When the Patient Protection and Affordable Care Act was enacted on March 23, 2010, and subsequently amended by the Health Care and Education Affordability Reconciliation Act of 2010 (collectively, “PPACA”), it provided certain “grandfathered” relief – i.e., an exemption from some but not all of PPACA’s requirements for those group health plans or health insurance coverage in effect on March 23, 2010. Accordingly, it is important to understand which provisions of PPACA are or are not applicable to “grandfathered” health plans and what would cause a “grandfathered” health plan or coverage to lose its “grandfathered” status.
The following are some examples of the requirements with which “grandfathered” plans or insurance coverage must comply:
Effective with the first plan year beginning on or after September 23, 2010 (for calendar year plans, January 1, 2011):
- Elimination of pre-existing condition exclusions for children under age 19;
- Extension of coverage to dependent adult children through age 26 (even if they are married) only if the dependent adult child is not eligible for coverage under other employer-sponsored health coverage;
- Prohibition on canceling an enrollee’s coverage, unless the enrollee used fraud or made an intentional misrepresentation to obtain coverage;
- Elimination of lifetime dollar limits on “essential health benefits” (as defined in the law) under a group health plan or insurance coverage; and
- Restricted annual dollar limits only with respect to the scope of essential health benefits.
Effective with the first plan year beginning on or after January 1, 2014:
- Elimination of pre-existing condition exclusions for all enrollees;
- Extension of coverage to all dependent adult children through age 26 (even if they are married);
- Elimination of all annual dollar limits on “essential health benefits” under a plan or insurance coverage; and
- Elimination of waiting periods in excess of 90 days to enroll in a plan/insurance.
PPACA also provides that a “grandfathered” health plan/insurance will not lose its “grandfathered” status: (a) if it enrolls new employees; and (b) if it enrolls an employee’s dependents, provided that the group health plan or coverage allowed for dependent/family coverage on March 23, 2010. However, the new law does not address what modifications to a “grandfathered” health plan or insurance coverage would result in loss of “grandfathered” status. We expect guidance in the near future so that “grandfathered” health plans and insurance coverage sponsors can take precautionary steps to preserve their “grandfathered” status.