The passage of comprehensive health care reform legislation under the Affordable Care Act (“ACA”) made 2010 a monumental year for group health plans. As a result, plan sponsors are faced with a dizzying array of action items for 2011.
The ACA introduced the concept of “grandfathered” health plans. As we discussed in our June 2010 article, grandfathered plans are excused from at least some of the ACA’s requirements. Plan sponsors must decide whether their plans qualify as grandfathered plans and, if so, whether such status is worth preserving for the 2011 plan year in light of the restrictions it places on changes to plan design and cost-sharing arrangements.
Note that the agencies recently amended the regulations so that fully insured plans can remain grandfathered even if they change insurance carriers or policies (as long as no other changes are made that would otherwise cause a loss of grandfathered status). Thus, some plan sponsors who had already concluded that their plan would lose grandfathered status (due solely to an anticpiated change in carriers) may wish to reevaluate that position. The amended regulations are prospective only. Plan sponsors who have already lost grandfathered status due to a change in insurance carriers or policies after the enactment of the ACA (March 23, 2010), but before the amended regulations were issued (November 15, 2010), are not affected.
Plan Design Decisions
Many aspects of the new ACA requirements are subject to interpretation, and other provisions leave some room for administrative flexibility. Plan sponsors should review their plan provisions and decide how they will apply the various ACA provisions. For example, group health plans may no longer place any lifetime dollar limits on “essential health benefits.” Right now, plan sponsors are subject to a “good faith” interpretation of the term “essential health benefits.” Thus, they must decide whether particular covered services, such as chiropractic care or infertility services, constitute essential health benefits, to which no lifetime limit may be applied.
Once plan sponsors have made decisions regarding grandfathered status and plan design, the plan document must be amended to incorporate the required ACA changes. All group health plans, both grandfathered and non-grandfathered, must be amended to comply with the following ACA changes:
- Extend eligibility for dependent children to age 26;
- Eliminate lifetime benefit limits for “essential health benefits”;
- Revise and/or eliminate annual benefit limits for “essential health benefits”; and
- Eliminate pre-existing condition limitations for enrollees under age 19.
In addition, non-grandfathered plans must be amended to comply with the following ACA mandates:
- New internal claims and appeals requirements;
- New external review procedures;
- Eliminate cost-sharing for in-network preventive services; and
- Provide new patient protections for designation of primary care provider and emergency services.
Notices and Disclosures
As we discussed in our August 2010 article, there are many new notice and disclosure requirements under the ACA. Plan sponsors must ensure that all required notices and disclosures have been distributed. All group health plans, both grandfathered and non-grandfathered, must provide notice of:
- Removal of the plan’s lifetime benefit limit and the corresponding special enrollment opportunity; and
- Expansion of dependent eligibility and the corresponding special enrollment opportunity.
In addition, grandfathered group health plans must provide a special notice of the plan’s grandfathered status. Non-grandfathered plans must provide a special notice of the new patient protections governing designation of primary care provider, pediatrician, and OB/GYN. All of these notices must be distributed to participants on or before the first day of the first plan year beginning on or after September 23, 2010.