Consumer Protections in the Affordable Care Act

What are Grandfathered Plans under the ACA?

Insurance Reforms that Apply to Grandfathered Plans

While grandfathering plans that people currently have allows people who like their insurance to keep it, it also creates an uneven playing field. Some health plans are subject to rules that others are not.

Apply to Grandfathered Plans

Do NOT Apply to Grandfathered Plans
  • Prohibition of lifetime limits
  • Restriction of annual limits (in group coverage)
  • Prohibition of rescissions
  • Coverage for dependents until age 26 (before 2014, the child must not have access to employer-sponsored coverage)

 
  • Restrictions of annual limits (in individual coverage)
  • Preventive health benefits with no cost-sharing
  • Stronger internal and external appeals processes
  • Letting patients choose their primary care doctor, including pediatricians for children and  OB/GYNs for women
  • No prior approval or higher out-of-network costs for ER use

 

Could a plan lose its grandfather status?

Because grandfathered plans do not have to follow the same rules, with the same consumer protections, as new health plans, it is important to prevent employers and health insurers from using grandfathered plans to cherry-pick the healthy and remain exempt from consumer protections. The ACA requires HHS to create rules that define what changes to a grandfathered plan would result in the loss of its grandfathered status. To maintain grandfathered status, a health plan cannot:

  • Eliminate all or almost all benefits to diagnose or treat a particular health condition
  • Increase cost-sharing requirements for enrollees by more than a certain percentage
  • Reduce the employer contribution rate to premiums
  • Change annual or lifetime limits on the dollar value of covered benefits
  • Enter into a merger, acquisition, or restructure for the primary purpose of adding enrollees without losing grandfathered status.

In addition, grandfathered plans must provide a statement to all enrollees that the plan is grandfathered, and must detail the benefits provided.

HHS estimates that by 2013, about 51 percent of all employer-based plans will lose grandfather status. In the individual market, because most people keep their health plans for short periods of time, HHS estimates that more than 67 percent of plans could lose grandfather status within the first year, meaning most plans will be subject to the consumer protections in the ACA.

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