Market Reforms (ACA & HIPAA) Grandfathered Plan Provisions Self

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Note: This chart is a summary of certain provisions applicable to grandfathered, self-funded, non-Federal governmental group health plans, and is not an exhaustive

list of all legal requirements.

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

Opt-Out Elections: PHS Act § 2722(a)(2) (42 U.S.C. § 300gg-21(a)(2))

45 C.F.R. § 146.180

Effective Date:

Plan years beginning on

or after September 23,

2010.

Sponsors of self-funded, non-Federal

governmental plans are permitted to elect to

exempt those plans (“opt out”) from the

following provisions of title XXVII of the Public

Health Service (PHS) Act:

1. Standards relating to benefits for

newborns and mothers (Newborns and

Mothers Health Protection Act of 1996);

2. Parity in the application of certain limits

to mental health and substance use

disorder benefits (Mental Health Parity

and Addiction Equity Act of 2008);

3. Required coverage for reconstructive

surgery following mastectomies

(Women’s Health and Cancer Rights Act

of 1998);

4. Coverage of dependent students on a

medically necessary leave of absence

Michelle’s Law, 2008.

If a self-funded, non-Federal governmental plan

correctly complies with the requirements for

electing and maintaining an opt-out, it will not be

considered out of compliance with the provisions

from which it is exempted.

FYI only:

Prior to the enactment of the ACA, sponsors

of self-funded, non-federal governmental

plans could opt out of seven provisions of

the PHS Act. In addition to the four

provisions enumerated in the summary

section, sponsors of these plans could opt

out of:

1. Limitations on pre-existing condition

exclusion periods;

2. Requirements for special enrollment

periods;

3. Prohibitions against discriminating

against individual participants and

beneficiaries based on health status.

The regulation (45 CFR §146.180) was

updated on March 21, 2014 to clarify that

these plans may no longer opt out of these

provisions. If a plan document includes an

exemption from all seven PHS Act

provisions, it is out of compliance with the

regulation.

Notice Requirement:

CCIIO webpage:

https://www.cms.gov/CCIIO/Resources/

Fact-Sheets-and-

FAQs/non_federal_governmental_plans

_04072011.html

Regulations and Guidance:

http://www.gpo.gov/fdsys/pkg/FR-

2014-03-21/pdf/2014-06134.pdf

https://www.cms.gov/CCIIO/Resources/

Files/Downloads/opt_out_memo.pdf

https://www.cms.gov/CCIIO/Resources/

Forms-Reports-and-Other-

Resources/Downloads/hipaa-

exemption-guidance-7212014.pdf

https://www.cms.gov/CCIIO/Resources/

Files/hipaa_exemption_election_instruc

tions_04072011.html

☐

YES

☐ NO

Opted out of:

☐ NMHPA

☐ MHPAEA

☐ WHCRA

☐ Michelle’s

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

Plan administrators must annually provide

enrollees notice that they opted out of the

PHS Act provisions. Notice language is

provided in the regulation, and should be

provided to enrollees in the plan document

or in a separate mailing.

Electronic Opt-Outs:

All opt outs must be made electronically via

the HIOS NonFed module as described in the

updated regulation, and in the guidance (see

link to the right).

Grandfathered Status: Affordable Care Act §1251

45 C.F.R. § 147.140

Effective Date:

Plan years beginning on

or after March 23, 2010.

Section 1251, as implemented in 45 C.F.R.

§147.140, preserves the enrollee’s right to

maintain coverage existing as of March 23, 2010,

(the date of enactment of the Affordable Care

Act) as long as it meets the below criteria. If a

self-funded, non-Federal governmental plan

meets the criteria to qualify for grandfathered

status, it is subject only to a subset of the

otherwise applicable ACA market rules, as

described in this checklist.

To qualify as a grandfathered plan the self-

funded, non-Federal, governmental plan must

have:

• At least one individual enrolled on March 23,

2010;

The plan does not have to continuously

cover the same individual from March 23,

2010, through the present: it must only

cover at least one individual throughout that

period.

Plan or sponsor does not cease to be

grandfathered if it enters into a policy,

certificate, or contract of insurance with a

new issuer, as long as the plan maintains the

benefits in accordance with the regulations.

