To really understand your health coverage, it pays to learn whether your plan is grandfathered. After the Affordable Care Act passed in 2010, some health plans were grandfathered, meaning they don’t have to comply with certain portions of the law. The purpose of this was to allow people to keep the coverage that they have.
In 2012, 48 percent of Americans who received coverage through their employer were enrolled in a grandfathered health plan, down from 56 percent in 2011, according to a survey by the Kaiser Family Foundation.
Having grandfathered status does not necessarily mean the plan is any better or worse than other plans.
What is a grandfathered health plan?
Most health plans that existed on or before March 23, 2010 are grandfathered, meaning they are exempt from certain requirements in the Affordable Care Act, also known as Obamacare.Some of the consumer protections in the law still apply to grandfathered plans, but others don’t. This is true for the group plans, which employers offer, and individual plans, which you purchase on your own.
If you have a grandfathered individual health plan, you don’t have to keep it, but you can keep it if you like it.
If you are looking to buy coverage on the individual market, you cannot enroll in a grandfathered plan unless you are a spouse or child of an existing enrollee. Likewise, you cannot enroll in a grandfathered group health plan unless you are a new employee or a family member of an existing enrollee.
What requirements don’t apply to a grandfathered health plan?
The grandfathered individual health plans don’t have to:
•Pay for preventive care without charging any copay, coinsurance or deductible.
•Offer a package of benefits that meets the federal standards for “essential health benefits” (this includes 10 categories of benefits, such as emergency services, maternity and newborn care).
•Sell coverage for children under age 19 who have preexisting conditions.
All plans, even if they are grandfathered, can’t:
•Set maximums or caps on the amount the insurer will pay over the patient’s lifetime.
•Cancel your coverage because of a mistake that you make on your insurance application.
•Set a waiting period that’s longer than 90 days before coverage starts.
Also, they must allow young adults to stay on their parents’ plan until age 26.
How do I know if my health plan is grandfathered?
You can call your insurer or your employer’s human resources department to find out if your plan is grandfathered. Also, you can check the summary plan description for your plan, which is an official document that explains coverage.
Grandfathered status for a health plan isn’t necessarily permanent. The plan will lose its grandfathered status if an insurance company or an employer significantly raises prices for premiums, copays, coinsurance or deductibles. Likewise, the plan will no longer be grandfathered if the insurer or the employer significantly cuts benefits or lowers the annual limit on what the insurer will pay.
Not all employers are going to dramatically increase the employee premium contributions for health care, but in recent years many of them have been shifting some of the health care costs to their workers.
“Employers are redefining their financial commitment to health care,” says Ron Fontanetta, senior health care consultant for the HR consulting firm Towers Watson. “Yet they are also mindful of a growing affordability gap for employees as health care costs take their toll on take-home pay.”