Grandfathering Mandate

Confused About the Grandfathering Mandate??

When President Obama was campaigning to overhaul health care, he often said that if you like your coverage, you can keep it. He was trying to neutralize fears about change, especially for those content with their employer-sponsored coverage.

As a general rule, health plans in existence when Obama signed the law are grandfathered, meaning they are not required to comply with new requirements. This general rule, however, is riddled with exceptions: Some new requirements will apply to grandfathered plans.

For example, over time the legislations prohibit all employer plans from using some of the simplest cost-savings devices: lifetime and annual limits on the dollar value of coverage.

When health plans of small employers lose grandfathered status, they will have to meet the requirements of the essential health benefits package.

It has been estimated, by 2013, that the majority of small employer plans will have lost grandfathering status (as high as 80%); simply, due to the fact, that small employers have limited purchasing power and high overhead, Which often forces a trade-off between benefits, cost sharing & affordable premiums.

As a reminder: Individual Patient Protection and Affordable Care Act Benefits (PPACA) began December 1, 2010.

All impacted members received a mailing indicating their Grandfathered or Non-Grandfathered status and notifying them of the benefits they will receive depending on their status.

1) Keep in mind that a Grandfathered member is any member who had coverage prior to March 23, 2010 and has not changed plans since March 23. Members may have upgraded plans between March 24, 2010 and September 22, 2010 and still retained their Grandfathered Status.

2) Non-Grandfathered Members will receive the following PPACA provisions:

a) No Annual Dollar or Lifetime Limits

b) Expanded Preventive Care

c) New Patient Protections

3) Grandfathered Members will receive the following PPACA provisions:

a) No Lifetime Limits

b) New Patient Protections

Protecting Patients' Rights in All Plans

All health plans - whether or not they are grandfathered plans - must provide certain benefits to their customers for plan years starting on or after September 23, 2010 including: - No lifetime limits on coverage for all plans - No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application - Extension of parents' coverage to our adults under 26 years old - No coverage exclusions for children with pre-existing conditions - No "restricted" annual limits (e.g., annual dollar-amount limits on coverage below standards to be set in future regulations)

Plans will lose their grandfathered status if they choose to make significant changes that reduce benefits or increase costs to consumers. If a plan loses its grandfathered status, then consumers in these plans will gain additional new benefits including: - coverage of recommended prevention services with no cost sharing, and - Patient protections such as guaranteed access to OB/GYN's and pediatricians

Under the Affordable Care Act, these requirements are applicable to all new plans, and existing plans that choose to make the following changes that would cause them to lose their grandfathered status.

Compared to their policies effective on March 23, 2010, grandfathered plans:

1) Cannot significantly cut or reduce benefits.

2) Cannot raise co-insurance charges

3) Cannot significantly raise co-payment charges

4) Cannot significantly raise deductible

5) Cannot significantly lower employer contributions

6) Cannot add or tighten an annual limit on what the insurer pays

7) May change insurance companies - an employer with a group health plan can switch plan administrators as well as buy insurance from a different insurance company without losing grandfathered status - provided the plan does not make any of the above six changes to its cost or benefits structure.

Jan 1, 2011 - BayCrest Insurance Services

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