“Maximum percentage increase” is defined

as medical inflation (defined in 45 C.F.R. §

147.140(g)(3)(i) expressed as a percentage

plus 15 percentage points.

CCIIO webpage:

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Health-Insurance-

Market-Reforms/Grandfathered-

Plans.html

Regulations and Guidance:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

☐

YES

☐ NO

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

• At least one individual covered continuously

since March 23, 2010;

To maintain grandfathered status, the plan must

not make the following changes, known as

“paragraph g changes” which will cause cessation

of grandfathered status:

• Elimination of all or substantially all benefits

to diagnose or treat a particular condition;

• Any increase in a percentage cost-sharing

requirement (such as co-insurance) measured

from March 23, 2010;

• Any increase in a fixed-amount cost-sharing

requirement other than a copayment (e.g., a

deductible or out-of-pocket limit) if the total

increase in the cost-sharing requirement

measured from March 23, 2010, exceeds the

maximum percentage increase (see notes for

the definition of “maximum percentage

increase”);

• An increase in a fixed-amount copayment,

measured from March 23, 2010, to the date

of the increase that exceeds the greater of:

o $5, adjusted for medical inflation (see

notes for definition).

o The maximum percentage increase

(see notes for definition), determined

by expressing the total increase in

copayment as a percentage.

“Contribution rate based on cost of

coverage” and “contribution rate based on

formula” are defined in 45 C.F.R. §

147.140(g)(3)(iii).

If a plan is maintained pursuant to one or

more collective bargaining agreements

(CBAs) that were ratified before March 23,

2010, the coverage is grandfathered health

plan coverage at least until the last of the

CBAs relating to the coverage in effect on

March 23, 2010, terminates. If an

amendment is made to a CBA to bring it into

conformity with the ACA, it should not be

treated as a termination of the CBA(s).

Effectively, this delays the application of a

number of ACA provisions to health plans

maintained under CBAs.

Provisions that do not apply to

grandfathered health plans:

PHS Act sections 2701, 2702, 2703, 2705,

2706, 2707, 2709 (concerning clinical trials),

2713, 2715A, 2716, 2717, 2719, and 2719A.

Provisions that do not apply to

grandfathered coverage in the individual

market (but do apply to group coverage):

IFR:

https://www.federalregister.gov/articles

/2010/06/17/2010-14488/interim-final-

rules-for-group-health-plans-and-health-

insurance-coverage-relating-to-status-

as-a

Amendment to IFR:

https://www.federalregister.gov/articles

/2010/11/17/2010-28861/amendment-

to-the-interim-final-rules-for-group-

health-plans-and-health-insurance-

coverage-relating

FAQs and Factsheets:

https://www.cms.gov/CCIIO/Resources/

Files/factsheet_grandfather_amendmen

t.html

https://www.cms.gov/CCIIO/Resources/

Fact-Sheets-and-

FAQs/aca_implementation_faqs4.html

(See all questions)

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

• Decrease in contribution rate by employers

and employee organizations:

o If the plan decreases its contribution

rate based on cost of coverage by

more than 5 percentage points below

the contribution rate for the

coverage period including March 23,

2010.

o If the plan decreases its contribution

rate based on a formula (for example,

hours worked or tons of coal mined)

toward the cost of any tier of

coverage for any class of similarly

situated individuals by more than 5

percent below the contribution rate

for the coverage period including

March 23, 2010.

• Changes in annual limits: addition of a new

annual limit after March 23, 2010, reduction

in an annual limit after March 23, 2010, or

addition of an overall annual limit to a plan

that had an overall lifetime limit as of March

23, 2010.

The plan must also maintain documentation of

plan or policy terms on March 23, 2010, and any

other records necessary to verify, explain, or

clarify the plan’s status as a grandfathered health

plan and must make this documentation available

upon request. And the plan must comply with the

PHS Act sections 2704 and 2711 as it

concerns annual limits.

PHS Act section 2714 is applicable to

grandfathered plans.

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

grandfathering provision’s notice requirement to

maintain grandfathered status.

