Part of the Patient Protection and Affordable Care Act, or the “Health Care Reform Act” as I have been referring to it, includes the idea of "grandfathering" certain plans.  Grandfathering applies to allow certain plans to avoid immediate application of some of the new rules.  Note, I said "some" and not "all."  Grandfathering does not apply to all of the new rules. 

A “grandfathered" health plan is defined as any group health plan that was in effect when the Act was passed, which was March 23, 2010.  The idea behind grandfathering is exempting the plans from having to comply with certain provisions of the new Act and allowing them to remain generally the same as they were in prior years, or for prior "pre-Act" enrollment periods.   

What this means is that new employees (and their families) may be added to the plan after March 23, 2010, and individual can even re-enroll in a "grandfathered" health plan after March 23, 2010, and the plan would still be grandfathered.  Likewise, an individual who was covered by a grandfathered health plan may add his or dependents to the plan after March 23, 2010, without negating the plan’s grandfathered status as long as the plan allowed for dependent/family coverage on March 23, 2010.

Of course, there are exceptions to the grandfathering and so here are the ones that are EXEMPT from grandfathering, which means plans have to comply with them even if they were in effect prior to March 23, 2010.  For plan years beginning after September 23, 2010: 

1. Pre-existing conditions. Pre-existing condition exclusions have to be removed from group health plans for children under the age 19.  Not for everyone.  That comes later.
2. Dependent coverage.  Group health plans must provide coverage for adult dependent children up to age 26 only if the child is not eligible to enroll in other employer-provided coverage (other than in a grandfathered plan). 
3. Rescissions.  Plans will not be able to cancel coverage after someone has submitted medical claims.  Rescission would still be permitted if an individual committed fraud or made an intentional misrepresentation of a material fact. 
4. Coverage limits.  Group health plans must removed lifetime maximum limits on coverage of essential benefits and the eliminate of certain annual limits.

Provisions generally effective Jan. 1, 2014 for calendar-year grandfathered plans:

1. Dependent coverage.  Group health plans will have to provide coverage for adult dependent children up to age 26.
2. Excessive waiting periods.  Enrollment waiting periods cannot exceed 90 days.
3. Pre-existing conditions.  Elimination of pre-existing condition exclusions entirely, not just for children under 19.

It is not all bad.  There are come provisions that are not applicable to grandfathered plans.

1. IRS Code Section 105(h) (Amount paid to highly compensated individuals under a discriminatory self-insured medical expense reimbursement plan) will not apply to insured group health plans.
2. The new rules for processing claims appeals do not apply to grandfathered health plans.
3. The requirement that women be permitted to select an OB-GYN of their choice.
4. The requirement that certain preventative care benefits be provided under group health plans.

A special note about collectively bargained plans:

Collectively bargained multi-employer and single employer plans that are in place as of March 23, 2010 are not subject to the new rules until the date on which the last of the collective bargaining agreements relating to the coverage terminates.  The Act specifically provides, however, that a collectively bargained plan is permitted to be amended early for some or all of the new rules. This voluntary amendment will not be treated as a termination of the collective bargaining agreement which might otherwise subject the plan to an earlier Reform Act compliance deadline.

However, once the bargaining agreement expires, a collectively bargained plan is then subject to health care reform rules and, assuming it remains grandfathered (based on the rules then in effect), it would have to comply with the requirements for grandfathered plans.

So grandfathering may not require your plan to make every change, but it will certainly have to make some of them.