	Introduction

The Patient Protection and Affordable Care Act ( P.L. 111-148 , ACA), as amended, includes provisions for the grandfathering of existing health insurance plans. Given that most Americans had private health insurance coverage on the date of enactment of ACA, most Americans' health coverage was affected by the grandfathering provisions. Grandfathered Health Plans

A grandfathered health plan is an existing group health plan or health insurance coverage (including coverage from the individual health insurance market) in which a person was enrolled on the date of ACA's enactment. Therefore, as long as a person was enrolled in a health insurance plan on March 23, 2010, that plan has been grandfathered. Current enrollees in grandfathered health plans are allowed to re-enroll in that plan, even if renewal occurs after the date of ACA enactment. Family members are allowed to enroll in the grandfathered plan, if such enrollment is permitted under the terms of the plan in effect on the date of enactment. For grandfathered group plans, new employees (and their families) may enroll in such plans. Insurance Reforms Applicable to Grandfathered Health Plans

Grandfathered health plans are exempt from the majority of new insurance reforms under ACA. However, grandfathered plans are subject to a handful of requirements with different effective dates. Requirement to extend dependent coverage to children under age 26. Prohibition on coverage exclusions for preexisting health conditions. Interim Final Rules on Grandfathered Health Plans

On June 17, 2010, the Departments of Health and Human Services, Labor, and Treasury ("Departments") issued interim final rules with request for comments regarding grandfathered plans. The Departments identified certain changes to benefits, cost-sharing, employer contributions, and access to coverage that would cause the loss of grandfathered status. The rules also clarified the loss of grandfathered status in either of the following instances: a plan did not have continuous enrollment since enactment (does not need to be the same enrollee), and termination of an existing collective bargaining agreement under which grandfathered health coverage was provided. Comments on the interim final rules were due August 16, 2010. Some of the changes that would cause loss of grandfathered status relate to covered benefits, cost-sharing requirements, and employer contribution rates:
"Elimination of all or substantially all benefits to diagnose or treat a particular condition"; "Any increase … in a percentage cost-sharing requirement (such as an individual's coinsurance requirement)"; "Any increase in a fixed-amount cost-sharing requirement other than a copayment (for example, deductible) … [that] exceeds the maximum percentage increase" (defined as medical inflation + 15%); "Any increase in a fixed-amount copayment … [that] exceeds the greater of: (A) An amount equal to $5 increased by medical inflation … (that is, $5 times medical inflation, plus $5), or, (B) The maximum percentage increase"; Any of the following changes regarding an employer's contribution towards premiums: (A) "Employer or employee organization decreases its contribution rate based on cost of coverage … by more than 5 percentage points below the contribution rate for the coverage period that includes March 23, 2010" or (B) "Employer or employee organization decreases its contribution rate based on a formula … by more than 5 percent below the contribution rate for the coverage period that includes March 23, 2010"; and Any of the following changes regarding annual dollar limits: (A) "A group health plan, or group health insurance coverage, that, on March 23, 2010, did not impose an overall annual or lifetime limit … [later] imposes an overall annual limit"; (B) "A group health plan, or group health insurance coverage, that, on March 23, 2010, imposed an overall lifetime limit … but no overall annual limit … [later] adopts an overall annual limit at a dollar value that is lower than the dollar value of the lifetime limit on March 23, 2010"; or (C) "A group health plan, or group health insurance coverage, that, on March 23, 2010, imposed an overall annual limit … [later] decreases the dollar value of the annual limit…." Transitional Rules and Enforcement

The regulation provides some flexibility in allowing changes to be made to the terms of a plan or coverage after enactment which do not cause loss of grandfathered status. Issues that generated comments across the various perspectives include prescription drug formularies, provider networks, cost-sharing, plan design and funding, and the requirement to disclose certain information to plan participants and beneficiaries. Amendment to Interim Final Rules

On November 17, 2010, the Departments published an amendment to the interim final rules on grandfathered health plans.
The Patient Protection and Affordable Care Act (P.L. 111-148, ACA), as amended, includes provisions for the grandfathering of existing health insurance plans. Given that most Americans had private health insurance coverage on the date of enactment of ACA, most Americans' health coverage was affected by the grandfathering provisions.
A grandfathered health plan is an existing group health plan or health insurance coverage (including coverage from the individual health insurance market) in which a person was enrolled on the date of enactment. Therefore, as long as a person was enrolled in a health insurance plan on March 23, 2010, that plan has been grandfathered.
Current enrollees in grandfathered health plans are allowed to re-enroll in that plan, even if renewal occurs after the date of enactment. Family members are allowed to enroll in the grandfathered plan, if such enrollment is permitted under the terms of the plan in effect on the date of enactment. For grandfathered group plans, new employees (and their families) may enroll in such plans.
Grandfathered health plans are exempt from the majority of new insurance reforms under ACA. However, grandfathered plans are subject to a handful of requirements: (1) uniform explanation of coverage documents; (2) medical loss ratio reporting and premium rebates; (3) prohibition on lifetime limits; (4) restriction on rescissions; (5) dependent coverage for children under 26 years of age; (6) prohibition on excessive waiting periods; (7) restricted annual limits; and (8) coverage for preexisting health conditions.
Enrollment in a grandfathered plan meets the individual mandate requirements that are effective in 2014.
On June 17, 2010, the Departments of Health and Human Services, Labor, and Treasury ("Departments") issued interim final rules with request for comments regarding grandfathered plans. The regulation identified certain changes to benefits, cost-sharing, employer contributions, and access to coverage that would cause the loss of grandfathered status. It also clarified the loss of grandfathered status in either of the following instances: for a plan that did not have continuous enrollment (does not need to be the same enrollee), and termination of an existing collective bargaining agreement under which grandfathered health coverage was provided. In addition, the regulation included transitional rules that provide some flexibility in allowing changes to be made to the terms of a plan or coverage after enactment that do not cause loss of grandfathered status, and analysis of the potential impact of grandfathering rules on group and individual health plans. Comments on the interim final rules were due by August 16, 2010. Among the issues that generated comments from different stakeholder groups (health plans, employers, consumers, and state regulators) are prescription drug formularies, provider networks, cost-sharing, plan design and funding, and plan disclose requirements.
On November 17, 2010, the Departments published an amendment to the interim final rules on grandfathered health plans. The amendment permits group health plans to change insurance carriers and still maintain grandfathered status.