Notice Requirement

45 C.F.R. § 147.140

Disclosure of grandfathered status—to maintain

grandfathered status, a plan must include a

statement:

• In any summary of benefits provided under

the plan;

• That the plan believes it is a grandfathered

health plan within the meaning of section

1251 of the Affordable Care Act;

• And must provide contact information for

questions and complaints.

The regulation includes model notice

language at 45 C.F.R. § 147.140(a)(2)(ii).

Generally, if the plan does not provide

notice to participants and beneficiaries,

grandfathered status is lost as of the plan

year the notice was not provided.

In the case of plans with CBAs, until all CBAs

expire, notice is not required to maintain

such status (see above).

DOL grandfathered status website,

model notice language (link on this

page):

http://www.dol.gov/ebsa/healthreform

/regulations/grandfatheredhealthplans.

html

Preexisting Condition Exclusions: PHS Act § 2704 (42 U.S.C. § 300gg-3)

45 C.F.R. § 147.108

Effective Date:

For individuals under 19:

Plan years beginning on

or after September 23,

2010.

For all individuals: Plan

years beginning on or

after January 1, 2014.

A self-funded, non-Federal governmental plan

may not impose any preexisting condition

exclusion (as defined in 45 C.F.R. § 144.103).

Plans may not apply pre-existing condition

exclusions:

• To enrollees under age 19, for plan years

beginning on or after 9/23/2010;

• To all enrollees for plan years beginning on or

after 01/01/2014.

Note: this includes initially denying coverage

of a child under age 19 due to a pre-existing

condition.

Regulations and Guidance:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

http://webapps.dol.gov/FederalRegister

/PdfDisplay.aspx?DocId=23983

☐

YES

☐ NO

Prohibition on Excessive Waiting Periods: PHS Act § 2708 (42 U.S.C. § 300gg-7)

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

45 C.F.R. § 147.116

Effective Date:

Plan years beginning on

or after January 1, 2014.

A self-funded, non-Federal, governmental group

health plan shall not apply any waiting period

that exceeds 90 days (“Waiting period” is defined

in PHS Act section 2704(b)(4) and interpreted in

45 C.F.R. § 147.116).

A waiting period is the period that must pass

with respect to an individual who is

otherwise eligible to be covered for benefits

under the terms of the plan before coverage

for that individual can be effective.

Restrictions on benefit-specific waiting

periods do not apply to self-funded, non-

Federal, governmental group health plans.

Final Rule:

http://www.gpo.gov/fdsys/pkg/FR-

2014-02-24/pdf/2014-03809.pdf

☐

YES

☐ NO

Lifetime Limits: PHS Act § 2711 (42 U.S.C. § 300gg-11)

45 C.F.R. § 147.126

Effective Date:

Plan years beginning on

or after September 23,

2010.

Lifetime limits on the dollar value of EHBs are

prohibited (see non-grandfathered ACA HIPAA

checklist for list of EHB categories under PHS Act

§ 2707 and ACA § 1302).

Self-funded, non-Federal governmental

plans are not required to provide EHBs.

However, if they do provide such benefits,

they are prohibited from placing lifetime

dollar limits on them.

Specific covered services that are not EHBs

are not subject to the prohibition on lifetime

dollar limits.

If the limit is not a dollar limit (i.e., a visit

limit), the lifetime limit prohibition would

not be triggered, unless the visit limit

incorporates a specific dollar amount per

visit.

Regulation:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

45 C.F.R. § 147.126 -

http://www.gpo.gov/fdsys/pkg/CFR-

2010-title45-vol1/xml/CFR-2010-title45-

vol1-sec147-126.xml

CCIIO webpage:

http://www.cms.gov/CCIIO/Programs-

and-Initiatives/Health-Insurance-

Market-Reforms/Annual-Limits.html

☐

YES

☐ NO

Annual Limits: PHS Act § 2711 (42 U.S.C. § 300gg-11)

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

45 C.F.R. § 147.126

Effective Date:

Plan years beginning on

or after September 23,

2010.

Restricted annual limits on the dollar value of

EHBs were permitted for plan years beginning

before 1/1/2014.

