The benefit of being grandfathered is an exemption from certain plan design mandates. (The plan must comply with these provisions once it no longer qualifies for grandfathered status.) You may want to review each requirement and consider whether it would be important for your plan to maintain grandfathering for that provision. You may want to mark each as follows:
- Very important to be grandfathered
- Somewhat important to be grandfathered
- Not important
In other words, if it would be very difficult or expensive for your plan to comply with a particular requirement, you would mark that it is very important to be grandfathered and therefore not have to comply with that provision. However, if most provisions end up with labels of “not important,” that would indicate that grandfathering would not necessarily add much value for your plan.
The benefit of not trying to maintain grandfathered status is greater flexibility in making plan changes, such as to help manage rising health care costs.
At the same time, maintaining grandfathered status means that you will be prevented from making certain plan design changes. You may want to evaluate whether the cost of these restrictions outweighs the cost of complying with additional plan design mandates for non-grandfathered plans.
Grandfathered plans receive an exemption from the following plan design mandates:
Required for Non-Grandfathered Plans on/after September 23, 2010:
- Insured plans may not discriminate in favor of highly compensated employees
- Must cover preventive care without cost-sharing
- Must allow individuals to choose their primary care physicians/pediatricians
- Must allow access to OB/GYN without referral
- Must provide direct access to/coverage for emergency services
- Must follow new internal and external review standards
In connection with the requirement to cover adult children to age 26 that also takes effect for plan years beginning on or after September 23, 2010, a grandfathered plan is not required to extend coverage to an adult child who is eligible for other employer-sponsored coverage. However, that limited exemption expires for plan years beginning on or after January 1, 2014.
Required for Non-Grandfathered Plans on/after January 1, 2014:
- Insured, small group plans must cover all essential benefits
- May not discriminate against individuals in clinical trials
- Insured, small group plans must comply with limits on deductibles
- Cost-sharing limited to HSA out-of-pocket maximums
- May not discriminate against providers
Grandfathered plans must comply with all of the other plan design mandates.