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The New Health Care Law and 'Grandfathered' or Exempted Plans

Your questions answered

Q. My insurance agent told me if I stay with my current policy, it would not be subject to any changes required by the new health care law. Is he right?

A. The insurance agent could be right but it’s too soon to know. Health plans in existence the day President Obama signed the health care reform legislation into law — March 23, 2010 — are exempt from some provisions if those plans have not changed since that time. Insurers are waiting for regulations that will explain what changes — like covering a new prescription drug — will cause a plan to lose its exemption and force it to follow the new requirements in the health care reform law, says Robert Zirkelbach, a spokesman for the industry trade group America’s Health Insurance Plans.

The plans that existed before the law and remain unchanged do not, for example, have to undergo the rate review mentioned in the previous question or provide the free preventive health benefits described in the next one. However, they are subject to many other provisions, including limits on how much of the premium must be spent on medical care and requirements allowing young adults to keep their family health coverage up to age 26. Check the chart from the National Association of Insurance Commissioners to see other exemptions for these plans.

Susan Jaffe of Washington, D.C., covers health and aging issues and writes the Bulletin’s weekly column, Health Care Reform Explained: Your Questions Answered.

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