Grandfathered Health Plans: Coverage Purchased Before The ACA

Grandfathered health plans aren’t sold through the marketplace, and were typically purchased before the Affordable Care Act passed on March 23, 2010. Here’s what you need to know about your policy.
Grandfathered Health Plans: Coverage Purchased Before The ACA

Prior to the Affordable Care Act, the landscape of healthcare in the US seemed to favor insurance companies rather than the insured. While private insurers are a bit more regulated today than they were in years past, some Americans decided to stick with their grandfathered health plans. Let’s take a look into what the means exactly, and if it’s still a good idea in this day and age.

What Is A Grandfathered Health Plan?

A grandfathered health plan is an insurance policy or health plan that existed on March 23, 2010, and has not significantly changed since that date. These plans are exempt from certain provisions of the Affordable Care Act (ACA), such as coverage for preventive services without cost sharing and meeting minimum essential coverage requirements. Grandfathered health plans must still meet consumer protection standards set by ACA, but they are not required to provide all of the benefits the law requires of other plans. As a result, grandfathered plans often offer lower premiums than other ACA-compliant health plans.

Eligibility & Requirements You Need To Know

To be eligible for, and meet the requirements for grandfathered status, you must be part of an individual health care plan or group plan through your employer, both of which are purchased outside the marketplace. If anything major changes on their plan or if their benefits change, they may lose their eligibility and no longer meet your grandfathered health plan requirements.

In order to maintain your grandfathered status, you must also maintain records of your contribution levels, and if you change those contributions levels at any time it must be reported. You must also include a notice about the status in significant communication. This includes enrollments materials and a detailed account of your plan’s descriptions.

How Someone Might Lose Status

The status of grandfathered health plans is fragile in nature. There are a handful of ways in which you may lose your grandfathered status. The following are some of the most common examples:

  • If you have major changes to your plan that do not follow the rules of the Affordable Care Act, you may lose grandfathered status.
  • You eliminate benefits for a particular condition.
  • You increase your cost-sharing percentages.
  • You increase your co-pays by more than $5.
  • You raise a fixed amount of cost-sharing outside of co-pays.
  • You lower the employer contribution rate by more than 5%.
  • You add or reduce your annual limit.

If you do not meet all of these grandfathered health plan requirements then you will no longer qualify for this status.

Grandfathered Health Plans Pros and Cons

Grandfathered health plans can be beneficial for individuals and families looking for more affordable coverage as premiums tend to be lower than ACA-compliant plans. Additionally, some people may prefer the flexibility of being able to keep their current coverage without facing some of the stricter requirements of other plans. However, one downside to grandfathered health plans is that they may not provide all the consumer protections afforded by the Affordable Care Act or cover the same level of benefits. It’s important to understand your plan in detail before making any decisions about what type of coverage is best for you.

Pros To Consider

Grandfathered plans appeal primarily to employers as they are no longer required by law to cover 100% of the cost of preventative services. This includes things like vaccines and colonoscopies. This is a great thing for employers, maybe not a great thing for employees.

These plans are also cost-effective in order to keep rates affordable for businesses. Finally, since employers can increase cost-sharing elements, their health insurance rates will level off for the business overall.

Cons To Consider

They are not required to cover a minimum of 10 essential benefit categories. Employers cannot make big changes to the plan’s benefits in order to keep their status, employers have been forced to increase cost-sharing elements in order to avoid premium increases. And employees now have to pay much more in order to keep their health insurance in grandfathered status.

Replace Your Grandfathered Plan With Coverage Guru

Health insurance is an absolute necessity, you need it in order to stay healthy and have protection in case you come into an accident. You may have a grandfathered policy and find that you have to change jobs, you may age out, or you simply may not be able to afford your premiums any longer. You can cancel your policy though it is a difficult process, and there may be a waiting period to move insurances during which you are responsible for your payments.

Luckily, if you’re looking to cancel your grandfathered plan, or just looking to explore other options, Coverage Guru can help. With our easy to use quoting engine, we’ve been able to help individuals and families find and compare plans and prices in their area. By entering your zip code and answering a few qualifying questions, Coverage Guru can tailor your results to help you find the best plan for your needs.

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