Group health plans in existence on or before March 23, 2010, when the Affordable Care Act was signed into law may be considered “Grandfathered.” Grandfathered plans are exempt from certain health care provisions, whereas non-grandfathered plans must comply with health care reform mandates. Listed below are a summary of key benefit provisions that apply to Grandfathered Plans, and a list of key benefit provisions that DO NOT apply to Grandfathered plans.
It is important to note, that NOT all health insurance carriers are allowing a “Grandfathered” plan option. In mid 2014, the carriers in California that were allowing Grandfathered group plan options were Kaiser Permanente and Health Net. The other group carriers in California discontinued the “Grandfathered plan options.”
Key Benefit Provisions That DO Apply to Grandfathered Plans
Many of the changes under Health Care Reform apply to all plans, regardless of grandfathered status. Key requirements that grandfathered group health plans must comply with include:
- 90-Day Limit on Waiting Periods. In plan years beginning on or after January 1, 2014, group health plans may not apply any waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective.
- Dependent Coverage to Age 26. Grandfathered group health plans that offer dependent coverage must continue to make the coverage available until a child reaches the age of 26, unless the adult child has another offer of employer-based coverage (such as through his/her job). Beginning in 2014, a child up to age 26 can stay on the parent’s plan, even if the adult child is eligible to enroll in another employer-sponsored health plan. Eligible dependents can also remain on their parents’ health insurance plan if they are married, up to age 26.
- Elimination of Preexisting Condition Exclusions. Group health plans cannot limit or deny benefits or coverage for a child younger than age 19 on the basis of a preexisting condition (a health problem that developed before the child applied to join the plan). Effective for plan years beginning on or after January 1, 2014, this rule applies to both children and adults.
- Medical Loss Ratio (MLR) Rebates. Employers who sponsor group health plans and receive rebates, as a result of insurance companies not meeting specific standards related to how premium dollars are spent, may be responsible for distributing the rebates to eligible plan enrollees annually.
- No Lifetime or Annual Limits. Group health plans may not impose lifetime limits on coverage of “essential health benefits.” Annual limits on essential health benefits are prohibited for plans issued or renewed beginning January 1, 2014. Until then, annual limits are being phased out according to the limits set by law.
- Prohibition on Rescission of Coverage. Group health plans are not permitted to rescind health coverage (meaning declare the coverage invalid from the time of enrollment), except in the case of fraud or intentional misrepresentation by a person covered under the plan.
- Summary of Benefits and Coverage (SBC). Effective for plan years and open enrollment periods beginning on or after September 23, 2012, group health plans and health insurance issuers offering group coverage are required to provide participants and beneficiaries with a summary of benefits and coverage at several points during the enrollment process and upon request.
Key Benefit Provisions That DO NOT Apply to Grandfathered Plans
Grandfathered group health plans are not required to comply with certain changes under Health Care Reform, including requirements relating to:
- Coverage of Preventive Services Without Cost-Sharing
- Essential Health Benefits Coverage
- Guaranteed Availability and Renewability of Coverage and Limits on Premium Variations
- Providing Certain Internal Appeals and External Review Rights
- Selection of Health Care Providers and Access to Emergency Care
As always, if you would like to evaluate which option is best for your company, MNJ Insurance Solutions is available to assist you and review the pros and cons of each scenario. For more information, please contact us at (714) 716-4303.
This content is provided for informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and MNJ Insurance Solutions makes no representations or warranties regarding its accuracy and completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice form their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.