The Affordable Care Act (ACA) health care reform law doesn’t fully kick in for another year. That hasn’t stopped Department of Labor (DOL) auditors from scrutinizing group health plans for provisions that have already taken effect, such as the grandfathering rules and rules that allow adult children to stay on their parents’ plan until they turn 26. Here’s what you need to consider.
Note: Find the model notices referenced below at the DOL's website.
Grandfathered plans (those in existence on March 23, 2010, when the ACA was enacted) don’t have to comply with substantial portions of the law. Catch: Those plans must maintain a host of documentation to prove they have retained their grandfathered status. DOL auditors are interested in the following:
- Notification to employees regarding grandfathered status. The DOL created a model notice for this purpose. Key: The grandfathering rules apply separately to each benefit package in a group plan, so some packages could be grandfathered and others not. Your documentation should clearly reflect those differences.
- Records of the terms of the plan coverage that was in effect on March 23, 2010, and other documents necessary to verify grandfathered plan status.
- For plans that entered into new policies, certificates or contracts of insurance after March 23, 2010, documents showing that the old and new plans were identical in terms of employee cost-sharing, benefits offered and the employer’s contribution.
New plans and plans that lose their grandfathered status must comply with the law as a whole. These plans must maintain these documents:
- Plans that require participants to designate primary care physicians must have provided participants with notice no later than the first day of the first plan year that began after Sept. 23, 2010. The DOL created a model notice for this purpose.
- Notices informing participants that their claims were denied, and notices informing participants about the outcome of their internal appeal/external review of that adverse determination. The DOL created model notices for this purpose.
- Documentation of coverage mandates, including allowing participants to go to any in-network or out-of-network hospital without prior authorization to receive emergency care and to receive certain preventive services (e.g., flu shots) at no cost.
Grandfathered and nongrandfathered plans must comply with four basic provisions of the law. The following documentation supports these four provisions.
- Plans must have provided employees’ adult children notice of a 30-day special election period to re-enroll in their parents’ plan. The DOL created a model notice for this purpose.
- Participants who had reached their lifetime limit must have been provided notice regarding re-enrollment rights by the first day of the first plan year beginning Sept. 23, 2010. The DOL created model notices for this purpose.
- A list of participants whose benefits were rescinded and the reason for the rescission.
- The law forbids plans to impose annual limits on essential benefits. Plans that had imposed annual limits must maintain documentation of those annual limits for each plan year, beginning Sept. 23, 2010.