An Important Message About Grandfathering
Under the new health care reform law, health plans in existence on March 23, 2010 may be eligible for “grandfathered” status. However, changes in benefits or other plan terms may result in the loss of that status. Your renewal package includes a recommended package of benefits as well as a number of options to consider. The recommended benefit design may not preserve grandfathered status for your plan. If grandfathering is important to you, please consider the information below and review your options carefully. This is a summary only; you should also ask your benefits advisor or Aetna representative for details.
Implications of maintaining grandfathered status for group health plans
The reform law imposes a number of requirements on group health plans. Most of these will apply to your plan whether or not you maintain grandfathered status, including:
- Elimination of lifetime limits on essential benefits
- Phase-out of annual limits on essential benefits by 2014
- Extending eligibility for dependents up to age 26
- Elimination of pre-existing condition limitations for children under age 19
- Elimination of all pre-existing condition limitations in 2014
- Limitation of benefit waiting periods to no more than 90 days
- Assessment of “Cadillac plan tax”, if applicable
- Assessment of employer mandate charge, if applicables
However, some reform requirements will not apply to grandfathered plans so long as that status is maintained. These include requirements to:
- Cover immunizations and certain preventative care without cost sharing
- Allow free choice among participating primary care physicians and pediatricians
- Allow direct access (no referral) to OB/GYN services
- Cover emergency services without pre-authorization
- Provide internal and external review processes for certain denied claims
- Eliminate discrimination in favor of highly compensated individuals
- Federal rating limitations in 2014 (state rating rules will still apply)
- Providing essential benefits in the small group market in 2014
- Abide by cost sharing and deductible limits in 2014
Most Aetna plans already provide these benefits.1
Most health plans will not remain grandfathered
You should consider the benefits and burdens of grandfathering carefully. Grandfathered plans will be subject to severe on-going restrictions on future benefit changes. Many of those restrictions are cumulative, meaning that grandfathered plans will be substantially locked into benefits in effect on March 23, 2010. The government has estimated that up to 80 percent of small employer plans could lose grandfathered status by 2013. Up to 64 percent of large group plans could lose grandfathered status by then as well.2 The actual percentages could be even higher because many common plan changes will eliminate grandfathering.
1 Please see your existing plan documents for additional information.
2 26 CFR Parts 54 and 602 citing, Kaiser/RHET Employer Survey, 2008-2009
Will your plan qualify for grandfathered status?
The following check-list may help you analyze if your plan will remain qualified for grandfathered status. Compared to your plan in effect on 3/23/2010, will there be:
- A decrease of more than 5% in your contribution to the coverage
- A substantial elimination of a benefit to diagnose or treat a particular condition
- An increase in any employee coinsurance percentage
- An increase in any fixed copayment by more than the CPI3 plus 15% points
- An increase in deductibles or out-of-pocket limits by CPI3 plus 15% points
- An addition of an annual limit (except to replace an overall lifetime limit4)
- A business restructuring in order to avoid loss of grandfathered status
- Do you expect to make any of these changes by January 1, 2014?
If you answered “Yes” to any of these questions, there is a good chance that your plan will not be grandfathered or that you will not benefit from seeking grandfathered status. This basic checklist does not list all of the actions that may defeat grandfathered status so you will want to review this issue carefully with your benefits advisor or Aetna representative if you wish to try to maintain grandfathered status.
Important Notice: In renewing your coverage, Aetna will assume that you do NOT intend to maintain grandfathered status.
Among other requirements, grandfathered plans must contain a specific notice in plan documents, and to provide this notice Aetna must understand certain actions you may take with respect to your plan, e.g., changes in your contribution strategy. If you are interested in maintaining grandfathered status you MUST contact Aetna as described below at least [30] days before the effective date of your renewal. Otherwise your plan will not be grandfathered.
Aetna is also making a number of changes to its plan offerings to provide value to our customers and to streamline our product offerings in the market. Because of these changes, we cannot guarantee that a grandfathering will be available for all existing plans.
3 Based on the overall medical care component of the Consumer Price Index for All Urban Consumers, unadjusted (CPI), published by the Department of Labor using the 1982 - 1. using the 1982 – 1984 base of 100.
4 Permitted only if the plan did not already have an annual limit.
This information is subject to change and should not be construed as, nor is it intended to provide, legal or compliance advice.