FAQ A C A  
S ABOUT  FFORDABLE  ARE  CT 
I P IV 
MPLEMENTATION  ART 
U.S. Department of Labor  
Employee Benefits Security Administration  
October 29, 2010 
 
 
Set out below are three Frequently Asked Questions (FAQs) regarding implementation of the market 
reform provisions of the Affordable Care Act.  They have been prepared jointly by the Departments of 
Health and Human Services, Labor and the Treasury (the Departments).  Like the FAQs the Departments 
issued on September 20, 2010, October 8, 2010, and October 12, 2010, these FAQs answer questions 
from stakeholders with a view to helping people understand the new law and benefit from it, as 
intended.  
 
The Departments anticipate issuing further responses to questions and other guidance under the 
Affordable Care Act in the future.  We hope these publications will be helpful by providing additional 
clarity and assistance.  
 
Q1:  The Departments interim final grandfather regulations provide that, to maintain 
status as a grandfathered health plan, a group health plan or health insurance 
coverage must include a statement, in any plan materials provided to a participant 
or beneficiary describing the benefits provided under the plan or health insurance 
coverage, that the plan or coverage believes it is a grandfathered health plan.   
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?  If not, how does a grandfathered health plan comply 
with this disclosure requirement? 
 
A:   A grandfathered health plan will comply with this disclosure requirement if it includes the 
model disclosure language provided in the Departments interim final grandfather regulations 
(or a similar statement) whenever a summary of the benefits under the plan is provided to 
participants and beneficiaries.  For example, 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 EOB), 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.  
 
Q2:  If an individual health insurance policy that was in place on March 23, 2010 
included a feature that allowed a policy holder to elect an option under which he or 
she would pay a reduced premium in exchange for higher cost sharing, could such 
an election be made after March 23 without affecting the policy's grandfather  status even if the increase in cost sharing for the individual would exceed the 
limits under the grandfather rule on increases in cost sharing? 
 
A:   Yes.  The cost-sharing level that would apply under this option would be grandfathered as part 
of the policy in place on March 23, 2010 even if it did not apply for the particular individual at 
that time.  As long as the policy holder had that option available on March 23 under the policy, 
he or she could exercise the option after March 23 without affecting grandfather status, even if 
the result would be that the particular individuals cost-sharing would increase as a result of 
electing this option by an amount in excess of the grandfather rule limits. 
 
Q3:  An employer has maintained a plan since before enactment of the Affordable Care 
Act that reimburses expenses for special treatment and therapy of eligible 
employees children with physical, mental, or developmental disabilities.  The 
treatment or therapy is not covered by the employers primary medical plan or 
plans.   Reimbursable expenses may include expenses for special treatment or 
therapy from licensed clinics or practitioners, day or residential special care 
facilities, special education facilities for learning-disabled children, or camps 
offering medically oriented programs that are part of a childs continued treatment, 
or for special devices.  The plan is operated separately from the employers 
primary medical plans; employees who are otherwise eligible may participate in 
the plan without participating in those primary medical plans.  The plan limits the 
total benefits for any eligible child to a specified lifetime dollar limit. 
 
Would it be a reasonable good faith interpretation of the Affordable Care Act and 
the regulations thereunder for the plan sponsor to take the position that the plan 
does not violate the prohibition, under section 2711 of the Public Health Service 
Act (PHS Act) and the related interim final regulations, on imposing a lifetime 
dollar limit on essential health benefits, as defined in section 1302(b) of the 
Affordable Care Act (the lifetime limit prohibition)? 
 
A:   Yes.  In accordance with the preamble to the Departments interim final regulations 
implementing PHS Act section 2711, for plan years beginning before the issuance of final 
regulations defining essential health benefits, for purposes of enforcement, the Departments 
will take into account good faith efforts to comply with a reasonable interpretation of the term 
essential health benefits.  (Of course, the regulations may differ in their definition of 
essential health benefits from reasonable interpretations used before the regulations are 
issued.) Accordingly, in the case of  plans described above, for such plan years: (i) the 
Departments will treat as a reasonable good faith interpretation of  section 2711 of the PHS Act 
and the regulations thereunder the position that the imposition of the per-child lifetime dollar 
limit on benefits provided under such  plans does not violate the lifetime limit prohibition, and 
(ii) the imposition by such  plans of such a limit will not result in an enforcement action by the 
Departments against such plans under PHS Act section 2711.