Federal Agencies Issue Regulations on Grandfathered Plans

On Monday, three federal agencies issued regulations providing further definition on so-called “grandfathered” health plans under the health care reform legislation, the Patient Protection and Affordable Care Act (PPACA). PPACA requires health plans to provide certain benefits that were not mandated previously. Coverage that was in place on March 23, 2010, however, is “grandfathered” out of some of these requirements, which typically would increase the plan’s cost. The new regulations clarify the circumstances under which grandfathered plans retain that status, specifying that they remain grandfathered unless they “significantly” cut benefits or increase out of pocket costs to consumers. Even grandfathered plans must meet certain new requirements by September 23, 2010, such as covering children up to age 26. The regulations, however, define fairly tightly when a plan loses its grandfathered status: basically any changes such as eliminating coverage for certain conditions, raising copayments or deductibles by any more than a minimal amount, raising the portion of premiums paid by employees, or importantly, changing insurance companies regardless of whether the coverage changes. If a plan is no longer grandfathered, it must offer free prevention services and certain other benefits. For more information, see Grandfathering of Health Plans.