The new federal law, enacted through the "Patient Protection and Affordable Care Act" (PPACA) (Pub. L. No. 111-148) and the "Health Care and Education Reconciliation Act of 2010" (Reconciliation Act) (Pub. L. No. 111-152), establishes a right for individual consumers and employer groups (fully insured and self-funded) to maintain their existing coverage if certain conditions are met. This coverage is referred to as a "grandfathered health plan." To qualify as a "grandfathered health plan," an individual must have been enrolled in the insurance coverage or group plan on the date of enactment of the health reform law — March 23, 2010.
1. What does "grandfathering" mean with respect to health reform?
The term "grandfathering" in the health reform law refers to those situations when certain provisions of the law may not apply to plans that were in effect on, or before, March 23, 2010 as long as those plans have not made changes that would cause them to lose their grandfathered status.
2. Who is grandfathered and not grandfathered?
EmblemHealth policies for small groups and large groups of 51 to 99 eligible members will not be grandfathered for all products. These group and individual plans must implement all short-term health care reform benefit changes on their respective renewal dates beginning October 1, 2010.
For Healthy NY, a grandfathered plan will be made available to groups (including Sole Proprietors) and to individuals who enrolled prior to March 23, 2010.
Direct Pay members who enrolled prior to March 23, 2010, will also have the option of renewing into a grandfathered plan.
EmblemHealth may grandfather large group plans of 100 or more eligible members on a case-by-case basis. Groups under a collectively bargained agreement may maintain grandfathered status until the agreement terminates.
3. Which benefit changes may grandfathered plans postpone?
The benefit changes that grandfathered plans are allowed to postpone, as long as they maintain grandfathered status, are:
- Internal/external processes for appeals.
- Coverage changes for emergency services.
- Coverage changes for preventive services.
- Minimum medical loss ratio (MLR — ratio between medical and administrative expenses) requirement for self-funded plans only.
4. Which benefit changes must all plans include on renewal?
Benefit changes that grandfathered and non-grandfathered plans must include on renewal include:
- Elimination of annual and lifetime limits on coverage.
- Elimination of rescissions (i.e., retroactive cancelation of coverage) except in cases of fraud or material misrepresentation.
- Elimination of coverage limitations based on pre-existing conditions for children under age 19.
- Children remain covered until age 26 (at end of month) on parents' policies.
- Minimum MLR requirement for individual and all fully insured individual and group business.
Grandfathered plans must also comply with the following:
- Use uniform "evidence of coverage" documents and standard definitions of insurance and medical terms as determined by the Secretary of Health & Human Services (effective two years after enactment).
- Report "medical loss ratios" (effective six months after enactment) and pay premium rebates if the ratios fall below certain benchmarks. (This applies only to individual and group insurers beginning no later than January 1, 2011).
5. If small groups insured by EmblemHealth are renewing without changes, why must they lose their grandfather status?
All small group plans will be upgraded to contain the full federal health reform law provisions that apply to non-grandfathered plans. Furthermore, grandfathered status does not mean the group can retain the exact same benefit rules in place prior to the law's effective date. While there are fewer imposed benefit changes in grandfathered plans, there are some benefit enhancements and patient protections that are required even for grandfathered plans.
6. Under what circumstances would a group lose grandfathered status?
A group will lose grandfathered status under the following circumstances:
- Significant reduction in benefits.
- Coinsurance increase.
- Significant copayment or deductible increase (medical inflation plus 15 percent or more) or employer contribution decrease (five percent or more).
- Any tightening of annual limit.
7. Can dependents be added to a grandfathered health plan?
Yes. The new law explicitly allows for the addition of new dependents to an individual or group grandfathered health plan without disrupting its status under the law. However, new family members may be added only if such enrollment is permitted under the terms of the grandfathered plan.
8. Can employees be added to a grandfathered group plan?
Yes. New employees (and family members) can be added to a grandfathered group health plan without disrupting its status under the law.