Grandfathering Extension Could Harm Patients, AAFP Warns HHS

Continuing Pre-2010 Insurance Exemptions Would Undermine Key ACA Protections

April 12, 2019 10:05 am News Staff

While the White House continues to pursue the dismantling of the Patient Protection and Affordable Care Act (ACA) in court, the law's core features are again being challenged by federal agencies.

[affordable care act document]

At issue is whether HHS should further extend ACA exemptions to so-called grandfathered group health plans. The possible lengthening of terms was suggested in a request for information (RFI)(www.govinfo.gov) from HHS, the Department of Labor and the Treasury Department that was published Feb. 25 in the Federal Register.

The Academy objected to such a course in its March 22 response(2 page PDF) to the RFI, which was addressed to HHS Secretary Alex Azar and signed by Board Chair Michael Munger, M.D., of Overland Park, Kan.

"The AAFP is concerned that grandfathered plans may choose not to cover essential health benefits (EHBs), creating potential harm for vulnerable patients or those who utilize many health services," the letter said. "Inadequate benefits could leave this population with too little coverage to meet their health care needs."

EHB requirements, the letter reminded HHS, prevent insurance discrimination based on beneficiaries' health status, age or gender. Grandfathered health plans, the AAFP pointed out, are subject neither to the ACA's requirement to cover certain preventive services without cost-sharing nor the law's annual cost-sharing limit.

In the employer-sponsored market, health plans that were in place when the ACA was enacted in March 2010 are grandfathered and can remain exempt from some of the law's protections. HHS has so far forbidden substantial changes to such grandfathered plans, such as alterations to employer contributions, while allowing new employees to enroll; plans whose grandfathered status has lapsed, however, become subject to ACA rules. The RFI was meant to gather information on whether employers and insurers should be given greater flexibility in maintaining grandfathered standing.

Some 16% of U.S. workers whose health insurance was provided by an employer were enrolled in a grandfathered group health plan last year, down from 56% in 2011, according to the Kaiser Family Foundation.(www.kff.org)  

The same Kaiser survey found that 20% of employers providing health benefits offered at least one grandfathered health plan in 2018.

The RFI descends from a January 2017 executive order(www.federalregister.gov) directing federal agencies to reduce the burdens of the ACA, give states more flexibility, and waive or delay implementation of the law where possible. The agencies framed it as a means to "better understand the challenges that group health plans and group health insurance issuers face in avoiding a loss of grandfathered status and to determine whether there are opportunities … to assist such plans and issuers, consistent with the law, in preserving the grandfathered status of group health plans and group health insurance coverage."

But companies that provide group health insurance don't necessarily want the help. As one benefits consultant recently told the Society for Human Resource Management,(www.shrm.org) "It's astonishing that we're approaching nine years of the ACA and we're looking to prolong grandfathered status of group health plans even further."

The March 22 correspondence reiterated the Academy's position that "all public and private insurance policies should adhere to four fundamental patient protections -- guaranteed issue, EHBs, limits on age rating and no limits on annual/lifetime spending."

"The AAFP therefore encourages the administration to focus on improving meaningful access to health insurance rather than fostering opportunities to prolong grandfathered plans," the letter concluded.

Related AAFP News Coverage
AAFP Warns Against Expanding Association Health Plans
Labor Department Proposal Would Sidestep Essential Health Benefits Rule

(3/7/2018)