Grandfathering

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.  Grandfathered plans do not have to comply with several plan design mandates imposed by Health Care Reform.  A plan sponsor treating a plan as grandfathered must maintain certain documentation and include notice that the coverage is grandfathered in any plan materials provided to participants that describe the coverage.

Grandfathering Notice

Benefit summaries must include notice of grandfathered status.

Grandfathering Documentation

A grandfathered plan must maintain records documenting the terms of health coverage in effect on March 23, 2010 and subsequent changes.

 

Value of Grandfathering

The benefit of being grandfathered is an exemption from certain plan design mandates.

Grandfathering Restrictions

This questionnaire can help a plan sponsor determine whether a plan option is eligible for grandfathering.

 

Grandfathered Provisions

A list of plan design mandates that do and do not apply to grandfathered plans.

 

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Grandfathering Hot Topics & FAQs

  • Answer: Yes, a plan sponsor may change insurers for a grandfathered plan and still maintain grandfathered status, so long as the change occurs on or after November 15, 2010 and the sponsor does not make any other impermissible changes that would jeopardize grandfathering eligibility.

  • From which Health Care Reform requirements may grandfathered plans receive relief?

    Answer: A grandfathered plan only receives relief from certain plan design mandates. Grandfathering does not provide relief from the other plan design mandates or the other requirements in Health Care Reform, such as the Free Rider Penalty, or Cadillac Tax.

  • Does grandfathered status automatically expire in 2014?

    Answer: No. A grandfathered plan will lose its grandfathered status when the plan sponsor or insurer makes changes prohibited by the grandfathering regulations. There is no date when grandfathered status automatically expires or becomes unavailable.

  • Do the grandfathering rules apply to an employer’s entire benefit package or each option individually?

    Answer: Grandfathered status is determined and maintained on a per-benefit option basis. For example, if an employer sponsors a plan with three benefit package options – a PPO, HMO, and high deductible health plan – and the employer makes changes that cause the HMO to lose its grandfathered status, the changes to the HMO do not impact the grandfathered status of the PPO or high deductible health plan.

  • Do special rules apply for collectively bargained plans?

    Answer: Yes, but only for insured collectively bargained plans, not self-funded plans. In the case of health insurance coverage maintained pursuant to one or more collective bargaining agreements ratified before March 23, 2010, the coverage is a grandfathered health plan at least until the date on which the last agreement relating to the coverage that was in effect on March 23, 2010 terminates. Thus, before the last of the applicable collective bargaining agreement terminates, any health insurance coverage provided pursuant to the collective bargaining agreements is a grandfathered health plan. Remember, this special rule for collectively bargained plans only applies to insured plans, not self-funded plans. After the date on which the last of the collective bargaining agreements terminates, the determination of whether health insurance coverage maintained pursuant to a collective bargaining agreement is grandfathered health plan coverage is made under the general grandfathering rules.

American Fidelity Assurance Company does not provide tax or legal advice.

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