Grandfather Plan Provisions

Grandfathered Plans:  A rule in health reform on “grandfathered health plans” would make some provisions of the new law inapplicable to existing plans in place as of the date of enactment. Grandfathered coverage can be renewed, and family members and new employees are allowed to enroll without destroying grandfathered status, for example.

Caution. It is not clear what makes a plan lose grandfathered status. If a plan is fully-insured, cooperation by the insurance carrier will be crucial, to prevent changes to the plan that may result in a loss of the status if a plan sponsor attempts to rely on grandfathering to avoid a certain, limited number of new compliance burdens.

Collective Bargaining and Grandfathered Plans. A special rule applies if health insurance coverage is maintained due to one (or more) collective bargaining agreements between employee representatives and one (or more) employers. If the agreement was ratifi ed before the date of enactment (March 23, 2010), then portions of two subtitles of the new law do not apply to that plan. (The law allows plan amendments, without destroying grandfathered status, if changes are made solely to conform the plan to the law’s new rules.) Note: One interpretation is that only insured collectively bargained plans are entitled to grandfathering; we need additional guidance on this apparent drafting error.  Grandfather Plan Provisions PDF Download