This is going to be very interesting to see how the grandfathered plans are treated from a carrier standpoint. It’s very possible that these plans could cost less than the new generation of plans that will be launched under the health care reform.
The next few years these grandfathered plans either group or individual could become very valuable. If you have a plan where the premium is 35% lower than market condition you will not want to let that plan go.
What is a “grandfathered” health plan?
A “grandfathered” health plan is any group health plan or individual coverage that was in effect on the date of the Acts’ enactment on March 23, 2010. “Grandfathered” status is important under the Acts as certain provisions of the Acts do not apply to grandfathered plans (or at least to many participants under “grandfathered” plans), or apply to such plans at a later date. There remain many questions regarding “grandfathered” plans and the extent to which “grandfathered” status will apply
What provisions of the Acts apply to “grandfathered” health plans
The following lists some of the key provisions of the Acts that apply to “grandfathered” health plans with plan years beginning on or after September 23, 2010:
- Dependent Coverage Until Age 26 – The Acts require group health plans (including “grandfathered” health plans) that cover dependents to provide coverage for dependent children until they reach age 26, regardless of student status or marital status. However, for plan years beginning before January 1, 2014, coverage need not be offered by a “grandfathered” plan if a dependent is eligible to enroll for coverage under another employer-sponsored group health plan.
- Restrictions on Annual and Lifetime Limits – Group health plans (including “grandfathered” health plans) may not impose lifetime limits or “unreasonable” annual limits on the value of “essential benefits” for any plan participant or beneficiary.
- Prohibition on Retroactive Cancellation of Coverage – Group health plans (including “grandfathered” health plans) may not retroactively cancel a participant’s coverage once the participant is enrolled in the plan unless the individual has engaged in fraud or made an intentional misrepresentation of a material fact.
- Restrictions on Preexisting Conditions – The Acts mandate that group health plans (including “grandfathered” health plans) may not impose any preexisting condition exclusions for eligible children under age 19.
It is very possible if these are the only acts that are imposed on the grandfathered health plans they very well might end up costing much less.
What provisions of the Acts do not apply to “grandfathered” health plans?
“Grandfathered” health plans are excluded from the following provisions of the Acts so long as the plan maintains its “grandfathered” status:
- Preventative Care Benefits – For plan years beginning on or after September 23, 2010, the Acts require that group health plans (other than “grandfathered” health plans) offer certain preventative care benefits, such as immunizations and breast cancer screening, on a first-dollar basis, without cost to participants.
- Nondiscrimination Testing – Currently, the existing Internal Revenue Code rules for nondiscrimination testing apply only to self-insured plans. For plan years beginning on or after September 23, 2010, the Acts require that fully-insured health plans (other than “grandfathered” health plans) apply the same nondiscrimination tests in an effort to discourage plans that cover only high-ranking employees.
- External Review of Claim Denials and Appeals – For plan years beginning on or after September 23, 2010, group health plans (other than “grandfathered” health plans) must provide a mechanism in their claims procedures for an external review process, among other things.
Since these acts do not apply these plans should cost the carriers less in claims which means less in premium for the policy owner.
Time will tell.