CHAMPAIGN – It's not your grandparents' health insurance, but if you're a member of a group health plan – and most insured people are – you're going to be seeing the term "grandfathered" next time you start a new coverage year.

And you probably want to pay attention.

Under the new requirements of federal health care reform legislation, group health plans will be required to notify their members at the start of their next plan year whether they're in a "grandfathered" health plan or not.

That's because grandfathered plans are exempt from many of the changes being rolled out under the Affordable Care Act, and whether or not your plan is grandfathered stands to affect not only your coverage but how much you'll be paying for it.

Under the new law, health policies purchased before March 23, 2010, are considered grandfathered, but group plans that want to keep their grandfathered status are going to be tightly restricted in terms of how much they can change benefits or raise expenses for their members.

Habeeb Habeeb, CEO of Benefit Planning Consultants in Champaign, says most plans probably won't remain grandfathered because that would rob them of flexibility.

And even for those that elect to remain grandfathered next year, he projects, it's going to be difficult for them to remain that way in future years.

"Any little change is really going to make you lose your grandfathering," he says.

Changes that would cause a plan to lose its grandfathered status, according to Habeeb:

– Increasing the participant's premium cost by more than 5 percent.

– Changing the insurance carrier.

– Increasing fixed copayments (for doctor's visits, prescription medicines, emergency room visits, etc.) by either $5 or 15 percent.

– Increasing fixed cost-sharing other than copayments for deductibles or out-of-pocket limits more than 15 percent.

– Any increase in a percentage cost-sharing requirement, known as co-insurance.

– An addition or decrease of an annual limit.

– Eliminating all or substantially all benefits to diagnose or treat a particular condition.

Sinead Rice Madigan, director of government relations at Health Alliance Medical Plans, said Health Alliance members are likely to first encounter the grandfathered issue after Jan. 1, 2011, when many of the company's plans are set to renew.

Health Alliance's small-group plans with 50 members or less won't be grandfathered, she said, but its larger employer groups are currently weighing the costs and the benefits before they decide.

Health Alliance spokeswoman Jane Hayes said the company's small-group plans are already compliant with new requirements and will have more flexibility in terms of benefits if they're not grandfathered.

"I think it's the very large employer groups that are considering grandfather status more seriously, because they're not certain what's going to happen in the future," Hayes said.

Regardless of their individual group, she and Madigan say, Health Alliance members are in a good position because the company already has some of the first provisions of the new legislation in place.

One new requirement, for example, is full coverage for preventive health services for anyone in an employer group plan (not grandfathered) or individual policy created after March 23, 2010, beginning with the first new plan year or policy year on or after Sept. 23, 2010.

Some covered preventive health services to be included at no cost to health plan members are blood pressure, diabetes and cholesterol tests, colonoscopies and many other cancer screenings, routine vaccinations, well-baby and child-health visits, services to promote healthy pregnancies, flu and pneumonia shots, and counseling for depression and healthful lifestyle changes, according to the U.S. Department of Health & Human Services.

For a full list of newly covered preventive health services, see: http://www.healthcare.gov/law/about/provisions/services/lists.html.

What else do you stand to lose, in addition to coverage for preventive services, if your plan is grandfathered? Grandfathered plans are also exempt from some nondiscrimination requirements, expanded appeals rights, having to provide emergency services without authorization or additional cost sharing, providing primary-care physician choices for members, and being required to allow direct access to an obstetrician/gynecologist, according to Habeeb.

But even grandfathered plans will have to meet the following requirements, he says:

– Starting next year, insurers must eliminate pre-existing condition limits for children under 19, allow young adults up to age 26 to remain on their parents' health plans (with certain limits), eliminate lifetime maximum benefits and certain annual coverage limits and eliminate coverage recisions.

– Starting in 2014, they'll also have to comply with requirements to allow dependent coverage for young adults up to age 26 (whether or not they have access to other employer coverage) and limit waiting periods for coverage to less than 90 days. Insurers will also have to eliminate pre-existing condition limits entirely and eliminate annual limits on benefits.

No matter how you look at it, Habeeb says, it's going to cost the average insured person more.

"This is purely economics," he said. "If anybody is obligated to provide extra services at no cost, you are going to pay more for the insurance."