Grandfathering under PPACA, what you think you have may not be what you think (you have)


The health care reform legislation (PPACA) makes a number of changes to health plans and health insurance. Many people have expectations of immediate changes that in some cases will add benefits to their coverage.  This is not necessarily the case.  Several provisions will not apply to certain grandfathered plans, generally health plans that were in effect on the date of enactment, March 23, 2010. 

Here is a summary of those provisions that are subject to all plans and those that do not apply to grandfathered plans.

These changes apply to all plans; there is no grandfather plan exclusion:

  • No overall lifetime benefit maximum and no lifetime dollar limit on specific essential benefits
  • Restricted annual benefit maximum for essential benefits (pre-2014)
  • Dependent coverage to age 26 (for dependents without employer sponsored coverage pre-2014)
  • No rescission except in case of fraud
  • No preexisting condition exclusions for children under age 19
  • Prohibits waiting periods longer than 90 days (2014)
  • Uniform explanation of coverage 

My plan is grandfathered I tell you, grandfathered!

In addition, there is a question of how and when the above provisions apply to a collectively bargained plan.  The legislative language is confusing and contradictory.  Nevertheless, the consensus is that the intent is for these provisions not to apply until the existing CBA expires. 

These provisions do not apply to grandfathered plans: 

  • Rules on deductible maximums and out-of-pocket maximums ($2,000 and $4,000)
  • Required coverage of preventive services with no cost-sharing
  • Internal and external appeal process rules-
  • No prior authorization for ob-gyn visits
  • Emergency care must have same payment in and out of network, and no prior authorization
  • Nondiscrimination for insured plans under the tax Code (105 h dealing with coverage for highly paid)

So, for example, the requirement for a plan to have both a revised internal and a new external claims review procedure does not apply to plans that were already in effect on March 23, 2010.

Now the question becomes, can a plan that is grandfathered lose that grandfathering by taking certain actions like making changes to the current provisions of that plan?  The law does not say what will cause a plan to lose its grandfathering. However, some thinking that changing a plan (say, raising a deductible) could cause that to happen.  Only future regulations will clarify the situation.  Until that happens, plan sponsors should make changes with caution.


Categories: Healthcare

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