The new health care law grandfathered health plans in existence before March 23, 2010 — the day reform became law — and exempted existing plans from many of the new regulations, benefits standards and consumer protections. But the exclusion comes with conditions. If the plans make changes that undermine the spirit of the health law and significantly burden enrollees with lower benefits and increased costs, they have to come into compliance with all reform provisions.
- Insurers will lose their grandfathered status if they cancel coverage when a person becomes ill or impose lifetime limits on benefits.
- Insurers will lose their grandfathered status if they eliminate all benefits for a particular condition or if it increases deductibles or co-payments by more than the rate of medical inflation plus 15 percentage points.
- Insurers will lose their grandfathered status if an employer reduces its contribution so that its share of the total cost of coverage declines by more than 5 percentage points.
- Insurers will lose their grandfathered status if they increase co-payments for doctor’s visits to $45, from $30 — a 50 percent increase — while medical inflation was 8 percent.
- Insurers will lose their grandfathered status if they increase the amount consumers to pay as percentage of the bill.
- Insurers will lose their grandfathered status if they reduce the cap for covered services each year.
If these rules sounds like good things for consumers, it’s because the government is trying to discourage insurers from reducing health care benefits and increasing costs. Ultimately, the goal of reform is to phase down the number of insurers protected under the grandfathered provisions and bring all plans in compliance with the new rules and regulations. It’s in the government’s interest to prevent insurers from using the two different sets of rules to segment “good” and “bad” risks (that could result in higher costs for older and less healthy enrollees) and free itself from the burden of having to maintain and enforce two separate regulatory systems — one for grandfathered plans and one for plans issued after March 23, 2010.