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    Explained: Grandfathered Health Insurance Plans

    5 mins

    If you’re not sure what grandfathered health insurance plans are, you are not alone. The insurance that covers your medical costs has become increasingly complex, and more than half of Americans reported difficulty understanding some aspect of their health insurance in 2023.

    However, not understanding your health insurance can lead to poor health and unnecessarily paying more for medical care. Here is what you need to know about grandfathered health insurance plans.

    What Are Grandfathered Health Insurance Plans?

    Grandfathered plans are health insurance policies purchased on or before the signing of the Affordable Care Act (ACA) into law on March 23, 2010. If you purchased a health plan on or before this date or were added to an existing plan before or after that date, you may have a grandfathered health insurance plan. 

    These plans may not offer you some of the rights and protections required of insurers under the ACA. To maintain grandfathered status, the plans also must not have made changes to the policy that significantly reduce your benefits or increase your costs for coverage.

    By law, your insurance agent or health plan administrator must disclose whether your plan is grandfathered. You can check your policy or ask your agent or plan administrator to confirm whether your plan is grandfathered.

    Types of Grandfathered Health Insurance Plans

    Grandfathered health insurance plans can be group or individual. Group plans are sponsored by an employer (the benefits your workplace offers), while individual plans are bought from an insurance company, agent, or broker.

    Grandfathered Group Insurance

    A grandfathered group health insurance plan can continue to add employees after March 23, 2010, if the plan:

    • Hasn’t changed substantially to reduce your benefits or increase your cost

    • Notifies you that your plan is grandfathered

    • Has continued to serve at least one person since March 23, 2010

    As a policyholder, you can add a dependent, and your plan will remain grandfathered.

    Grandfathered Individual Insurance

    A grandfathered individual health insurance plan:

    • Can continue to offer the grandfathered plan to people enrolled before the ACA

    • Must provide a 90-day notice before ending the plan

    • Must offer other coverage if the plan ends

    However, an individual grandfathered health plan cannot newly enroll you in that plan and have it considered grandfathered.

    Protections Offered by Grandfathered Plans

    While grandfathered health insurance plans lack certain rights and protections other plans have under the ACA, the grandfathered plans still give you other rights and protections, including: 

    • No lifetime limits on coverage

    • Coverage for adult children up to age 26

    • An obligation to spend 80% of your premium on healthcare

    You also are protected from an insurance company arbitrarily canceling your policy if you made an honest mistake or left off information on your insurance application. 

    Before the ACA, insurance companies could end your coverage, declare your policy invalid from its start date, and ask you to return money already spent on health and medical care.

    However, your policy can still be canceled if you intentionally fill in misleading information or leave off information on your insurance application. It also can be canceled if you fail to pay your premium.

    Protections Not Offered by Grandfathered Plans

    An important reason to understand your grandfathered health insurance plan is so that you can know what is not protected under your plan. For example, grandfathered health insurance plans don’t have to offer free preventive care or end yearly coverage limits. 

    Other limitations of grandfathered plans: 

    • They do not protect your choice of doctor

    • An insurer can deny coverage if you have a pre-existing condition

    • You cannot appeal a denied medical claim or stop coverage

    While grandfathered health insurance plans aren’t required to provide policyholders these rights and protections, some grandfathered plans do offer them. Check with your insurance agent or benefits administrator whether your plan carries these rights and protections. 

    Should I Switch Off of a Grandfathered Plan?

    The ACA was adopted to reform the health insurance industry, reduce the cost of insurance for medical needs, and provide better access and protection for you to use your health insurance when needed.

    The ACA has defined essential health benefits — such as preventive health screenings — that might not be part of your grandfathered plan, so you might consider leaving your grandfathered plan if you want access to these benefits. 

    If you do want to leave your plan, you will want to compare several factors as you choose your new marketplace plan, including:

    • Monthly premiums

    • Premium assistance

    • Out-of-pocket costs

    • Explanation of benefits

    • Plan type (PPO, HMO, or EPO)

    • Network size

    If you are considering switching from your grandfathered health insurance plan, contact your insurance agent or plan administrator to learn how and when to end your current insurance plan. You don’t want to be responsible for two premiums or caught without coverage before open enrollment.

    Finding the Right Coverage for You

    If your policy was purchased on or before March 23, 2010, you may have a grandfathered health insurance plan. These plans come with certain protections but may not include all of the rights that marketplace plans offer. The right plan for you ultimately comes down to what your needs are. 

    No matter what your plan is, make sure to review it regularly and understand what is covered so that you can ensure you maintain a plan that best serves you and your family.

    Kara Thesing
    Kara Thesing
    Senior Consultant, Team Lead at Bennie
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