The federal agencies charged with drafting regulations under the Patient Protection and Affordable Care Act (PPACA) have released long-awaited interim final regulations on the application of PPACA’s grandfather provisions. A fact sheet describing the regulations and a list of frequently asked questions were also posted on the healthreform.gov Web site. In a prior Legal Alert, we outlined the 10 most frequently asked questions concerning grandfathered coverage. This Legal Alert revisits those issues and highlights the guidance in the interim final regulations.

Q-1: What is grandfathered group health coverage under the regulations?

A-1: Grandfathered group health coverage is coverage under an insured or self-insured plan in which an individual was enrolled on March 23, 2010, as long as (a) the coverage complies with the maintenance provisions of the regulations (see Q&A-6 below) and (b) the anti-abuse enrollment rules are not violated (see Q&A-5 below). The regulations clarify that the grandfather rules apply separately to each benefit package within a plan; therefore, a plan may contain, for instance, a grandfathered PPO option and a non-grandfathered HMO option. However, if an insured plan enters into a new policy, certificate, or contract of insurance after March 23, 2010, the new coverage is not grandfathered, even if the product was offered to the group market before March 23, 2010.

Q-2: If my coverage is grandfathered, what does that mean, and what do I do now?