Today the U.S. Departments of HHS, Labor and
Treasury issued interim final and proposed regulations for group
health plans and health insurance coverage relating to status as a
grandfathered health plan under the Patient Protection and
Affordable Care Act (P.L. 111-148). The regulations, which also call
for comment, was published in the June 17 Federal Register.
The PPACA exempts "grandfathered" plans
that were in existence on March 23, when the law was enacted.
Following are some details released regarding the proposed
regulations.
While the PPACA requires all health plans to
provide important new benefits to consumers, it allows plans that
existed on March 23, 2010 to contain costs by allowing insurers and
employers to make routine changes without losing grandfather status.
Plans will lose their "grandfather" status if they choose
to significantly cut benefits or increase out-of-pocket spending for
consumers/employees.
Protecting Patients’ Rights in All Plans
All health plans - whether or not they are
grandfathered plans - must provide certain benefits to their
customers for plan years starting on or after September 23, 2010
including:
No lifetime limits on coverage for all plans;
No rescissions of coverage when people get sick
and have previously made an unintentional mistake on their
application;
Extension of parents’ coverage to young adults
under 26 years old; and for the vast majority of Americans who get
their health insurance through employers, additional benefits will
be offered, irrespective of whether their plan is grandfathered,
including:
No coverage exclusions for children with
pre-existing conditions; and
No "restricted" annual limits (e.g.,
annual dollar-amount limits on coverage below standards to be set in
future regulations).
Additional Consumer Protections Apply to
Non-Grandfathered Plans
Grandfathered health plans will be able to make
routine changes to their policies and maintain their status. These
routine changes include cost adjustments to keep pace with medical
inflation, adding new benefits, making modest adjustments to
existing benefits, voluntarily adopting new consumer protections
under the new law, or making changes to comply with State or other
Federal laws. Premium changes are not taken into account when
determining whether or not a plan is grandfathered.
Under the Affordable Care Act, these requirements
are applicable to all new plans, and existing plans that choose to
make the following changes that would cause them to lose their
grandfathered status.
Compared to their polices in effect on March 23,
2010, grandfathered plans:
Cannot Significantly Cut or Reduce Benefits. For
example, if a plan decides to no longer cover care for people with
diabetes, cystic fibrosis or HIV/AIDS.
Cannot Raise Co-Insurance Charges. Typically,
co-insurance requires a patient to pay a fixed percentage of a
charge (for example, 20% of a hospital bill). Grandfathered plans
cannot increase this percentage.
Cannot Significantly Raise Co-Payment Charges.
Frequently, plans require patients to pay a fixed-dollar amount for
doctor’s office visits and other services. Compared with the
copayments in effect on March 23, 2010, grandfathered plans will be
able to increase those co-pays by no more than the greater of $5
(adjusted annually for medical inflation) or a percentage equal to
medical inflation plus 15 percentage points. For example, if a plan
raises its copayment from $30 to $50 over the next 2 years, it will
lose its grandfathered status.
Cannot Significantly Raise Deductibles. Many plans require
patients to pay the first bills they receive each year (for example,
the first $500, $1,000, or $1,500 a year). Compared with the
deductible required as of March 23, 2010, grandfathered plans can
only increase these deductibles by a percentage equal to medical
inflation plus 15 percentage points. In recent years, medical costs
have risen an average of 4-to-5% so this formula would allow
deductibles to go up, for example, by 19-20% between 2010 and 2011,
or by 23-25% between 2010 and 2012. For a family with a $1,000
annual deductible, this would mean if they had a hike of $190 or
$200 from 2010 to
