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Grandfathered Health Plans | Coverage Purchased Before The ACA

Thomas Wright Published: May 10, 2019 Updated: May 10, 2019

Grandfather and granddaughter planting

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 Are Grandfathered Health Plans

Grandfathered health plans are insurance policies purchased before the Affordable Care Act (ACA) was passed on March 23, 2010. These plans weren’t sold through the health insurance marketplace, which officially opened on October 1, 2013.

Grandfathered health plans are health insurance policies sold by private insurance companies, and were typically bought through either agents or brokers. An important thing to remember if you’re enrolled in a grandfathered plan is that it doesn’t always include the rights and protections that are legislated under the ACA.

If your grandfathered health plan makes a significant change, which results in reduced benefits or increased consumer costs, then your plan may no longer be considered grandfathered. An exception to this would be if you add a new employee or a new family member to your plan as they can be added to existing grandfathered 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.

Pros and Cons of Grandfathered Plans

As with any insurance policy, grandfathered and non-grandfathered health plans have pros and cons that you need to weigh. For some, keeping their plan may be more beneficial than switching to a newer policy. If you’re wondering what you should do, we’ve looked into some of the most important benefits and drawbacks of grandfathered health plans.

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 FirstQuote Health

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, FirstQuote Health 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, FirstQuote Health can tailor your results to help you find the best plan for your needs.