On June 17, 2010, the U.S. Departments of Health and Human Services (HHS), Labor, and Treasury issued interim final rules relating to “grandfathered” health care plans under the Patient Protection and Affordable Care Act (PPACA). A “grandfathered health plan” is any group health plan or individual coverage that was in effect on March 23, 2010, the date of the new law’s enactment. 

The new rule preserves the ability of the American people to keep their current plan if they like it, while providing new benefits, by minimizing market disruption and putting us on a glide path toward the competitive, patient-centered market of the future. While it requires all health plans to provide important new benefits to consumers, it allows plans that existed on March 23, 2010 to innovate and contain costs by allowing insurers and employers to make routine changes without losing grandfather status. 

Even if an individual re-enrolls in a grandfathered health plan or new employees (and their families) are added to the plan after March 23, 2010, that does not destroy the plan’s grandfathered status.  Likewise, an individual who was covered by a grandfathered health plan adds his dependents to the plan after March 23, 2010 will not negate the plan’s grandfathered status as long as the plan allowed for dependent/family coverage on March 23, 2010.

Plans will lose their “grandfather” status if they choose to significantly cut benefits or increase out-of-pocket spending for consumers.  Additionally, the status will be lost if:

• Benefits are eliminated;
• Insurance carriers are changed;
• Corporate re-organizations or plan mergers are put in place to avoid complying with the law

A fact sheet regarding the regulation can be found at http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html.

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