Grandmothered Plans to End: What Does This Mean?

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Understand the Impact of Grandmothered Plans Ending

There has been much buzz recently about “grandmothered” and “grandfathered” plans in New Jersey.   Yet another extension was issued in April 2018, allowing — again, at each state’s discretion — grandmothered plans to renew until as late as October 1, 2019, as long as they terminate by the end of 2019.  New Jersey, however, is only allowing grandmothered plans to stay in force through December of 2018.

Grandmothered and Grandfathered Insurance Plans

“Grandmothered” insurance plans are those that were in effect prior to 2014, bought between the time that the Affordable Care Act (ACA) was enacted on March 23, 2010 and the time that it was actually implemented in January 2014. Originally, the expectation with the ACA was that plans would terminate on December 31, 2013 and simply be replaced by Affordable Care Act compliant plans for 2014. In other words, the ACA wasn’t originally designed with consideration and allowances for individual or small group insurance plans that would effectively start between the time the ACA was enacted and then later implemented.

These plans are not to be confused with “grandfathered” plans. In order to be considered a Grandfathered plan, the plan needed to be active on March 23, 2010 (the date the ACA was enacted) and are not permitted to have any prohibited plan design changes. They also must continuously cover at least one person, though it doesn’t have to be the same person, since March 23, 2010 without interruption.  Plans also must maintain all required disclosures and documentation.

All new or renewing plans that began on or after September 23, 2010 were to provide coverage of preventive care with no cost to the participant. The exception were “grandfathered” plans. “Grandfathered” plans were not required to cover preventive care in this way.

Plans with initial effective dates between March 23, 2010 and December 31, 2013 didn’t qualify as “grandfathered” plans. As a measure of transitional relief, the concept of “grandmothered” plan was offered by the Centers for Medicare and Medicaid Services (CMS) in November 2013.

The creation of “grandmothered” plans would cover preventive care with no cost-sharing, but these plans were not required to cover the rest of the ACA’s essential health benefits. States had the option to participate or not – and several states chose not to participate in grandmothering.

What Has Changed?

As previously mentioned, the CMS rolled-out multiple renewals of this transition relief, issuing the last and final extension on April 9, 2018. This extension includes limitations based on acceptance by states and other regulations and includes the statement “provided all such policies end by December 31, 2019.” However, each state is permitted to determine whether or not grandmothered plans be permitted to continue. In New Jersey, grandmothered plans can only remain in force until December 31, 2018. Therefore, if you are currently in a NJ grandmothered plan, you will be required to make a plan change come January 1, 2019.

Contact BenefEx here to learn more about “grandmothered” plans or to help answer any questions you may have.