The Trump administration is seeking comments on regulations that make it easier for employers to continue offering grandfathered health plans. The Affordable Care Act (ACA) carved out large regulatory exceptions for grandfathered health plans. These plans never entirely went away in the employer plan context.
Differences Between Grandfathered and Nongrandfathered Health Plans
Under the ACA, an employer or issuer can offer a health plan that was in existence on March 23, 2010, without having to abide by a number of ACA requirements. In the context of employer plans, both grandfathered and non-grandfathered plans are subject to the following ACA rules:
- pre-existing condition exclusions prohibited,
- annual dollar limit prohibited,
- rescission of coverage prohibited,
- dependents up to age 26 must be offered coverage,
- uniform plan document and enrollee value rules must be followed, and
- excessive waiting periods for coverage prohibited.
Only plans that weren’t grandfathered under the ACA are subject to these rules:
- preventive health services must be offered without cost sharing (including free birth control),
- fair premium requirements apply,
- guaranteed availability of coverage to any applicant,
- guaranteed renewability of coverage,
- nondiscrimination for health status,
- comprehensive coverage requirements,
- coverage for participants participating in clinical trials,
- patient protections requiring choice of doctors, and access to emergency rooms, pediatric care, and obstetrical or gynecological care, and
- appeals process rules.
Possible Rule Changes
Under the current regulations, certain changes in benefits, cost-sharing, and contribution rates will result in:
- a health plan losing its grandfathered status; and
- being treated as a nongrandfathered plan.
The administration is seeking comments on how it can change its rules to make it less likely a plan will lose its grandfathered status.
Among other things, the administration would like to know:
- what challenges employers face in keeping their plans grandfathered;
- what benefit they see in it; and
- how important it is to maintain grandfathered status.
The administration also wants to identify what these plans have in common.
Note that the administration is not considering rules enabling nongrandfathered plans to become grandfathered. That means employers should not be looking for rules that allow a remedial cure period.
Why Were Grandfathered Plans put in the Affordable Care Act?
The appeal of grandfathering existing health plans for the drafters of the ACA was that it would:
- cause less opposition; and
- smooth a transition to entirely ACA-compliant plans over time.
And it has worked that way as grandfathered health plans have all but disappeared in the individual markets, and fewer and fewer employers still offer them.
Why Does the Trump Administration Want Grandfathered Plans to Continue?
Grandfathered plan provide space for less expensive plans that can provide “skinnier” coverage. This change would go along with other administration rule changes intended to expand as much as possible the availability of plans excepted from ACA coverage. The most significant of these changes is the newly expanded “short-term” plans. Short-term plans:
- can last up to 364 days; and
- do not have to comply with ACA requirements.
By James Solheim, J.D.