Insurance plans that were in place prior to March 23, 2010 are grandfathered in as long as the plan conforms to the Affordable Care Act’s new reforms and consumer protection provisions. So why are some people getting messages from insurance companies indicating their former plan is no longer available? Simply put, because the plan no longer conforms to the Affordable Care Act’s new reforms and consumer protection provisions.
Why would a plan lose grandfathered status? Sarah Lueck at the Center on Budget and Policy Priorities explains how an insurance plan can lose its grandfathered status:
“The health reform law is structured to avoid forcing major changes to existing plans that would disrupt people’s current coverage. At the same time, once a health plan is modified significantly compared to when health reform was enacted, it must provide the full consumer protections required under health reform.
The Administration issued an interim final regulation implementing the grandfathering provision on June 17. It allows employers and insurers to modify a plan’s coverage to a reasonable degree — for example, to increase cost-sharing charges to keep up with medical-cost growth — without losing grandfathered status. But more significant changes, including those listed below, would trigger a loss of grandfathered status:
- The elimination of all or substantially all benefits to diagnose or treat a medical condition. For example, an insurer could not eliminate coverage of treatments needed for cystic fibrosis.
- An increase in the percentage of a procedure’s cost that enrollees must pay, such as charging 25% of the cost of a surgery when the percentage had been 20%.
- A change in a fixed-dollar co-payment that exceeds the rate of medical inflation since enactment of health reform plus 15 percentage points, or $5 increased by medical inflation, whichever is greater. For example, a health plan would lose grandfathered status if it raised its copayment for a physician visit to $40 from $20 and medical inflation since March 2010 was 7.2%. (The $20 increase exceeds 22.2 percent — the 7.2 percent inflation rate plus 15 percentage points — and also exceeds $5.36, or $5 adjusted to reflect 7.2 percent medical inflation.)
- Increases in fixed-dollar cost-sharing amounts other than co-payments (i.e., deductibles and the total amount you must pay each year out of pocket) that exceed the rate of medical inflation since enactment of the health reform law plus 15 percentage points.
- A reduction in the share of costs an employer pays toward group health coverage, if the new employer share is more than five percentage points below the one in place when health reform was enacted.” Continue reading–>