Grandmothered Plans — On Life Support?

Plans that are not fully in compliance with the Affordable Care Act (ACA) but are not “grandfathered” are referred to as “grandmothered” plans. “Grandfathered” plans had to be in effect prior to enactment of the ACA on March 23, 2010. “Grandmothered” plans could have been purchased subsequent to March 23, 2010 but before December 31, 2013. Both “grandfathered” and “grandmothered” plans have been able to be renewed depending on meeting regulatory or state requirements.

“Grandmothered” plans came about as the result of transitional relief offered by CMS in November 2013. The relief described in a letter allowed health insurance coverage in the individual and small group market that would be renewed between January 1, 2014 and October 1, 2014 to avoid certain insurance market reforms. The rationale for allowing the transition relief was that ACA compliant policies would have been significantly more expensive in many cases.

States could decide whether or not to allow these transitional policies. If a state allowed transitional policies, insurers could decide if they wanted to continue them or not. As many as 35 states allowed “grandmothered” policies.

There have been subsequent renewals of this transition relief. The most recent extension of “grandmothered” plans – and to date the last extension – was issued on February 23, 2017. This letter extended the period of transition relief to policy years beginning on or before October 1, 2018. The relief further limited the relief by noting that “provided all such policies end by December 31, 2018.”

The extension to the end of the 2018 calendar year was to align the end of the policies with the calendar year policy in the individual market.

States could elect to comply with this extension of the transitional relief or they could choose not to do so. They could also selectively elect shorter periods but were precluded from extending transition relief beyond the end of 2018.

Many small group employers and their insurance broker advisors are asking if “grandmothered” policies will survive to see 2019. Hope had flickered when a leaked version of a recent Republican reconciliation bill included an extension for these plans. This legislation never came to a vote.

As things currently stand, “grandmothered” plans will come to an end as of December 31, 2018. As has been the case with a number of ACA provisions, however, “grandmother” may make a miraculous recovery. Only time will tell.

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