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Frequently Asked Questions About Grandfathered Health Plans

Originally posted by United Benefits Advisors, LLC (UBA).

As employers determine their plan designs for the coming year, those that have plans with grandfathered status need to decide if maintaining grandfathered status is their best option. Following are some frequently asked questions, and answers, about grandfathering a group health plan.

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
  • Essential health benefits and metal levels (these only apply to insured small group plans)
  • Modified community rating (this only applies to insured small group plans)
  • Guaranteed issue and renewal (this only applies to insured plans)
  • Nondiscrimination rules for fully insured plans (this requirement has been delayed indefinitely)
  • Expanded claims and appeal requirements
  • Additional patient protections (right to choose a primary care provider designation, OB/GYN access without a referral, and coverage for out-of-network emergency department services)
  • Coverage of routine costs associated with clinical trials
  • 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:
  • Limits on eligibility waiting periods
  • 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
  • Elimination of pre-existing condition limitations
  • 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
  • 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)