Annual limits on the dollar value of EHBs are

prohibited for plan years beginning on or after

January 1, 2014.

As with lifetime limits, self-funded, non-

Federal governmental plans are not required

to provide EHBs. However, if these benefits

are provided, plans may not place annual

limits on the dollar value of the benefit.

Plans may impose annual limits on specific

covered benefits that are not EHBs.

If the limit is not a dollar limit (i.e., an annual

visit limit), the annual limit prohibition

would not be triggered, unless the visit limit

incorporates a specific dollar amount per

visit.

Regulation:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

45 C.F.R. § 147.126 -

http://www.gpo.gov/fdsys/pkg/CFR-

2010-title45-vol1/xml/CFR-2010-title45-

vol1-sec147-126.xml

CCIIO webpage:

http://www.cms.gov/CCIIO/Programs-

and-Initiatives/Health-Insurance-

Market-Reforms/Annual-Limits.html

☐

YES

☐ NO

Rescissions: PHS Act § 2712 (42 U.S.C. § 300gg-12)

45 C.F.R. § 147.128

Effective Date:

Plan years beginning on

or after September 23,

2010.

Coverage may only be rescinded in the event of

an act or omission that constitutes fraud or

intentional misrepresentation of a material fact.

A discontinuation or cancellation with retroactive

effect due to non-payment of premiums is not a

rescission.

A self-funded, non-Federal governmental plan is

required to provide thirty (30) days' advance

written notice prior to rescinding coverage. The

An inadvertent misstatement of fact does

not constitute fraud (e.g., forgetting to

mention psychologist visits when completing

a medical history on enrollment).

Regulation:

Regulations and Guidance:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

45 C.F.R. § 147.128 -

☐

YES

☐ NO

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

enrollee may appeal this decision under 45 C.F.R.

§ 147.136 (Appeals provision).

http://www.gpo.gov/fdsys/pkg/CFR-

2010-title45-vol1/xml/CFR-2010-title45-

vol1-sec147-128.xml

Fact Sheets and FAQs:

http://www.cms.gov/CCIIO/Resources/F

act-Sheets-and-

FAQs/aca_implementation_faqs2.html

Dependent Coverage until 26 Years of Age: PHS Act § 2714 (42 U.S.C. § 300gg-14)

45 C.F.R. § 147.120

Effective Date:

Plan years beginning on

or after September 23,

2010.

Extension of dependent coverage until 26 years

of age

Self-funded, non-Federal governmental plans that

provide for dependent coverage for children

must continue to make such coverage available

until age 26.

The plan need not extend coverage to such

dependents' spouses or children.

Dependent eligibility can only be defined in

terms of the relationship between the child

and the subscriber. Requirements for

eligibility cannot include:

• Financial dependency;

• Residency (including living or working in

the plan service area)

• Eligibility for other coverage;

• Student status;

• Employment; and

• Marital status

Terms of dependent coverage cannot vary

based on age for children under age 26. For

example: plans cannot impose a premium

CCIIO webpage:

http://www.cms.gov/CCIIO/Programs-

and-Initiatives/Health-Insurance-

Market-Reforms/Coverage-for-Young-

Adults.html

Regulations and Guidance:

Final Rule:

https://www.federalregister.gov/articles

/2015/11/18/2015-29294/final-rules-

for-grandfathered-plans-preexisting-

condition-exclusions-lifetime-and-

annual-limits

Fact Sheets and FAQs:

http://www.cms.gov/CCIIO/Resources/F

iles/adult_child_fact_sheet.html

☐

YES

☐ NO

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

surcharge for dependents over 18. Note that

this does not prohibit plans from imposing

age rating.

http://www.cms.gov/CCIIO/Resources/F

iles/adult_child_faq.html

http://www.cms.gov/CCIIO/Resources/F

act-Sheets-and-

FAQs/aca_implementation_faqs.html

(see Q14)

http://www.cms.gov/CCIIO/Resources/F

act-Sheets-and-

FAQs/aca_implementation_faqs5.html#

(see Q5)

Summary of Benefits and Coverage (SBC): PHS Act § 2715 (42 U.S.C. § 300gg-15)

45 C.F.R. § 147.200

Effective Date:

Plan years beginning on

or after September 23,

2012.

