As part of the Patient Protection and Affordable Care Act (PPACA), existing
health care coverage plans that were in place prior to the enactment of the new
health care law on March 23, 2010 are eligible to be "grandfathered,"
or exempted, from a number of new requirements provided that they meet five
essential criteria to maintain grandfathered status. The Department of Health
and Human Services (HHS) in conjunction with the Internal Revenue Service
(IRS), and the Department of Labor (DOL) have released final rules for
grandfathered health plans.
Grandfathered Health Plans:
- Not subject to the new health law mandate to provide first-dollar coverage for preventive care
- Must fulfill new requirement to extend dependent coverage to children under age 26
- Can exclude children who have employer-sponsored coverage through their own employer or a spouse's employer until 2014
- As long as a plan maintains its grandfathered status, it is exempt from most PPACA requirements indefinitely
Maintaining Grandfathered Plan Status: Grandfathered plans are allowed to make routine changes to their coverage structures, which includes changing insurers for group health coverage as long as the same level of coverage is maintained. Any significant change related to any one of the following criteria will lead to an immediate and permanent loss of grandfathered status:
- Significant reduction in benefits
- Co-insurance charge increases
- Deductible increases
- Employer contribution decreases
- Change to annual limits
IS Position: Independent Sector submitted comments to the IRS and HHS, urging more flexibility for employers to make changes to existing plans to take advantage of new market rates and the establishment of a waiver from the interim rule requirements for small to mid-sized nonprofits until the insurance exchanges are established in 2014.
