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Grandfathered Plans - What does it Mean?

May 03, 2010


Individual & Group News

Grandfathering provision in new federal health care reform legislation

There is a provision in the new law that "grandfathers" existing subscribers and employers in plans as of March 23, 2010, and allows subscribers currently enrolled in these plans and employer groups that offer these plans to keep their existing products.  However, as Anthem has also discussed recently, there are a handful of near-term health care reform requirements that will impact all contracts for new sales and renewals beginning in late September regardless of whether the individual or employer group is or is not "grandfathered". These include:

  • Allowing members to add dependents up to age 26 regardless of student status
  • Eliminating lifetime limits on policies

For new sales and  subscribers or employer groups who change policies after March 23, 2010, those individuals and groups are not "grandfathered", and Anthem will also be required to make changes in addition to those above, such as:

  • For renewals after late September, removing any member cost sharing for "preventive" benefits, as defined by the legislation.
  • Beginning in 2014, limiting product choices to four benefit tiers that include a defined list of "essential health benefits".

Additionally, new family members and employees can be added to a subscriber's or employer group's grandfathered plan. 

Although it is difficult to respond to specific questions about grandfathered plans until HHS issues additional guidance in regulations, it is possible that changing insurers could result in loss of grandfathered status. Loss of grandfathered status means that additional mandates required by health care reform will apply.

Note: At the top of the Individual plan options tables, Anthem has added the following language: "It is important to note that our preliminary analysis of the "grandfathering" provision indicates that if a subscriber changes products after March 23, 2010, he or she will likely be subject to additional product requirements that are effective in the future.

Please see additional information on the Anthem agent/broker website at www.anthem.com."
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