One of the most fundamental changes to our health insurance system brought about by Obamacare is the requirement that all health insurers provide a minimum level of coverage to their insureds. However, some health plans that existed before March 23, 2010 are exempt from many of the Affordable Care Act's health coverage requirements. Such plans are called “grandfathered.” If you have a grandfathered health insurance plan, you may not get some rights and protections that other plans offer.
Two Types of Grandfathered Plans
There are two types of grandfathered plans: job-based plans and individual plans (the kind you buy yourself, not through an employer).
Job-based grandfathered plans can keep going after March 23, 2010 and even enroll new members. They’ll maintain their grandfathered status so long as they don’t substantially raise rates or cut benefits for their members. Complex government regulations spell out how much insurers can change their plans before they lose their grandfathered status.
The rules are more restrictive for individual grandfathered plans. They can’t enroll new people after March 23, 2010 and maintain their grandfathered status. They can continue to provide coverage to those enrolled before that date.
However, health insurers don’t have to keep operating grandfathered plans if they don’t want to. They always have the option of discontinuing such plans. If they do so, they must provide 90 days advance notice to their enrollees and offer them other available coverage options. Several hundred thousand individuals had their individual plans cancelled on this basis at the end of 2013. It’s expected more will be cancelled in 2014 and later.
Your insurer should have already let you know if your plan was grandfathered. Check your plan’s materials if you aren’t sure, or call your insurer and ask.
What Grandfathered Plans Have to Cover
Even plans that are grandfathered have to comply with some of the reforms enacted by Obamacare. These include:
- the end to lifetime limits on coverage
- end of arbitrary cancellations of health coverage
- coverage for adult children up to age 26, and
- providing their insureds with a Summary of Benefits and Coverage (SBC), a short, easy-to-understand summary of what the plan covers and costs.
What Grandfathered Plans Don’t Have to Cover
Grandfathered plans don’t have to:
- cover preventive care for free
- guarantee your right to appeal
- protect your choice of doctors and access to emergency care, or
- be held accountable under Obamacare’s Rate Review program for excessive premium increases.
In addition, grandfathered individual health insurance plans don't have to:
- end yearly limits on coverage, or
- cover you if you have a pre-existing health condition.
However, some insurers with grandfathered plans have elected to provide some of these benefits to their members, even though they are not legally required to do so. Read your Summary of Benefits and Coverage guide or check with your plan administrator to find out if you have one of these improved grandfathered plans.
If you have an individual grandfathered plan, you don't have to keep it. You can always obtain another health insurance plan through your state health insurance exchange. You have until March 31 to do so and obtain coverage for 2014. If you qualify for premium assistance credits, obtaining a plan on your state exchange could be much cheaper than keeping the plan you have. You could also obtain a much higher level of coverage. For links to the 50 state health insurance exchanges, go to healthcare.gov.