What happens if an insured plan loses grandfather status?

Insured plans need to determine the importance of grandfather status compared to the additional regulation for non-grandfathered plans.  As a practical matter, insurance providers will likely make this decision, but the employer should be aware of these issues.  We recently discussed the implications for self-funded non-grandfathered plans.  Insured non-grandfathered plans must comply with all the provisions identified for self-funded non-grandfathered plans. In addition, insured group plans must consider the following provisions which will apply ONLY if grandfather status is lost:

  • Prohibition of discrimination in favor of highly compensated employees;
  • Premium rate discrimination requirements;
  • Guaranteed availability;
  • Guarantee renewability; and
  • For the small group market only, coverage for essential health benefits.

For calendar year policies, the prohibition on discrimination in favor of highly compensated employees takes effect January 1, 2011.  All the other provisions listed above are effective January 1, 2014 for calendar year policies.

Regardless of grandfathered status, an insured plan must report on medical loss ratio and possibly provide participants with rebates beginning January 1, 2011.

Today’s post was contributed by Maureen Maly and Megan Hladilek.

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