Health plans in existence on March 23, 2010 had the option to “grandfather” their health plan if certain criteria were met. The Affordable Care Act imposes a number of requirements on group health plans. Some reform requirements do not apply to grandfathered plans as long as that status is maintained.
Retaining Grandfather Status
Remaining grandfathered subjects the plan to severe on-going restrictions on future benefit changes. To make a determination about whether grandfather status has in fact been or soon will be lost, the Plan must look closely at any changes that have been made since March 23, 2010. Any action falling into the following triggers could cause a loss of grandfathered status:
• Employer contribution were reduced by greater than 5%
• A benefit to diagnose or treat a particular condition was eliminated
• Member's cost share (i.e., coinsurance) requirements were increased
• Copays were increased by more than $5 (adjusted for inflation) or the greater of the Consumer Price Index (CPI) plus 15% points
• Deductible and/or out-of-pocket limits were increased by more than CPI plus 15% points
• A business restructuring occurred to avoid a loss of grandfather status
• An addition or a decrease of an annual limit, except to replace an overall lifetime limit. This is permitted only if the Plan did not already have an annual limit on March 23, 2010, and the new annual limit is not lower than the prior lifetime limit, subject to regulatory minimums
Annual Certification Required
If a plan did not make any of the changes discussed above and maintains that their Plan is a grandfathered plan, they MUST certify at the time of their renewal each of the plans that qualify for grandfathered status. If certification is not received at renewal for each of the plans that qualify for grandfather status, we will assume that a plan does NOT intend to maintain grandfathered status. Certification is required annually.
Notices to Participants and Beneficiaries
A grandfathered plan must (1) include a statement, in any plan materials provided to participants and beneficiaries, describing the benefits provided under the plan or health insurance coverage that the plan or health insurance coverage believes that it is a grandfathered health plan and (2) must provide contact information for questions and complaints. (A model notice has been issued by The U.S. Department of Labor).
A grandfathered plan must also maintain records documenting the terms of the plan or health insurance coverage that were in effect on March 23, 2010, and any other documents necessary to verify, explain or clarify its status as a grandfathered health plan. The plan or insurer must make such records available for examination for as long as the plan or insurer takes the position that the plan or health insurance coverage is a grandfathered health plan. The records must be made available for examination by participants, beneficiaries, individual policy subscribers or a state or Federal agency official.
Benefits that must be added upon relinquishing grandfathered status
If a plan decides to relinquish its grandfather status or makes changes that defeat its grandfathered plan status, a plan will also be required to add the following benefits to their plan as of the date grandfather status is lost:
• Patient Protections
• Coverage of Preventive Services
• Internal Claims and Appeals and External Review Processes
• Coverage for participation in approved clinical trial
• Cap on In-Network out-of-pocket maximums
This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.