New Guidance on “Grandfathered Plans”


The Internal Revenue Service, along with the Departments of Labor and Health and Human Services, have issued interim final regulations that address at what point changes to a group health plan in existence on March 23, 2010, are significant enough to cause the plan to cease to be a “grandfathered health plan” for purposes of the Patient Protection and Affordable Care Act (the “Act”). Grandfathered plans are exempt from certain insurance market reform provisions of the Act, including requirements related to preventive care, internal and external review, nondiscrimination based on income, choice of providers, emergency care, clinical trials, cost sharing and deductibles, guaranteed issue/renewal, and rating restrictions. However, grandfathered plans are not exempt from requirements related to annual and lifetime limits, dependent coverage to age 26, rescission, pre-existing condition exclusions, waiting periods, employer mandates, and tax provisions.

The regulations provide that certain changes will not result in a loss of grandfathered status...

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