PPACA Status of Grandfathered Plans

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It’s really happening!  Not just to individuals, but since October, we’re speaking to more and more companies whose plans have been canceled because they do not meet PPACA requirements.  They are then forced to scramble to find replacement plans in time to meet the new law’s deadlines.

While many Americans and members of Congress seem shocked by this news, the broker community knew this was coming.

While many Americans and members of Congress seem shocked by this news, the broker community knew this was coming.

Those who escaped this round of plan cancellations either have plans that already meet the PPACA guidelines or they are enrolled in policies that were in effect and haven’t changed since the PPACA was signed on March 23, 2010 – and they are both in an individual market minority.

We’re just waiting for the rest of America to figure out that cancellations will hit most small group plans in 2014, too.  The effects will be staggered since reform requirements are effective on the plan anniversary rather than on the calendar year.

Constituents whose policies were canceled put pressure on Congress, and in November, H.R. 3350, the Keep Your Health Plan Act of 20131, which already has 88 co-sponsors, was introduced by House Energy and Commerce Committee Chairman Fred Upton (R-MI).  Insurance companies who said their plans need to be canceled because they do not meet PPACA’s requirements would be authorized by this bill to keep offering these plans, essentially voiding the law’s individual market reform requirements for the time being.

We’re just waiting for the rest of America to figure out that cancellations will hit most small group plans in 2014, too.

The Senate joined in, with Democrats Mary Landrieu (LA) and Joe Manchin (WV) introducing similar legistation (S.1642)1.  While the text of the bill has not yet been released, according to NAHU (National Association of Health Underwriters)1, the bill would essentially overturn the PPACA requirements for all plans, allowing the consumer to retain or purchase plans that are not compliant with PPACA .  So far, Mary Pryor of Arkansas, is the only other co-sponsor on the bill.  

Both bills do beg the question, if plans are not required to meet PPACA guidelines, even if in a delayed timeline -- then what's the point? Would the PPACA still maintain relevance having these requirements waived?  The plot continues to thicken.

A voting timeline on these two bills is still unknown.  Meanwhile, companies would do well to quickly seek expert advice on the status of their current plan to avoid being thrown into crisis management, if their plan in fact does not meet PPACA requirements.

In the long run, moving towards Consumer-Driven Health Care is a win for companies.  Don’t let the bumps in the road on the way there throw your company off course.

In the long run, moving towards Consumer-Driven Health Care is a win for companies.  Don’t let the bumps in the road on the way there throw your company off course.

1 NAHU "What's Going On With Grandfathered Plans," Health Insurance Underwriters Magazine, December 2013, p18

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