New requirements take effect for plans beginning on and after September 23, 2010

News Image 08-02-2010

Your new and renewing clients will start seeing a number of required changes to their group plans beginning on and after September 23, 2010. Please note: While this information focuses on group business, this impacts both group and individual business.

Here's what your clients can expect:

All plans

The following changes impact all plans on their effective dates, or upon renewal - whether they are grandfathered or not:

  • Members can add dependents up to age 26, regardless of student or marital status.
  • Pre-existing exclusions for members under age 19 are removed.
  • Lifetime limits are eliminated.
  • Certain annual dollar limits are removed.
  • Coverage changes (fraud or intentional misrepresentation) are rescinded

    For non-grandfathered plans

    For plans that are not grandfathered, the following changes are also required:

  • Removal of member cost sharing for in-network preventive benefits, as defined by the law.
  • New internal claims appeal and external review processes.
  • Patient protections - primary care physician selection, direct access to OB/GYN services, emergency services

    For grandfathered plans

    For plans that are grandfathered:

  • A subscriber can add a new family member to a grandfathered plan.
  • A group can add new employees to a grandfathered plan.

    More about grandfathering

    Here are some answers to common questions about grandfathering:

    Can a group make changes to its current benefit plan and maintain its grandfathered status?

    Certain limited benefit changes allowed within the legislation and interim final regulation do not impact grandfathered status, but there are very few situations in which an alternative standard plan complies. As a result, only large groups that are eligible to customize their benefits will be allowed to change their benefits and retain grandfathered status if the changes are within the level of changes allowed by the legislation. Other changes allowed according to the interim final rules are:

  • Changes in premiums of a policy or plan
  • Changes required to comply with federal or state law
  • Changes to increase benefits or voluntarily comply with provisions of the Patient Protection and Affordable Care Act
  • Changes to plan structure, for example, switching from a health reimbursement arrangement to major medical coverage, or from insured to self-funded coverage
  • Changes to a provider network
  • Changes to accommodate mergers and acquisitions (as long as the merger or acquisition is not done solely to allow a group to move from one grandfathered plan to another when the plan change would reduce benefits or increase cost sharing in excess of that allowed by the regulations)
  • Changes to a self-funded plan's third-party administrator

    What changes would cause a group to lose grandfathered status?

    Groups that are not eligible to customize their benefits will not be allowed to change benefits and retain grandfathering status. For a group that is eligible to customize benefits, the following changes would cause a loss of grandfathered status:

  • Eliminate all (or substantially all) benefits to diagnose or treat a particular condition.
  • Increase coinsurance (or another percentage cost-sharing requirement) above the level that was set on March 23, 2010.
  • Increase fixed-amount cost-sharing requirements other than copayments, such as a deductible or an out-of-pocket limit, by a total percentage (measured from March 23, 2010) that is more than the sum of medical inflation plus 15%.
  • Increase copayments above the level in effect on March 23, 2010, by an amount that exceeds the greater of (a) the sum of medical inflation plus 15%, or (b) $5 increased by medical inflation.
  • Reduce employer contributions (calculated by cost or formula, such as hours worked) toward any tier of group health insurance coverage or a group health plan by more than 5% below the contribution rate on March 23, 2010.
  • Impose an annual limit on the dollar value of benefits if an annual or lifetime limit had not been previously imposed on all benefits or, for plans that previously imposed a lifetime limit on all benefits, impose an overall annual dollar limit that is lower than the lifetime limit, or, for plans that previously imposed an annual limit on all benefits, decrease the dollar value of the annual limit.
  • Issuer or plan sponsor does not disclose to participants and beneficiaries that the plan or coverage is a grandfathered health plan.
  • Change from one insurer to another.

    If a group commits to making a change before March 23, 2010, does the group have to change back?

    Probably not. If changes were made according to a written agreement or a filing with an insurance department before March 23, 2010, and the changes were implemented before or after March 23, 2010, the plan will likely be considered grandfathered.

    If a group commits to making a change after March 23, 2010, can the group change back?

    According to the interim final regulations, it appears that groups that have changed benefits between March 23, 2010, and June 14, 2010, may have the opportunity to revoke or modify the changes and regain grandfathered status at their next renewal date in 2011.

    How can I help large group clients determine the impact of grandfathering or not grandfathering?

    Several carriers are developing a tool for large groups that can customize their benefits to evaluate how much the benefits can be adjusted and still maintain grandfathered status.

    We know you may have more questions. You can expect more information about grandfathering in the future. And, as always, you can talk with your BUA sales representative for more information.

    Appeals process for non-grandfathered plans

    As you know, the health care reform law includes requirements for internal claims and appeals, and external reviews for fully insured and self-funded non-grandfathered plans. The law says that a plan must, at a minimum:

  • Have an internal claims and appeals process.
  • Provide notice of an external appeals process.
  • Allow an enrollee to review his or her file, present evidence during the appeals process and continue to receive coverage pending outcome.
  • Implement an external review process.

    A recent interim final rule offers more information. Key points include:

  • The rule applies to individual plans and fully insured and self-funded group plans
  • The rule does not apply to any grandfathered plans.
  • Plans must follow state or federal appeals processes.
  • A benefit determination subject to internal review includes:
    - Whether a service is a covered benefit.
    - Imposition of pre-existing condition or other benefit limits.
    - Medical necessity and experimental treatment determinations.
    - A determination to rescind coverage.
  • Plans must ensure that internal review processes are fair and impartial.
  • Individuals must be notified of their rights to internal reviews and external appeals in a "culturally and linguistically appropriate manner."
  • Consumer protections for the external review process are required for certain benefit determinations and decisions to rescind coverage.
  • For plan years before July 1, 2011, insurers in states with an existing external review process that complies with health care reform may follow that process. If the state external review process does not comply, or if there is no applicable state external review process, the federal standard (not yet published) must be followed. For self-insured plans, unless the state external review process applies, the federal standard (not yet published) must be followed.
  • All non-grandfathered fully insured and self-funded group health plans must meet the new consumer protection standards for internal and external review for plan years on and after September 23, 2010.

    More regulations will be issued for internal claims and appeals process, as well as additional guidance for external reviews. We'll keep you posted as this information becomes available. As always, talk with your BUA sales representative with any questions.










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