Tuesday, April 20, 2010

What is a grandfathered health plan?

As defined by the Patient Protection and Affordable Care Act (PPACA), a grandfathered health plan is any group health plan or individual coverage that was in effect on March 23, 2010, the date of the new law’s enactment.

Grandfathering was put into place to carry out Obama’s promise that if you like your current plan, you can keep it. A plan can remain grandfathered even if employees or dependents are added or deleted from the plan. Although it is still unclear from the legislation, it is likely that any plan design changes will cause the plan to lose its grandfathered status. Once a plan loses its grandfathered status, it is subject to all applicable provisions of the PPACA.

Although grandfathered plans are generally able to avoid many of the PPACA’s requirements, the access and reform provisions outlined below will still apply to these plans.

Provisions effective for plan years beginning on or after September 23, 2010:
• Eliminate pre-existing condition exclusions for children under 19
• Extend dependent coverage to adult children up to age 26 only if that child is not eligible to enroll in other employer provided coverage
• Prohibit rescission of coverage except for fraud or intentional misrepresentation
• Eliminate lifetime limits and annual limits as set forth by HHS Secretary; group health plans will still be allowed to place limits on the amount covered for certain medical procedures

Provisions effective for plan years beginning on or after January 1, 2014:
• Extend dependent coverage to adult children up to age 26
• Eliminate enrollment waiting periods in excess of 90 days
• Eliminate pre-existing condition exclusions on all individuals
• Eliminate annual limits on essential benefits

Grandfathered plans will be required to comply with the above provisions and will not lose their grandfathered status for doing so. As long as a plan maintains its grandfathered status, other provisions required by the PPACA will not apply.

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