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Grandfathered status is available for health plans that were providing coverage as of March 23, 2010. Making certain changes to benefit offerings, plan design, or employer contributions toward the cost of coverage will cause a plan to lose its grandfathered status.
The following requirements apply for health plans with plan years beginning on or after September 23, 2010.
Requirements that apply for health plans with plan years beginning on or after January 1, 2014.
Several types of plans are exempt from certain Health Care Reform requirements. Read about examples that are exempt from the plan design mandates.
If a plan does not comply with applicable Health Care Reform plan design mandates (or meet the requirements to maintain grandfathered status) the employer may be subject to the excise taxes imposed under HIPAA.
Mandates effective for plan years beginning on or after September 23, 2010
- Required for all plans (grandfathered and non-grandfathered)
- Additional requirements for non-grandfathered plans
- Insured plans may not discriminate in favor of highly compensated individuals
- Must cover preventive care without cost-sharing
- Must allow individuals to choose their PCPs/pediatricians
- Must allow access to OB/GYN without referral
- Must provide direct access to/coverage for emergency services
- Must follow new internal and external review standards
Mandates effective for plan years beginning on or after January 1, 2014
Plan Design Mandate Hot Topics & FAQs
- Do these plan design mandates apply to dental and vision plans?
Answer: No, if the dental and vision plans qualify as HIPAA excepted. Under HIPAA, dental and vision benefits generally constitute excepted benefits if they:
- Are offered under a separate policy, certificate, or contract of insurance; or
- Are not an integral part of the major medical plan. For dental or vision benefits to be considered not an integral part of the plan (whether insured or self-funded), participants must have a right not to receive the dental or vision coverage and, if they do elect to receive the coverage, must pay an additional premium.
Accordingly, if an employer provides its dental or vision benefits pursuant to a separate election by a participant and charges even a nominal employee contribution towards the coverage, the dental or vision benefits would constitute excepted benefits, and the Health Care Reform plan design mandates would not apply to that coverage. For additional information on plan design mandate exemptions, click here.
- Is it the employer's or insurer's responsibility to make these changes?
The penalty for not complying with the plan design mandates is imposed on the employer. The penalty is generally $100 per day for each affected individual up to the date of correction. From a practical standpoint, there are many tasks that will likely be performed by the insurer. However, because the employer could be assessed a penalty, it is important for the employer to take an active role in ensuring the group health plan's compliance with these Health Care Reform mandates.
- Do my plan documents need to be amended to reflect these changes?
Answer: Probably so, particularly if the plan design needed to be revised to comply with the new plan design mandates. You may be able to collect the appropriate documents from your insurer or third party administrator. Talk with your legal counsel regarding what amendments may be necessary for your plan. American Fidelity does not provide legal advice.
American Fidelity Assurance Company does not provide tax or legal advice.