What does it mean for a plan to be “grandfathered?” Is grandfathering different for fully-funded and self-funded plans?
The regulation lets health plans (both fully-insured and self-insured plans) that existed March 23, 2010, when the Patient Protection and Affordable Care Act (PPACA) became a law, to be “grandfathered” and thus be exempt from some of the law’s provisions. These plans can make routine changes such as cost adjustments to keep pace with medical inflation, adding new benefits, making modest adjustment to existing benefits, voluntarily adopting the new consumer protections under the law, or making changes to comply with state or other federal laws. Premium changes are not taken into account when determining whether or not a plan is grandfathered, or if it remains grandfathered. Grandfathered plans are exempt from provisions of the law, such as coverage for recommended preventive services with no cost-sharing and guaranteed access to OB-GYNs and pediatricians.
Even if my plan is grandfathered will I receive any additional benefits under the new law?
PPACA requires all health plans – including grandfathered health plans – to provide certain protections including: no lifetime limits on coverage for all plans; no rescissions of coverage except in cases of fraud or intentional misrepresentation of material fact; extension of a parent’s coverage to most young adults under age 26.
How does a plan lose its grandfathered status?
The rule sets firm limits on how much a plan’s current coverage can be changed before it loses its grandfathered status. Compared to its policies in effect March 23, 2010, a grandfathered plan cannot: significantly cut or reduce benefits; raise coinsurance percentages; significantly raise copayment amounts; significantly raise deductible amounts; significantly lower employer contributions; or add or tighten an annual limit on what the plan pays.
Who will tell me whether or not my plan or coverage is grandfathered? When will I be notified?
The rule requires your employer or insurer to provide you notice of your plan’s grandfathering status. This information is shared on an annual basis, usually around the time of your plan anniversary.
Will a grandfathered plan be able to make some changes without losing its grandfathering status?
Yes. Grandfathered plans have the flexibility to make changes in order to remain active so long as they don’t dramatically reduce people’s benefits or increase their cost-sharing. Among other things, plans are able to: raise premiums to reasonably keep pace with health care costs; make some changes in the benefits that they offer; increase deductibles and other out-of-pocket costs within limits; and continue to enroll new employees and new family members.