Update: Grandfathered Health Plans

I posted on this subject on October 1st, but an update has just been given on the subject from the IRS, EBSA, and HHS.  The three departments released new rules that allow group health insurance plans to change insurance carriers without losing their grandfathered status with regards to PPACA.  In changing insurance carriers the plan cannot be altered so much that it violates other “grandfather” rules or it will lose it grandfathered status.  This is good news as it will allow an employer to shop for the same insurance coverage  from other carriers to get a lower cost without losing their grandfathered status.


6 responses to “Update: Grandfathered Health Plans

  1. How long can a company grandfather their health plan?

    If they don’t make any major changes to the plan, can they grandfather it forever? What happens when the current contract is up and has to be renewed?

    • As far as I am aware, a company can grandfather their health plan indefinitely as long as they don’t make any changes that disqualify them. Granted, as years go by this may become harder and harder and possibly impossible. But, I don’t know of anything that states a grandfathered status expiring.

      Regarding a contract year ending and the renewing of a health plan, this alone would not be a cause to lose grandfathered status as long as the renewing plan meets the criteria to keep grandfathered status.

  2. So at the end of the day, very few companies will have to adhere to any of the PPACA mandates. It is legislation without teeth.

    • Not necessarily. First, many will not be able to grandfather their plan. Second, a grandfathered plan only avoids a small number of the provisions in PPACA, the biggest one being Non-Discrimination of Highly Compensated employees. But, most provisions of the bill will still apply to grandfathered health plans. You can read more about it on my post from October 1, 2010, “Grandfathered Health Plans and Management Carve-out Plans”.

  3. My company currently grandfathers, and as a result, we avoid all of the PPACA “Essential Health Benefit” provisions (requiring coverage of things like maternity, mental health, preventitive medicine, etc.). We also avoid the September 2010 mandate of first dollar coverage for preventitive medicine and routine (annual) doctor visits. Our physicals, screenings, vaccinations, etc. are still subject to deductibles and copays, and we have very high deductibles.

    I am not aware of any criteria by which a company cannot grandfather their plan: it is my understanding that all companies can do this.

    According to what I read, the only mandates to which grandfathered plans have to adhere to are the lifetime maximum benefit, and some of the non-discrimination stuff. That is a small portion of the PPACA

  4. I have an employer that is a chain of convenience store and yes they have a carve-out. They have always been grandfathered – does this mean as long as they do not lose their grandfathered status they are not required to insure the employees in this carve-out?

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