“If you like your plan you can keep it and you don’t have to change a thing…” – President Obama
This statement was a huge influence on what are now called “grandfathered” and “non-grandfathered” health plans.
Those plans in existence prior to the signing of the law on March 23, 2010 were grandfathered in as long as they met specific requirements. These grandfathered plans are exempt from certain provisions of the Affordable Care Act. Any plan created after March 23, 2010 is a non-grandfathered plan and is subject to all provisions of the Affordable Care Act. A grandfathered plan can lose its status and become non-grandfathered if it did not have at least one individual enrolled in the plan at all times since March 23, 2010 and/or it made a significant change in coverage.
The Departments have outlined the following items that will affect a plans grandfathered status. All comparisons are made based on the employer’s plan design that was in effect on March 23, 2010:
The plan has not continuously covered at least one person since March 23, 2010.The plan has eliminated all or substantially all benefits to diagnose or treat a particular condition.The plan has increased the percentage cost sharing requirements (such as coinsurance).The plan has increased a fixed-amount cost sharing requirement (such as deductibles and out-of-pocket limits) by more than 15% plus medical inflation.* (Does not include copayments.)The plan has increased fixed-amount copayments by either the greater of: 15% plus medical inflation or $5 plus medical inflation.*The Employer has decreased their contribution rate towards the cost of any tier of coverage for any class of similarly situated individuals by more than 5%.*The plan added an overall annual limit or decreased the overall annual limit on benefits.
A plan only needs to make one of these changes to lose grandfathered status.
* Changes up to these limits are only allowed once; they do not start over each year.
The analysis for determining grandfather status applies separately to each benefit package or option. Therefore, grandfather status might be retained for some benefit packages or options and not for others. In contrast, if an employer relinquished grandfather status for self-only, family or any other tier of coverage within a benefit package, it would relinquish grandfather status for the entire package.
The following items will generally NOT cause a plan to lose grandfather status:
Changes made to premiums (as long as the cost-sharing remains the same or under a 5% shift).Changes made to comply with Federal or State legal requirements.Changes to voluntarily comply with the provisions of the ACA.Changes to Third Party Administrators.*Change of Stop Loss Carrier.*Change of Network provider.*Changes to a plans’ prescription drug formulary list.Removing an entire class of coverage from eligibility (e.g. part-time).Changing from self-funded to fully-insured or fully-insured to self-funded. *
*Provided no other changes were made that would cause the plan to lose grandfather status.
The DOL has released a guidance chart relating to grandfather status and what provisions do and do not apply; you can find this on the DOL website: http://www.dol.gov/ebsa/pdf/grandfatherregtable.pdf OR https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers
To maintain status as a grandfathered group health plan, the plan must maintain records documenting the terms of the plan in connection with the coverage that was in effect on March 23, 2010, and any other documents necessary to verify, explain, or clarify its status as a grandfathered health plan. These records must be maintained for as long as the plan takes the position that it is grandfathered, and must be available for examination upon request.