Grandfathering Employee Benefits Plans

This is a topic that can be a bit confusing so my goal is to give you a basic idea of how Grandfathering Employee Benefits Plans work.

If you remember back when President Obama was pitching health care reform to the masses he said “and if you want to keep the plan you already have, you can”  or something similar to that.

When the writers of PPACA  (Patient Protection and Affordable Care Act) put the laws together they came up with the idea of grandfathering plans.  A grandfathered plan is one that was in existence prior to the bill’s passing, March 23, 2010.  An employer can determine if their plan is of grandfather status by not making changes to the plan design or employee contributions (within 5%).  There are a few more technicalities which you can read at the end of this blog, but let’s face it, the topic is a little dry.

Some rules of PPACA apply regardless of grandfather status, such as the extension of coverage for dependents to age 26 and eliminating lifetime and most annual dollar limits on benefits.

What does one gain by having a grandfathered status you ask?  Good question, but first let me explain the benefits of being a non-grandfathered plan.  The benefits are as follows at the renewal of your medical plan.

1. No deductible, co-pays or co-insurance for immunizations, or preventive care (this is really a good thing!!)
2. A pediatrician can be a child’s primary care physician (we already have this in California – what are the other states thinking?)
3. Women can use OB/GYN services without a referral (score California again, we already do this)
4. Equal coverage for emergency services from in-network or out-of-network providers (I can’t remember seeing anything about this but I haven’t seen any benefit summaries for California plans that don’t already do this so we get another 2 points!)
5. Process for internal appeals and external review of claims (I can’t imagine what state wouldn’t do this but shame on them!)
6. Insured plans can’t discriminate in favor of highly compensated individuals (this was actually considered legal discrimination as long as the same rules applies to all people in a classification)

So back to your question about what an employer gains by keeping their plan in a grandfathered status – In California, really just two things, numbers 1 and 6.  Some employers do practice number 6, but do you really want to deny your employees a zero cost for preventive benefits?

Just recently I received my open enrollment package from my husband’s plan.  I snatched it away from him right away with instructions not to do a thing until I review it!  I suspected they would consider their plan grandfathered and I wanted to make sure they were doing it right.  I suspected correctly, they considered the plan grandfathered.  I don’t know whether they discriminate in favor of their highly compensated employees and quite frankly that wasn’t my concern.  I was more concerned about the preventive benefit.  I think the plan lacks big time because I can’t have two preventive visits in one year.  My female audience knows exactly what I’m talking about – I want to talk to my PCP about my cholesterol and I also want an annual GYN visit to talk about, well GYN things.  So I looked through everything they sent and rats! I couldn’t find anything wrong so I could at least call them and complain (yes, I admit that would have given me some satisfaction indeed).

The good news is that in 2014, this grandfathering stuff goes away.  But wait, this isn’t about me now-really.  When your plan renews, you will have the opportunity to decide if your plan is grandfathered or not.  Most employers make plan changes every year to help keep the costs down so they will automatically move into a non-grandfathered plan.  None of the insurance carriers have made any distinction in the rates of grandfathered vs. non-grandfathered status with one exception, Health Net.  I wonder if Health Net is just trying to drive me crazy. 

Here is the article from HHS (Health and Human Services) on grandfathered plans.

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