September 2010 Health Insurance 'Grandfather' Rules Issued The health care reform legislation signed by President Obama earlier this year makes sweeping changes in the U.S. health care system and group health insurance plans. The U.S. departments of Health and Human Services, Labor, and the Treasury have issued regulations for determining whether health insurance plans in existence March 23, when the health care reform law went into effect, will be "grandfathered." Under the regulations, grandfathered plans can maintain the plan design in place March 23 and can increase benefits and make other changes to comply with state and federal rules without forfeiting their grandfathered status. They are also exempt from some of the insurance reform provisions of the law. President Obama is expected to sign the reconciliation bill this week, thereby bringing to an end a tumultuous and polarizing yearlong effort to pass health care reform. At a news conference last week, Health and Human Services Secretary Kathleen Sebelius said the rules were "carefully written to make sure the grandfathered plans still have the flexibility they need to make reasonable changes, but also making sure that insurance companies don't use this additional flexibility to take advantage of their customers." According to government estimates, 51% of employers will make changes to their benefits packages that will result in the plans' losing grandfathered status before 2014. The 131-page regulations took effect June 14. Under the regulations, plans will lose their grandfathered status if they:
Grandfathered plans will remain subject to many of the health insurance reform provisions, including the provisions allowing children to remain on their parents' plan until age 26, barring children under 19 from being denied coverage because of pre-existing conditions, limiting waiting periods to 90 days, barring lifetime limits on coverage and restricting annual dollar limits on coverage, prohibiting policy rescissions except for fraud or material misrepresentation, requiring uniform explanation of coverage, and imposing medical loss ratio requirements on insurers. Grandfathered plans will not be subject to the requirement that preventive health services be covered without deductibles or co-pay requirements. Nor are they subject to the new rules that prohibit discrimination in favor of highly compensated employees regarding eligibility or benefits. Source: Ed Lenz, American Staffing Association
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