Grandfathering: what does it really mean to you?

By now you’ve probably heard a lot about federal health care reform’s “grandfathering” provision and what you can and cannot do and have your plan remain grandfathered. (See previous blog posts for more information on grandfathering.) But if you’re like many employers, you’re still wondering, “what does grandfathered status really mean for me and my plan?” and “should I bother trying to remain grandfathered?” Well, what it means is this: if your plan remains grandfathered, you can avoid complying with some, but not all, of the mandates included in this year’s federal health care reform. But it also means that your hands are tied when it comes to making many cost-saving changes to your plan in coming years. Grandfathering allows you to avoid compliance with these provisions:

·         No cost sharing on specified preventive services

·         Patient Protections (ER care must be paid at the same level, whether it’s in or out-of-network, no referrals or preauthorizations for OB-GYN care, right to choose any participating PCP or pediatrician)

·         Medical retention standards (a certain portion of premiums must be used to pay claims, versus paying administrative costs)

·         Enhanced claims and appeals procedures

·         Application of nondiscrimination rules to insured plans

However, grandfathered plans must still comply with many other provisions, including:

·         Adult child coverage to age 26

·         No retroactive cancellation of coverage once enrolled

·         No preexisting condition exclusions for enrollees under the age of 19 (no PCEs at all in 2014)

·         Restrictions on waiting periods

·         Uniform explanation of coverage documents

·         Reporting the value of health coverage on Form W-2

·         Automatic enrollment for large employers

·         Restrictions on annual and lifetime limits

·         “Cadillac” tax

·         Various reporting and disclosure requirements

The bottom line is that you, as the employer, will need to make your own individualized assessment, based on your particular circumstances, of whether retaining grandfathered status is best for your organization and your plan. Many employers will likely find that cost pressures simply make it impossible for them to retain grandfathered status, or that grandfathered status is not worth the expense and hassle. If you have questions about grandfathering or any other aspect of health care reform, contact Kristine Cienfuegos at K.Cienfuegos@VigilantCounsel.org or 1-800-733-8621.