Uniform explanation of coverage documents and

standardized definitions.

Please see separate checklist for handling

SBC reviews.

CCIIO webpage:

http://cciio.cms.gov/programs/consume

r/summaryandglossary/index.html

☐

YES

☐ NO

Additional Public Health Service Act Protections

Newborns and Mothers

Health Protection Act

(1996)

PHS Act § 2725

PHS Act § 2751

42 USC § 300gg-25

NMHPA: Standards relating to benefits for

newborns and mothers

CCIIO webpage:

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-

Protections/NMHPA.html

Opted Out?

☐ YES

☐ NO

If NO, is contract

compliant?

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

42 USC 300gg-51

45 CFR § 146.130

45 CFR § 148.170

Fact Sheets & FAQs:

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-

Protections/nmhpa_factsheet.html

☐

YES

☐ NO

Mental Health Parity

and Addiction Equity Act

(2008)

PHS Act § 2726

42 USC § 300gg-26

(cross-references 29 USC

§ 1185(a))

45 CFR § 146.136

MHPAEA: Parity in the application of certain

limits to mental health and substance use

disorder benefits.

Non-Federal governmental

health plans with 50 or fewer employees (100 or

fewer in some states) are exempt from MHPAEA

requirements.

MHPAEA does not require a plan offer mental

health or substance use disorder (MH/SUD)

benefits; only that if it does offer such benefits, it

comply with MHPAEA’s parity provisions.

Parity requirements must be met in the way

MH/SUD and medical/surgical benefits are

treated with respect to:

• Annual and lifetime dollar limits;

• Financial requirements;

• Out of network benefits;

• Treatment limitations:

o Quantitative, e.g.: visit limits,

days of coverage;

o Non-quantitative, e.g.: medical

management standards,

formulary design, or methods

for determining reasonable and

customary amounts).

The law's requirements apply only to those

self-funded, non-Federal, governmental

health plans that choose to include MH/SUD

benefits in their benefit packages.

Regulation & Guidance:

http://www.gpo.gov/fdsys/pkg/FR-

2013-11-13/pdf/2013-27086.pdf

Fact Sheets & FAQs:

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-

Protections/mhpaea_factsheet.html

DOL Fact Sheet:

http://www.dol.gov/ebsa/newsroom/fs

mhpaea.html

Opted Out?

☐ YES

☐ NO

If NO, is contract

compliant?

☐ YES

☐ NO

Women’s Health and

Cancer Rights Act (1998)

PHS Act § 2727

PHSA § 2752

42 USC § 300gg-52

(cross-references 29 USC

§ 1185(b))

WHCRA: Required coverage for reconstructive

surgery following mastectomies

WHCRA is a self-implementing statute, so no

regulations have been drafted.

CCIIO webpage:

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-

Protections/WHCRA.html

Fact Sheets & FAQs:

Opted Out?

☐ YES

☐ NO

If NO, is contract

compliant?

☐

YES

MARKET REFORMS (ACA & HIPAA) GRANDFATHERED PLAN PROVISIONS

Self-Funded, Non-Federal Governmental Group Health Plans / Compliance Checklist

Federal Law Citations Summary of the Provision Notes Links to Guidance/FAQs/Resources Contract

Compliant?

42 USC § 300gg-27

https://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-

Protections/whcra_factsheet.html

☐

Michelle’s Law (2008)

PHS Act § 2728

PHS Act § 2753

42 USC § 300gg-28

42 USC § 300gg-54

Coverage of students on a medically necessary

leave of absence.

Law is limited in applicability based on the

application of other regulations that provide

overlapping protections. See limited example in

Notes section.

Michelle’s Law is applicable in the following

limited example: a plan offers dependent

coverage to individuals up to age 29, but

conditions the coverage for those 27 years

and older on having full-time student status.

If such a student takes a medically necessary

leave of absence, they are protected from

loss of coverage.

No guidance on CCIIO website.

Opted Out?

☐ YES

☐ NO

If NO, is contract

compliant?

☐ YES

☐ NO