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What Is the Difference Between a Grandfathered and a Grandmothered Health Plan?



QUESTION: Our company sponsors a group health plan, which is grandfathered for purposes of the Affordable Care Act. We’ve been reading about grandmothered health plans. How are these plans different from grandfathered health plans?

ANSWER: “Grandfathered plans” are group health plans (or health insurance coverage) that were in existence on March 23, 2010, and have not undergone certain prohibited design changes since then. These plans are excused from some of the requirements under the Affordable Care Act (ACA), such as coverage of preventive health services without any cost-sharing and the expanded appeals process and external review, but are subject to other provisions (see our Checkpoint article). Grandfathered status can be maintained indefinitely so long as the plan or coverage has continuously covered someone (although not necessarily the same person) since March 23, 2010; no prohibited plan design changes are made; and the required disclosure and recordkeeping requirements are met. Examples of changes that would cause loss of grandfathered status include any increase (measured from March 23, 2010) in a cost-sharing percentage and elimination of all or substantially all of the benefits to diagnose or treat a particular condition. The grandfathered plan rules apply separately to each benefit package (e.g., PPO or HMO) made available under a group health plan. If grandfathered status is lost, it cannot be regained.

On the other hand, “grandmothered plans” is a term used to describe non-grandfathered health plans that are subject to an HHS transition policy allowing insurers in the individual and small group markets to renew health insurance policies they would otherwise have had to cancel due to noncompliance with certain ACA insurance market reforms (e.g., premium rating rules, guaranteed availability and renewability, and the requirement to provide essential health benefits). The transition relief for grandmothered plans has been extended several times. Under the most recent extension, states may permit insurers that have continually renewed grandmothered plans since January 1, 2014, to renew such coverage again for any policy year beginning on or before October 1, 2019 (see our Checkpoint article). (However, the insurance policies must not extend past December 31, 2019.) An insurer that renews a grandmothered plan is required to provide an annual informational notice explaining the right to retain existing coverage to affected individuals and small businesses.

For more information, see EBIA’s Health Care Reform manual at Sections VI (“Grandfathered Health Plans”) and XIV.A(“Introduction and Understanding Small and Large Group Markets”).

Contributing Editors: EBIA Staff.

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