significant cut or reduction in benefits by eliminating all or substantially all of the benefits to diagnose or treat a condition, or any necessary element to diagnose or treat a condition.
- Raising coinsurance charges
- Significantly raising fixed cost-sharing (i.e., deductibles and out-of-pocket limits) by more than medical inflation (as measured from March 23, 2010) plus 15 percentage points
- Significantly raising copayment charges by more than the greater of: (i) medical inflation (as measured from March 23, 2010) plus 15 percentage points or (ii) $5 (adjusted for medical inflation)
- Significantly lowering the rate of employer contributions by 5 percentage points for any coverage tier
- Adding or tightening an annual limit (with one exception)
- Reclassifying employees so that the reclassified employees are eligible for a different plan (even if it’s a grandfathered plan), without a bona fide employment reason
- Failing to continuously maintain at least one covered individual (not necessarily the same individual)
Note: To maintain grandfathered status, a notice must be placed in plan materials provided to a participant or beneficiary explaining the grandfathered status of the plan or coverage.
For coverage that was in effect on March 23, 2010, an amendment to interim final rules released on November 15, 2010 clarifies that employers can change health insurance coverage effective on or after November 15, 2010 (i.e., enter into a new policy, certificate, or contract of insurance) without losing grandfathered status as long as other changes are not made that cause the loss of grandfathered status. Plans entering into a new policy, certificate, or contract of insurance with a new issuer must provide documentation of plan terms to the new carrier, as detailed in the amended rule. The rules for individual market were not modified, meaning a change in carrier in the individual market would result in the loss of grandfathered status.
Maintaining grandfathered status
How does a plan maintain grandfathered status?
The regulations also provide guidance on changes which are generally acceptable and will not normally affect a plan’s grandfathered status as long as the other invalidating changes are not made. Generally, if any of the changes listed below were made to a plan after March 23, 2010, they will not, by themselves, cause a plan to lose grandfathered status:
- Changes to third-party administrators or insurers in the group market
- Changing premiums
- Changes to comply with state or federal law, including voluntary changes to implement ACA
- Agreeing to binding renewals before March 23, 2010, effective on or after March 23, 2010
- Allowing new employees or new enrollees who are not new employees and their dependents to enroll (subject to certain anti-abuse rules)
- Allowing new dependents of current subscribers to enroll.
Tuesday, October 4, 2011
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