Grandfathered and Grandmothered health insurance plans are insurance policies purchased in the past when the Affordable Care Act (ACA) was taking shape. Specifically, these plans were not sold by the ACA Marketplace after 2014. However, while both varieties of policy still stand, there are significant distinctions between the two that affect how they operate going forward.
Grandmothered vs. Grandfathered Health Insurance Plans
The terms grandmothered and grandfathered sound similar, but they have different meanings and are managed differently.
A health insurance policy purchased on or before March 23, 2010, is a grandfathered plan if it’s still in effect. These plans were enacted prior to the ACA and are considered valid. A grandfathered plan will continue to be legitimate health insurance until the insured decides to terminate their coverage, the company that sponsored that policy no longer employs them, or the insurance company itself decides to terminate the policy.
A grandmothered health insurance policy was in effect before 2014 but didn’t qualify as a grandfathered policy. Both varieties are similar to a grandfathered plan because they are still in effect, but their termination may occur very soon. In contrast to grandfathered plans, grandmothered plans will not continue indefinitely.
Providers extended these plans annually in the past, but the current CMS timeline suggests that will not happen going forward, with an imminent expiration date.
Originally, grandfathered health insurance plans were the only ones with special consideration. Providers intended for the policies created after the inaction of the ACA in 2014. However, the public backlash convinced the healthcare industry to reconsider. Those plans affected by that policy change are now considered grandmothered.
Grandmothered Plan State Regulations
The state decides what can be grandmothered health insurance. Some states determined that they didn’t want to allow these policies to continue in the first place, and others have discontinued them since. Currently, these states don’t recognize grandmothered plans:
- New Jersey
- New Mexico
- New York
- Rhode Island
- West Virginia
In the past, the Centers for Medicare and Medicaid Services (CMS) has extended grandmothered health insurance policies annually. Currently, it appears as if that extension will not continue to happen. Therefore, all grandmothered health insurance policies will expire at the end of 2022 unless the federal government extends coverage.
ACA Compliance and Regulations
The Affordable Care Act (ACA) made health insurance broadly available and reduced the consumer’s cost. Another goal was to expand Medicaid coverage to people with incomes below 138% of the federal poverty level. The ACA also established mandatory regulations for insurers. Those regulations provide visibility into the differences between grandmothered and grandfathered insurance plans.
Any health plan enacted after 2014 was subject to compliance with the new healthcare regulations as part of the law. However, because grandfathered and grandmothered health care plans were enacted before 2014 and left to stand, they are not subject to those same regulations.
Since then, consumers purchasing insurance through the ACA do so through the online Marketplace administered by each state. Some states run marketplace insurance through their individual state-based Marketplace (SBM). These plans are similar to national marketplace plans but may have some variances. It’s important to note that all Marketplace policies are required to feature the following ten benefits:
- Ambulatory patient services
- Emergency services
- Laboratory services
- Mental health and substance use disorder services
- Pregnancy, maternity, and newborn care
- Prescription medications
- Preventive and wellness services and chronic disease management
- Pediatric services
- Rehabilitative and habilitative services
These are not the only ACA compliance measures; there are many others, such as not rejecting people because of a pre-existing condition. Additionally, Some plans are individual/family, some are small groups, and others cover large groups, and there are some variances between the plan sizes.
Ways Grandmothered and Grandfathered Plans Can Have Exceptions to ACA Regulations
There are some ACA regulations that grandmothered and/or grandfathered insurance plans must adhere to, and they both are required to allow children to stay on a parent’s health plan until the child is age 26.
However, grandfathered plans are less bound to current regulations than grandmothered policies. Therefore, the coverage differences may vary widely. Here are several of the regulations that grandmothered policies need to comply with grandfathered plans do not:
- Premium pricing models: The ACA established fair insurance premium regulations to make health insurance more affordable. Grandfathered insurance plans do not have to abide by these pricing guidelines.
- Availability and renewability: This refers to pre-existing conditions, and again, this is something that only grandfathered insurance plans can exclude coverage for pre-existing conditions.
- Benefit coverage: The ten required benefits listed above for marketplace insurance plans are not covered by grandfathered and grandmothered insurance policies. They might still be included but are not required.
- Limits on annual out-of-pocket maximums: Another area where grandfathered plans do not need to comply is the limit on out-of-pocket expenses that the insured has to pay.
- Renewal cycles: Beginning in 2014, all Marketplace insurance offerings run through a calendar year, with the Annual Enrollment Period happening between November 1 to January 15 for coverage that begins January 1. Grandfathered and grandmothered plans can renew at any time.
Should You Switch to an ACA-Compliant Plan?
Deciding if you should switch from a grandfathered plan to an ACA-compliant one is also a personal decision. For those with grandmothered plans, that decision will be made for you.
If you’re considering a change, the first step is to compare plans to see where there are differences and what that would mean to you. Some people prefer to stick with their grandfathered insurance because it’s familiar, and the rates might be better. Other factors to consider might make a switch more appealing. These factors include:
- Price: There are a few different ways in which a grandfathered insurance plan can be more expensive, including premiums, price sharing, and no limit on out-of-pocket expenses. ACA-compliant plans cannot make significant cost increases in many situations.
- Qualify for Subsidies: You might qualify for health insurance subsidies under the ACA, making premiums less expensive.
- Pre-existing Coverage: If you have a pre-existing condition, switching to an ACA-compliant plan will ensure you get coverage.
- Preventative Service Coverage: Screening and preventative health care play a b significant role in avoiding certain illnesses or catching them early and are covered by ACA-compliant plans.
- Patient Protections: ACA plans protect you in various situations, such as the right to choose a primary care provider, OB/GYN access without a referral, and coverage for out-of-network emergency services.
- Losing Grandfathered Insurance: Whether you’re changing jobs or your grandfathered insurance has decided to drop your policy, if you lose your grandfathered insurance, you have no choice but to select an ACA-compliant plan.
How to Switch to an ACA-Compliant Plan
If you have a grandmothered or a grandfathered insurance policy, the odds are that its coverage cycle does not line up with the enrolment period of Marketplace insurances. If you find yourself losing your insurance in between enrollment periods, do not worry. The healthcare marketplace allows for special enrollment periods designed to give people the opportunity to switch without their care lapsing.
The Special Enrollment Period (SEP) allows people to switch insurance when they are getting married, having a child, or during another qualifying event. Wanting or needing to switch your grandfathered or grandmothered insurance plan triggers an SEP if it doesn’t coincide with an Open Enrollment Period (OEP). An OEP is when anyone can enroll in coverage through the Marketplace. Depending on your situation, you’ll be given 60 days before or 60 days after termination to enroll in a Marketplace plan.