Employer Laws & Regulations
Grandfathered Health Plans
Under the Patient Protection and Affordable Care Act (PPACA), provision was made to allow people already covered by health insurance to keep that coverage. The term “grandfathered plan” was created to describe those plans that were in existence on March 23, 2010. Grandfathered plans are exempt from much of the new insurance reforms of the PPACA, as long as they retain their grandfathered status.
What PPACA Requirements Apply to a Grandfathered Plan?
For our grandfathered group plans, effective January 1, 2011, the following changes apply:
- A child of the insured who is not eligible for employer-sponsored health benefits on his or her own can be covered under the parent’s coverage to age 26, even if married.
- Lifetime benefit limits on essential health benefits are prohibited.
- Rescission of coverage is prohibited except in the case of fraud or intentional misrepresentation of material fact.
- Preexisting condition exclusions cannot be applied to persons under the age of 19.
- Annual limits on the dollar value of essential health benefits are restricted.
- An internal and external appeals procedure must be provided.
What Changes Cause a Plan to Lose Grandfathered Plan Status?
Examples of changes that will cause a plan to lose grandfathered status are:
- Increasing an employee’s premium contribution rate by more than 5%.
- Eliminating benefits for a particular condition.
- Increasing an insured’s coinsurance percentage by any amount.
- Increasing a fixed deductible amount or an out of pocket limit by more than the rate of medical inflation plus 15%.
- Increasing a fixed amount copayment by more than the lesser of $5 plus medical inflation or medical inflation plus 15%.
- Eliminating a plan option.
What Benefit Changes Will Not Cause a Plan to Lose Grandfathered Plan Status?
- Adjusting plan eligibility rules.
- Conducting dependent eligibility audits to ensure only eligible dependents are covered by the plan.
- Adding employees and dependents to the plan.
- Making changes to comply with state and federal law.
- Voluntarily changing benefits to comply with health reform.
- Adding benefits.
- Making changes to dental & vision programs.
- Making changes to the PPO networks.
- Changing insurance carriers, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered plan status (amended 11/17/2010).
Non-Grandfathered Health Plans
Under the Patient Protection and Affordable Care Act (PPACA), a “non-grandfathered plan” is a plan that came into existence on or after March 23, 2010, or a previously grandfathered plan that made changes that were significant enough to cause it to lose its grandfathered status. Non-grandfathered plans are subject to all of the new insurance reforms of the PPACA.
What PPACA Requirements Apply to a Non-Grandfathered Plan?
As of September 23, 2010, new non-grandfathered plans must:
- Allow a child of the insured to be covered under the parent’s coverage to age 26, even if married.
- Provide unlimited lifetime benefits for essential health benefits.
- Only allow rescission of coverage in the case of fraud or intentional misrepresentation of material fact.
- Remove preexisting condition exclusions for persons under the age of 19.
- Provide essential health benefits.
“CHIP” Health Benefit Eligibility Notice for All Employees
View and Print Chip Notice
An employer providing benefits in a state that offers premium assistance is required to provide the Employer CHIP Notice annually to all employees. Due to the fact that more than 40 states offer such a program, most employers will likely find it easier to simply send the model CHIP notice to all employees, rather than to try to send separate notices to employees based on the particular state in which the employees reside. An Employer CHIP Notice must be provided to each employee, not just the employees enrolled in the health plan of the employer.
The notice informs employees of potential state financial assistance to help pay for employer health insurance premiums. It explains that many states offer premium assistance to employees who are covered on their employer plan but are unable to afford the premiums. Many states use funds from their Children’s Health Insurance Program (CHIP) to assist people eligible for group health insurance but unable to afford their premiums. The notice includes information on how an employee may contact the state in which they reside for additional information regarding potential opportunities for premium assistance, including how to apply for such assistance.
If you have additional questions or would like a paper copy of the notice, please feel free to contact Group Policyholder Service at 800-322-0160, Extension 2814. We are at your service.
Group Coverage Continuation
State Continuation Forms
COBRA Continuation Forms
Other Continuation Forms
If you have questions regarding a specific situation, please contact Group Policyholder Service at 800-322-0160, Extension 2814, for assistance.