Medical Insurance Blog

Grandfathered Medical Insurance Plans Now Have Regulations

New laws were issued recently that will allow Americans to keep their medical insurance plans and allow them to enjoy protections and control regarding their medical care.  This was promised by President Obama in his push for medical reform, and it is being delivered.

The Affordable Care Act says that all medical plans must include important benefits to Americans, and any medical insurance policies that were in effect on March 23, 2010 are exempt from some of the newly passed required benefits.  This is called the "grandfathered plans".  This will allow medical insurance companies and companies to make changes routinely while not losing their grandfathered status. 

Some of the acceptable changes that businesses will be allowed to make will be to make small changes to co-pays, and contributions from the employer for their workers' premiums.  Also, they can have adjustments made to cost to keep up with medical inflation.  They can also add new benefits and make small adjustments to current benefits.  These grandfathered plans can accept the new protections as set forth in the new law or they can make the necessary changes in order to comply with their State law, or with Federal laws.

All medical insurance plans, grandfathered or not grandfathered, will have to have specific benefits starting on September 23, 2010 and after.  This includes the elimination of lifetime limits, the prohibition of medical insurance companies being able to cancel a policy whenever someone gets ill and they've previously erred on their medical insurance application unintentionally, and allowing young adults up to the age of 26 to remain on their parents' plans.

For people that receive their medical insurance through their employer, there are more benefits that'll be offered for grandfathered and not grandfathered plans.  This includes prohibiting insurers from excluding children with medical pre-existing conditions and the elimination of restricted annual limits.  In the future, there will be standards on limits and insurers cannot set a limit below that annual dollar figure.

If insurance companies or companies decide to get rid of significant benefits or raise consumers' out-of-pocket costs, then these plans will no longer be considered grandfathered.  If a medical plan is no longer grandfathered, then the people that have these medical plans will get more new benefits, such as 100% coverage for recommended preventative care and access to obstetricians and gynecologist without having to obtain a referral from a primary care physician.

In addition, grandfathered plans cannot increase a plan's co-insurance or they will lose their grandfathered status.  Co-pays cannot be increased by no more than either $5 or by a percentage that's equivalent to 15 percentage points plus medical inflation.  Also, they cannot increase deductibles by a large amount.  The largest that they can be increased to is equivalent to 15 percentage points plus medical inflation.  Grandfathered plans are not allowed to decrease the contributions that are paid by an employer significantly.  Employers are not able to decrease the amount that they pay towards employees' premiums by more than 5%.  Grandfathered plans also are unable to constrict any dollar limit that's in place for annual benefits paid, and plans that don't have a dollar limit on annual benefits are not able to add a new limit, unless they're replacing it with a dollar limit annual amount that's equivalent to or higher than the lifetime limit.  Plans can also lose their grandfathered status if a company makes a decision to purchase medical insurance for its employees from an alternative insurance company.  However, employers are able to change their plan administrator without losing their grandfathered status.

With these new grandfather laws, insurers must disclose to its members each time it gives out materials whether it's considered to be a grandfathered plan and not required to include some of the benefits of the Affordable Care Act.  This will enable Americans to comprehend the benefits of remaining with a grandfathered plan or changing to a new medical plan.  Also,  plans can lose their grandfathered status if the insurer encourages or makes people change to a different grandfathered plan that has less medical benefits or higher out of pocket costs.  In addition, a grandfathered plan will lose its status if it's purchased by another plan, or combines with another medical plan for the purpose of avoiding the new laws.