You’ve probably heard that existing benefits plans are “grandfathered” so they don’t have to comply with all the recent health reform changes. But you may be asking yourself, “what does that really mean?” In reality, the grandfathering provision in the new law isn’t all it’s cracked up to be. Under the new law, if your plan was in existence on March 23, 2010, then it need not comply with some of the new plan mandates. However, there are a number of mandates that all plans must comply with, including grandfathered plans, including:
Offering dependent coverage until age 26;
Prohibition on rescinding the coverage of an enrolled individual, except in cases of fraud or intentional misrepresentation;
Prohibition on annual or lifetime dollar limits;
No pre-existing condition exclusions for individuals under age 19, and as of 2014, for any enrollee;
No waiting periods over 90 days (as of 2014).
Except as noted above, these mandates are effective with the first plan year beginning on or after September 23, 2010 (January 1, 2011 for calendar year plans). Collectively bargained plans are grandfathered until the expiration date of the last collective bargaining agreement related to the plan. Non-collectively bargained plans enjoy permanent grandfathered status—as long as they don’t do anything to lose grandfathered status. While the law states that a plan may enroll new employees and enroll family members of existing employees without losing its grandfathered status, until further guidance is issued, it is unclear what activities could cause a plan to lose grandfathered status. Until then, if you want to retain your plan’s grandfathered status, be very careful about making plan changes. Contact your health plan advisor with questions.
This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult Vigilant or legal counsel.