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Grandfathered Health Plans

It’s time to revisit Grandfathered Health Plans.  Few Grandfathered Health Plans remain but for employers who have them it’s time to decide again whether Grandfathered status is the best option.  To help, we will answer many of the important questions in a Q&A format.

Q1: May plans maintain grandfathered status after 2014?

A1:  Yes, they may. There is no specific end date for grandfathered status.

 

Q2:  What are the advantages of grandfathered status?

A2:  Grandfathered plans are not required to meet these PPACA requirements:

  • Coverage of preventive care without employee cost-sharing, including contraception for women
  • Limitations on out-of-pocket maximums (starting with the 2014 plan year)
  • Essential health benefits and metal levels (starting with the 2014 plan year; these only apply to insured small group plans)
  • Elimination of Risk Adjustment discounts or surcharges beginning with the 2014 plan year (this only applies to insured small group plans)
  • Requirement that premiums for the oldest individuals cannot exceed 3X the premium for the youngest individuals
  • Change from 7 age bands to 45 age bands and more than twice the number of rating regions beginning in 2014
  • Change requiring that spouse rates be based on their own age and that children be billed separately per child beginning in 2014
  • Guaranteed issue and renewal (California groups have had guaranteed issue and renewal since 1993)
  • Nondiscrimination rules for fully insured plans (this requirement has been delayed but the IRS has promised to issue new rules shortly)
  • Expanded claims and appeal requirements
  • Additional patient protections
    • right to choose a primary care provider designation (not a change for California groups)
    • OB/GYN access without a referral (not a change for California groups), and
    • coverage for out-of-network emergency department services on the same basis as in-network
  • Coverage of routine costs associated with clinical trials (starting with the 2014 plan year)
  • Reporting to HHS on quality of care (requirement has been delayed indefinitely)

Q3:  What PPACA requirements apply to grandfathered plans?

A3:  Most PPACA requirements apply to grandfathered plans. This includes:

  • Requirement that eligibility waiting periods cannot exceed 90 days beginning with the 2014 plan year (60 days in California)
  • PCORI Fee
  • Transitional Reinsurance Fee
  • Summary of Benefits and Coverage
  • Notice regarding the exchanges
  • No rescissions of coverage except for fraud, misrepresentation, or non-payment
  • Lifetime dollar limit prohibitions on essential health benefits
  • Phase-out of annual dollar limits on essential health benefits, with all limits removed by the 2014 plan year
  • Dependent child coverage to age 26 (an exception for grandfathered plans when other coverage is available expires at the start of the 2014 plan year)
  • Elimination of pre-existing condition limitations (for children currently and all covered persons starting with the 2014 plan year)
  • W-2 reporting of health care coverage costs (this only applies if the employer provided more than 250 W-2s for the prior calendar year)
  • Wellness program rules
  • Minimum medical loss ratios (this only applies to fully insured plans)
  • Employer shared responsibility (“play or pay”) requirements (generally starting with the 2015 plan year)
  • Employer reporting to IRS on coverage (starting in January 2016, based on the 2015 calendar year)
  • Excise (“Cadillac”) tax on high cost plans (starting in 2018)
  • Automatic enrollment (this only will apply to employers with more than 200 full-time employees; this requirement has been delayed indefinitely)

For more FAQs on Grandfathered Health Plans, download a complimentary guide in UBA’s PPACA Resource Center: http://www.ubabenefits.com/Wisdom/ComplianceSolution/LegislativeSummaries

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