... [T]he 2010 Health Reform Act (Patient Protection and Affordable Care Act, 111 P.L. 148 (March 23, 2010) as amended by the Health Care and Education Affordability Reconciliation Act of 2010... imposes numerous new requirements on employer-provided group health plans, ranging from new prohibitions on preexisting condition exclusions, and dollar limits on coverage, to new requirements for benefit explanations.
... [T]he new requirements generally apply to private-sector group health plans and health insurance issuers providing group health coverage. Moreover, violations of the new requirements are subject to the excise tax for failure to meet group health plan requirements under IRC Section 4980D, 26 USCS 4980D.
The excise tax is $100 per day per individual affected by a violation for each day of the noncompliance period, which begins on the date the violation first occurs, and ends on the date the violation is corrected.
... [T]he applicability of other provisions of the Act will also hinge on a plan's status as a grandfathered plan. Most notably, starting in 2014, so-called "pay or play" requires that large employers that do not offer employees "minimum essential health coverage" face potential excise tax penalties. [IRC §4980H 26 USCS 4980H as added by PPACA §1513 and amended by PPACA Reconciliation §1003] And, for this purpose, a grandfathered plan will qualify as minimum essential health coverage. [IRC §4980H(a)(1) 26 USCS 4980H(a)(1); IRC §5000A(a)(f)(2) 26 USCS 5000A(a)(f)(2), as added by PPACA §1501 and amended by PPACA Reconciliation §1002].
Under the statute, a grandfathered health plan is defined cryptically as a plan in which an individual was enrolled on March 23, 2010.The statute does not, however, address at what point changes to a group health plan in which an individual was enrolled on March 23, 2010, will be significant enough to cause the plan or health insurance coverage to lose its grandfathered status and be treated as a new plan.According to the preamble to the interim final regulations, some commentators suggested that any change after March 23, 2010, should cause a plan or health insurance coverage to be considered different coverage and thus cease to be a grandfathered health plan. By contrast, others suggested that any continuous legal relationship to a plan in existence on March 23, 2010, should ensure continued grandfathered status regardless of degree of changes to the plan. [TD 9489, 6/14/2010]The interim final regulations do not go to either extreme, but make it clear that certain changes to a grandfathered plan will cause it to lose its grandfathered status. For this purpose, the grandfathered status of each benefit package (e.g., an HMO or a PPO) under a group health plan will be tested separately.
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1-12 Employee Benefits Guide 12.10