Manage Services

Understanding Grandfathered Health Insurance Plans

Remember back when President Obama said that if you liked your health insurance plan, you could keep it?

That applies to people who have grandfathered plans.

If you were on a plan before the President signed the health care reform bill into law, you may be able keep your plan indefinitely. That means you’re exempt from having to buy a new plan through the Affordable Care Act.

But there are certain provisions. And you might not get some of the rights and protections that other plans offer.

First of all, in order to be considered grandfathered, the plan has to have been in existence on or before March 23, 2010, and it can’t have been changed significantly. For example, if since then you’ve added a rider—like for maternity coverage—that nulls the grandfathered status.

In Virginia, none of the group plans offered through major insurance companies are grandfathered. So if you get your health insurance through an employer, this topic does not apply to you.

But if it’s an individual plan—the kind you buy yourself—it may qualify as grandfathered. In Virginia, it’s estimated than less than 5 percent of people fall into this category.

Health care reform requires that there be certain essential health benefits offered to consumers. On a grandfathered plan, some of the rules of health care reform don’t apply. The part of the law that requires routine preventative care be covered at 100 percent? That doesn’t apply.

All health plans, including grandfathered plans, must offer these protections:

  • They can’t have lifetime limits on coverage.
  • They can’t arbitrarily cancel health coverage.
  • They must cover dependent adult children up to age 26.
  • They must hold insurance companies accountable in spending premiums on health care, not administrative costs and bonuses.

Grandfathered plans don’t have to:

  • Cover preventative care for free (it might be at a percentage).
  • Guarantee your right to appeal.
  • Be held accountable against excessive premium increases.
  • Cover you if you have a pre-existing condition—they still require medical underwriting, which means the insurance company will base its acceptance and coverage based on one’s health.

People with grandfathered plans aren’t going to have the flexibility they had in the past. They’re going to be limited in the types of changes they can make to their plans, such as changing a deductible—which could take away the grandfathered status. More flexibility is offered on the new health insurance plans offered through the government health marketplace and through insurance companies off the health marketplace.

Why would anyone stay on a grandfathered plan, then? If someone had a low premium, he might want to just stay on the plan until it’s no longer affordable for him. He’ll still have to renew every year, and will see normal rate increases, but it’s what he’s used to. And some grandfathered plans offer protections they’re not required to.

An individual on a grandfathered plan might want to switch to a new plan offered through the marketplace, perhaps to take advantage of the government subsidies that are available.

It really is going to depend from person to person. It’s unique to each and every one

If you’re not sure if your health insurance plan is grandfathered, check your insurance plan’s materials or talk to your insurance company’s agent.