FAQ Guidance on Grandfathered Plans

The U.S. Department of Labor has posted a set of frequently asked questions (FAQs) regarding grandfathered plans and other issues under the Affordable Care Act (ACA).

The FAQs clarify that a sponsor of a health plan grandfathered since March 23, 2010: the date the ACA was enacted: may make most changes it likes to the plan without losing its grandfathered status. Only six specific changes are considered to alter a plan so significantly that they would cause a loss of grandfathered status:

Elimination of all or substantially all benefits to diagnose or treat a particular condition

Increase in a percentage cost-sharing requirement

Increase in a deductible or out-of-pocket maximum by an amount that exceeds medical inflation plus 15 percentage points

Increase in a copayment by an amount that exceeds medical inflation by 15 percentage points (or, if greater, $5 plus medical inflation)

Decrease in an employer’s contribution rate towards the cost of coverage by more than 5 percentage points

Imposition of annual limits on the dollar value of all benefits below specified amounts

The FAQs also repeat the department’s position that grandfathered status is determined on a benefit-package-by-benefit-package basis. For example, if a plan offers a point-of-service option, a preferred provider organization, and a health maintenance organization, it is permissible to treat them as separate benefit package options. The loss of grandfathered status under one option would not affect the other two.

The department expects to issue additional FAQs in the future.