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An employer-sponsored health plan can be grandfathered if it covered employees when
the ACA was enacted (March 23, 2010), and if the plan does not make certain material
changes that lower benefits or employer contributions, or increase employee paid deductible,
coinsurance or copayment costs to the employee. While grandfathered plans may have lower
rates (at least in the initial years), they are not required to include some of the new ACA benefit
reforms.
Maintain Grandfathered Status
Coverage
• Employers will continue to offer the pre-reform grandfathered benefit plans.
• The benefit plan cannot change in certain ways (see list below).
Compliance
• The employer will need to comply with all applicable federal and state laws and rules,
including some of the new ACA provisions, including the prohibition on annual and
lifetime limits on essential health benefits, the prohibition on pre-existing condition
exclusions, requirements for coverage of adult children to age 26, and the 90-day
limitation on waiting periods.
• Employees need to be notified of the grandfathering status.
• The employer must notify employees regarding the availability of the Health Insurance
Marketplace and subsidies that could help lower the cost of insurance coverage (by
October 1, 2013, and for all new employees at the time of employment).
• Grandfathered plans are exempt from certain health care reform provisions, such as:
-- Certain benefit mandates, such as essential health benefits or requirements to
cover preventive benefits with no cost-sharing
-- Clinical trial coverage
-- External appeals process
-- Non-discrimination testing for fully insured plans
-- Maximum out-of-pocket and deductible limits
-- Some of the additional reporting and disclosures
-- Guaranteed availability and renewability
• Grandfathered plans may change insurance companies, as long as there is no
change in coverage as described below.
• Grandfathered plans cannot:
-- Significantly cut or reduce benefits
-- Raise employee co-insurance charges
-- Significantly raise co-payment charges (15% more than medical trend since 2010)
-- Significantly raise deductibles (15% more than medical trend since 2010)
-- Significantly lower employer contributions (more than 5% of proportional cost share
for any coverage category)
-- Add or tighten an annual limit on what the plan pays
-- Starting in 2014, no annual dollar limits
Tax Credits
• Employers will not be eligible to receive tax credits.
• Employees may be eligible to receive tax credits through the Individual Exchange
if their employer’s coverage does not provide affordable, minimum value coverage.
Maintain
Grandfathered
Status
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