States that permit carriers to renew medical policies without adopting various Affordable Care Act (ACA) requirements may continue to do so through 2019, according to a bulletin released April 9, 2018, by the U.S. Department of Health and Human Services. The bulletin extends transitional relief for non-ACA-compliant policies for another year. The affected category of non-ACA-compliant policies, available in some individual and small group insurance markets, is commonly referred to as grandmothered.
By way of background, the ACA imposes numerous requirements on health plans. Whether a specific requirement applies, however, depends in part on the type of plan – and grandfathers and grandmothers are not the same.
First, a grandfathered health plan is one that was established no later than March 23, 2010, when the ACA was enacted. The plan can maintain grandfathered status indefinitely, as long as it does not make certain changes to reduce its benefits or increase the employee’s out-of-pocket costs. Basic ACA rules, such as coverage for children up to age 26 and prohibiting annual and lifetime dollar limits on essential health benefits, apply to all plans. A plan that maintains grandfathered status, however, is exempt from many other ACA rules, such as coverage mandates for preventive care, and small group market rules for essential health benefits and adjusted community rating.
A grandmothered policy does not have grandfathered plan status. It is an individual or small group policy originally issued before 2014 that has been allowed to renew year after year in accordance with the state’s insurance laws. Grandmothering does not apply to policies issued in the large group market. Most states that permit grandmothering also limit small group policies to groups with up to 50 employees.
Depending on the specific state’s rules, a grandmothered policy may be exempt from various ACA rules that otherwise would have taken effect in 2014, such as required coverage for all categories of essential health benefits and adjusted community rating. Currently about 30 states allow some type of grandmothering for individual policies or small group policies, or both, but the details vary from state to state.
States that allow grandmothering may continue to do so for renewals through October 1, 2019, provided the policy ends by December 31, 2019. Note, however, that even if the state’s insurance laws allow grandmothering, carriers are not required to continue renewing non-ACA policies.
What This Means
In summary, state insurance laws continue to control the options, provisions, and requirements that apply to group policies issued in their state. (Self-funded plans are not subject to state insurance laws.) For information about your state’s current insurance laws, refer to a carrier or broker that is licensed to sell products in your state.