What is the Grandfathering Grace Period?
If an employer made changes to its health plan between March 23 and June 14, 2010 that would otherwise trigger the loss of grandfathered status, that employer plan is eligible to regain its grandfathered status at its next renewal. This is the grandfathering grace period. While some health plans have decided not to maintain grandfathered status for their small and mid-market groups, Premera Blue Cross Blue Shield of Alaska has decided to preserve choices for our members and customers where possible and will continue to support plans for those members and customers who want to preserve grandfathered status.
To elect this option, an employerwould retract any plan changes made between March 23, 2010 and June14,2010 that caused it to lose grandfathered status and will revert back to its pre- federal healthcare reform benefits. That newly grandfathered plan would then be effective as of its next renewal date. As part of the renewal process, an employer could consider modifications to its grandfathered plan as long as it complies with grandfathering regulations. The group’s employeeswill notexperience any reassessment of previously processed claims.
How does an employer qualify for the Grandfathering Grace Period?
Generally speaking, if an employer changed to a richer plan where each benefit was equal to or richer than the previous plan, then the employer maintained its grandfathered status. However, if the employer made changes in spring 2010 that resulted in leaner benefits, then the plan may have lost grandfathered status in 2010 (and may be eligible to revert back using the grace period provision if the employer chooses).
The following are examples of the types of questions that should be asked when determining grandfathered status:
- Did the coinsurance percentage for medical or pharmacy services increase?
- Was the employer effective contribution percentage for any tier decreased by more than 5%?
- Did the medical or pharmacy deductible(s) increase by more than 15% plus medical inflation?
- Did the out-of-pocket maximum increase by more than 15% plus medical inflation?
- Was a copayadded for something previously covered in full?
- Did the employer eliminate any benefits necessary to diagnose or treat a condition that was previously covered?
- Did the employer merge with another company and combine, eliminate or change the plans offered?
- Did the employer eliminate a “rich” plan, moving all employees to a “lean” plan?
We advise that you consult your tax advisor and legal counsel for assistance on Healthcare Reform as needed, especially for non-discrimination testing.
What’s in my renewal?
As has been our practice since October 2010, renewals are sent out using your 2010 benefits, updated for healthcare reform as if you are a grandfathered plan, with a non-grandfathered plan option.
If we determine that changes were made during your 2010 renewal, our default will be to send renewals out using your 2010 benefits, updated for healthcare reform as if you are a non-grandfathered plan. Upon request, and if applicable, we can provide a grandfathered plan renewal using your pre- federal healthcare reform benefits. However, please note that we cannot renew a group with a discontinued plan.
If you have any questions, please contact your Premera account manager or producer for assistance in determining your grandfathering status.
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