Regulators Take Steps to Help Grandfathered Plans
Regulators are in the early stages of creating rules that make it easier for health plans that were grandfathered in before the Affordable Care Act took effect to continue providing coverage.
The number of workers enrolled in plans that were in effect before the ACA was enacted in 2010 has been shrinking, and as of 2018, some 16% of American workers who were enrolled in group health plans were in grandfathered plans.
Under the ACA, those plans do not have to abide by the same regulations as plans that took effect after the law’s implementation.
In February 2019, the Internal Revenue Service, the Employee Benefits Security Administration and the Health and Human Services Department issued a request for information from grandfathered plans. The goal is to determine whether there are opportunities for the regulators to assist plans to preserve their grandfathered status in ways that would benefit employers, employees, and their families.
While the effort will only affect a small amount of employer-sponsored plans, the move is significant as it looks like the ultimate goal is to further loosen rules for grandfathered plans.
A plan is considered grandfathered under the ACA if it has continuously provided coverage for someone (not necessarily the same person, but at all times at least one person) since March 23, 2010 and if it has not ceased to be a grandfathered plan during that time.
Grandfathered plans have certain privileges that other group health plans that were created after that date do not have, as the latter are all required to comply with all of the rules under the ACA.
Under the ACA, grandfathered plans do not have to comply with certain provisions of the law.
These provisions include coverage of preventive health services and patient protections (for example, guaranteed access to OB-GYNs and pediatricians).
Other ACA provisions apply to grandfathered plans, such as the ACA’s waiting period limit.
Grandfathered health plans may make routine changes to their coverage and maintain their status.
However, plans lose their grandfathered status if they choose to make significant changes that reduce benefits or increase costs for participants.
Some of the questions that the three departments are asking plan administrators are:
- What actions could the departments take to assist group health plan sponsors and group health insurance issuers to preserve the grandfathered status of a group health plan or coverage?
- What challenges do health plans and sponsors face regarding retaining the grandfathered status of a plan or coverage?
- What are your primary reasons for retaining grandfathered status?
- What are the reasons for participants and beneficiaries remaining enrolled in grandfathered group health plans if alternatives are available?
- What are the costs, benefits and other factors when considering whether to retain grandfathered status?
- Is preserving grandfathered status important to group health plan participants and beneficiaries? If so, why?
Responses to the request for information were due March 27.