What Are the Implications of Loss of “Grandfathering” Under PPACA
BBCG has been asked to comment on “grandfathering” under the 2010 healthcare reform statute and the recent interim final rules issued by HHS. Please see our prior post for the interim final rules discussion (http://bocabenefits.com/blog/?p=840). Below are some thoughts.
If a healthplan loses its “grandfathered” status under PPACA, then participants in these plans will gain two additional new and substantial benefits (i.e., assuming they did not exist prior):
- Coverage of recommended prevention services with no cost sharing; and
- Patient protections such as guaranteed access to OB-GYNs and pediatricians
Clearly, adding no-cost access for preventative services has significant cost implications (e.g., no co-pay for primary care visits, etc., changes both the cost structure and the frequency of service assumptions). How that is passed along will be determined by the funding vehicle in place (i.e., fully insured, partially insured, self-funded, etc.). In the case of OB-GYN and PEDS, many plans already cover these as primary care (i.e., service dependent). Cost implications may be somewhat less for that requirement. Plans must independently evaluate what the requirements will cost. Also should be judicious in accepting “quick and dirty” carrier underwriter/rep estimates which might be biased in the carrier’s favor (e.g., a high estimate to lock a client company into grandfathering, and therefore that carrier, versus a lower estimate which would allow an employer to change carriers once grandfathering was relinquished).
The question for employers is the trade-off between the extra costs noted above and the incremental flexibililty to modify the plan and/or carrier. Loss of grandfathering may still be the most efficacious course of action for many employers.
The Affordable Care Act requires all health plans– including grandfathered health plans – to provide certain new protections for plan years on or after September 23, 2010. The reforms that apply include:
- No lifetime limits on coverage for all plans
- No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application
- Extension of parents’ coverage to young adults under 26 years old
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