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CCH® BENEFITS — 11/09/10

EBSA Clarifies Required Communication Under Grandfather Rules

from Spencer’s Benefits Reports: Grandfathered health plans under the Patient Protection and Affordable Care Act (ACA) can comply with the required disclosure requirement if they include the model disclosure language whenever a summary of the benefits under the plan is provided to participants and beneficiaries, according to the most recent questions and answers released by the Department of Labor’s Employee Benefit Security Administration (EBSA).

In FAQs About the Affordable Care Act Implementation, Part IV, this question is posed: “Must a grandfathered health plan provide the disclosure statement every time it sends out a communication, such as an EOB (explanation of benefits), to a participant or beneficiary?”

The EBSA noted that “many plans distribute summary plan descriptions upon initial eligibility to receive benefits under the plan or coverage, during an open enrollment period, or upon other opportunities to enroll in, renew, or change coverage. While it is not necessary to include the disclosure statement with each plan or issuer communication to participants and beneficiaries (such as an explanation of benefits), the Departments encourage plan sponsors and issuers to identify other communications in which disclosure of grandfather status would be appropriate and consistent with the goal of providing participants and beneficiaries information necessary to understand and make informed choices regarding health coverage.”

The EBSA release also confirmed that certain plans that offer nonessential benefits under the ACA may impose lifetime limits in these plans. According to the EBSA, the following type of plan, which imposes a per-child lifetime dollar limit on benefits provided under such a plan, does not violate the ACA lifetime limit prohibition:

• operated before enactment of the ACA;
• reimburses expenses for special treatment and therapy of eligible employees’ children with physical, mental, or developmental disabilities;
• operated separately from the employer’s primary medical plans; and
• employees who are otherwise eligible may participate in the plan without participating in those primary medical plans.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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