Under health care reform, all plans that were in effect on March 23, 2010, are granted grandfathered status for as long as they meet all grandfathering requirements. Grandfathered plans are exempt from certain health care reform provisions, whereas non-grandfathered plans must comply with all health care reform mandates.
Changes to grandfathering requirements
The U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury recently amended the requirements for maintaining grandfathered status under health care reform. Effective November 15, 2010, you can retain your plan’s grandfathered status after changing carriers or moving from a self-insured to fully insured plan, as long as you haven’t made other changes that would cause the plan to lose grandfathered status.
The new amendment changes one of the grandfathering requirements in the interim final regulations, which caused plans to lose their grandfathered status if the group switched carriers or moved from a self-insured to fully insured plan after March 23, 2010. However, the amendment is not retroactive—it applies only when the new carrier’s coverage is effective on or after November 15, 2010. If your new carrier’s coverage was effective after March 23 but before November 15, 2010, the new rule doesn’t apply and your plan loses grandfathered status. A group that switches carriers and wants to retain its plan’s grandfathered status must give the new carrier documentation of previous coverage sufficient to determine whether there has been any other change that would cause your plan to lose grandfathered status.
Some group plans may regain lost grandfathered status
Unrelated to the amendment, group plans that changed benefits after March 23 but before June 14, 2010, have the opportunity to regain grandfathered status if they modify those benefit changes at their 2011 renewal. Coverage changes made after March 23 but before June 14, 2010, won’t cause the loss of grandfathered status if:
- The changes are revoked or modified, effective on the first day of the first plan year that begins on or after September 23, 2010
- The coverage, as modified, wouldn’t cause the loss of grandfathered status
Changes are considered to have been adopted before June 14, 2010, if any of the following are true:
- They were effective before June 14
- They are the result of a legally binding contract entered into before June 14
- They are the result of a filing with a state insurance department before June 14
- They are the result of written amendments to a plan that was adopted before June 14
What this means for your group
- If you’re considering Kaiser Permanente coverage, this amendment gives you an opportunity to switch carriers and keep your plan’s grandfathered status
- If you changed benefits earlier in the year, you may have the option of regaining your plan’s grandfathered status
For amendment details, visit HHS’ website*. If you have any questions, contact your broker or Kaiser Permanente representative.
What you need to know
It's important to consider the advantages of maintaining your plan's grandfathered status as well as the potential benefits of a non-grandfathered plan, such as design flexibility. Either way, you must return the Grandfathered and Retiree-Only Plan Designation Form. List each plan you offer, including retiree-only plans, on this same form.
Grandfathered plan buy-up chart for small businesses
Making benefit changes may or may not cause a health plan to lose grandfathered status. That’s why each benefit change must be evaluated separately. For example, changing from a deductible plan to a copayment plan with no deductible can cause your plan to lose grandfathered status if the deductible plan has a lower copayment for a particular service.
To help you determine when changing from one plan to another would cause a loss of grandfathered status, we’ve developed this grandfathered plan buy-up chart. Use it to see the plans we believe you can switch to and still retain grandfathered status.
The grandfathering rules require some interpretation, and our chart is not a legal representation of the grandfathering rules or a guarantee that these plan changes will not cause loss of grandfathered status. For confirmation of plan changes that will not cause loss of grandfathered status, you should consult your legal counsel or health benefits consultant.
For more information
Download the summary of the grandfathered plan rules to learn more about the changes—including benefits, premiums, and employer contributions—you can make while still retaining your plans' grandfathered status.
You will need the free Adobe Acrobat Reader* to read this file.
* Kaiser Permanente is not responsible for the content or policies of external Internet sites.