'Grandfathered' Health Plans

The health reform law exempts certain existing health insurance plans from many requirements. What does that mean for consumers, insurers, and employers?

Policy-makers took care during deliberations over the Affordable Care Act (ACA) to stress that Americans could keep the health insurance they already have, if they wanted to, in a post-reform world. The law ‘grandfathered’ health plans that were already in effect on that date, and exempted them from many changes the law requires of new health plans.

An employer or insurer offering coverage when the ACA took effect in March may elect to—but is not required to—have the plan grandfathered and continue to operate it even after 2014. These grandfathered plans are then subject to some regulations, including that they are generally not permitted to enroll new applicants in the plan. There are also several other permitted exemptions for grandfathered plans, leaving employers and employees alike wondering whether a grandfathered plan or newly established plan is their best option.

There are no clear indicators about whether sticking with a grandfathered plan is the best option—and therefore these decisions must be evaluated on a case-by-case basis.

This Health Policy Brief examines what grandfathered plans mean, and explores just how much a grandfathered plan may change over time and still retain its grandfathered status, and was published online on October 29, 2010 in Health Affairs.