News & Updates

Information on the Grandfather Rule
On June 14, 2010, the Departments of Labor, Treasury, and Health and Human Services issued interim final regulations pertaining to the grandfathering provisions in the Patient Protection and Affordable Care Act (PPACA). Known as the "grandfathering rules," these regulations clarify certain aspects of the law, including those changes to health care coverage that will result in the loss of grandfathered status.

In general, PPACA requires insurers and plan sponsors to modify their coverage to comply with new insurance market reforms, many of which are effective for plan years that begin on or after September 23, 2010. However, the PPACA "grandfathers" certain plans that were in existence on March 23, 2010, the date of enactment, effectively exempting these plans from the insurance market reform requirements. Plans sold after March 23, 2010 will not be considered grandfathered health plans.

The grandfathering rules apply separately to each benefit package available under health insurance coverage or group health plans (i.e., the rules would apply separately to the PPO and HMO options available to an employee).

Coverage under a grandfathered health plan extends to:

• Family members of an individual member enrolled in the health insurance coverage or group health plan on March 23, 2010, who enroll in the member's coverage or plan after March 23, 2010
• Newly hired or newly enrolled employees/members and their families enrolling in group health insurance coverage or a group health plan after March 23, 2010

Our Approach to Grandfathering
Regulatory and health reform has been in effect for several years in Massachusetts, so many of national health care reform's advantages and requirements are currently in place in our standard products and benefit plans.

After reviewing the new national health care reform requirements and their advantages to our customers, Blue Cross Blue Shield of Massachusetts will be modifying its standard and custom fully insured plans on renewal dates beginning on September 23, 2010. We will not be accepting requests to grandfather groups with 1 to 99 eligible employees.

As always, we will work consultatively with our larger, fully insured employer groups and self-funded customers who customize their benefits to determine the best solution for their businesses and employees.

If you have any questions, please contact your account executive.

Requirements for Grandfathered Plans
Grandfathered plan status exempts a plan from some but not all of the insurance market reform requirements. Below, please find some information intended to identify some but not all of the rules and regulations for grandfathered plans. This is not a complete summary of the advantages or disadvantages of grandfathering a health plan and is subject to change. In addition, this summary is not intended to address the ways in which federal reform may or may not impact state law. Refer to the law or seek legal advice for full details. Blue Cross Blue Shield of Massachusetts makes no representation as to the impact of plan changes on a plan's grandfathered status.

Examples of National Health Care Reform Rules That Apply to All Plans Despite Grandfathered Status Include:

• Prohibition on lifetime limits
• Prohibition on annual limits
• Coverage of dependents up to age 26 who do not have other employer-sponsored coverage¹

Examples of National Health Care Reform Rules That Do NOT Apply to Grandfathered Plans Include:

• Required first-dollar coverage of preventive health services
• Coverage of dependents to age 26 if they are eligible for coverage under a non-parent, employer-sponsored plan¹
• Internal appeals and external review process

Certain Plan Changes Will Result in a Loss of Grandfathered Status, Such as:

• Generally, a decrease in the employer contribution rate toward the cost of coverage by more than five percentage points
• Any increase in a fixed-amount cost-sharing requirement other than a copayment (e.g., a deductible or out-of-pocket limit), if the total percentage increase in the cost-sharing requirement exceeds the "maximum percentage increase" (the increase in the overall medical care component of the Consumer Price Index for All Urban Consumers [CPI-U] plus 15 percentage points), measured from March 23, 2010
• For copayments, the maximum permitted increase (since March 23, 2010) without loss of grandfathered status is the greater of the:
  (a) maximum percentage increase (as described above), or (b) $5 increase by medical inflation
• Any increase in co-insurance after March 23, 2010
• Entering into a new policy, certificate, or contract of insurance with the plan's issuer
• Generally, a decrease in or addition of a new annual limit on the dollar value of benefits
• A change to eliminate all or substantially all benefits to diagnose or treat a particular condition, or to eliminate benefits for any necessary element to diagnose or treat a condition (e.g., no longer covering people with diabetes)

1. Please note that PPACA does not change or preempt the Massachusetts law regarding coverage of dependents to age 26, which continues to apply to insured plans.

Certain Plan Changes That Will NOT Result in a Loss of Grandfathered Status Include:

• Adding family members of an enrolled individual
• Adding new employees (including newly hired and newly enrolled employees)
• Ceasing to cover an individual (provided that the plan or coverage has continuously enrolled at least one person since March 23, 2010)
• Enhancing or adding to existing benefits
• Changes to premium amounts
• Voluntary changes to increase benefits to conform to required legal changes

Grandfathering Rules That Apply to Collectively Bargained Plans:

• Generally, insured health plan coverage maintained in line with one or more collective bargaining agreements between employee representatives and one or more employers that was ratified before March 23, 2010 is grandfathered health plan coverage, at least until the termination date of the last of the collective bargaining agreements relating to coverage in effect on March 23, 2010
• There is no special grandfathering rule for self-insured, collectively bargained plans
• There is no delayed effective date for national health care reform requirements that apply to non-collectively bargained plans

Other Grandfathering Rules That Apply:

• Materials provided to enrollees describing the health plan policy or plan benefits will require an attestation/statement that the specified plan is grandfathered
• Records documenting the coverage terms in effect on March 23, 2010 and any other documents necessary to verify, explain, or clarify its status as a grandfathered plan must be maintained. Records must be retained for so long as the policy or plan claims grandfathered status

Some Advantages and Disadvantages of Grandfathering:

1. Please note that PPACA does not change or preempt the Massachusetts law regarding coverage of dependents to age 26, which continues to apply to insured plans.