FJG/FYI Articles | Employee Benefits

Benefits Compliance FAQ Grandfathered Plans

Answer: A “grandfathered” plan is an individual
or group plan, either self-funded or fully insured, in existence on the date that President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law, March 23, 2010. A new plan that is created after March 23, 2010, is not a grandfathered plan. An existing plan that makes any significant changes after March 23, 2010, may jeopardize its grandfathered status, although there is still some gray area regarding what changes are acceptable. At this time, it is clear that a plan will continue to be considered grandfathered if family members of employees and new employees are enrolled in the plan and the terms of the plan are consistent with those in effect on March 23, 2010. It is also clear that a plan may be renewed during the annual renewal process without changing the status from grandfathered.

However, currently unclear is to what extent plan changes will impact grandfathered status. Some industry experts believe that if an individual or group plan changes the level of the deductible or coinsurance, then the plan is no longer grandfathered. Other industry experts also believe that plans should at least be able to make changes to conform with PPACA and other applicable laws, such as the Mental Health Parity and Addiction Equity Act regulations, and not risk grandfathered status. This will remain unclear until guidance is issued. Regulators have informally indicated they may issue guidance as early as this summer.

While grandfathered plans do not have to comply with some of the
requirements under PPACA, a grandfathered plan is subject to some
rules, including restrictions on annual and lifetime limits, pre-existing
condition exclusion requirements and the requirement to cover adult dependent children to age 26. In addition, grandfathered plans must comply with changes for health Flexible Spending Accounts and the employer mandates. Grandfathered plans still will need to review each provision to see how the new rules may impact them.

Your FJG advisor has resources available to help with this process. Please contact us if you need assistance.

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