Do you have an individual health insurance policy that was initially purchased on or before March 23, 2010—the day the Affordable Care Act (ACA) was signed into law? If so, you have what is known as a “grandfathered health insurance plan.”1 Grandfathered plans may be job-based (obtained through your employer) or individual (obtained in the private market).2
If you have a grandfathered health insurance plan, it may be time to reevaluate whether or not it makes sense to keep it this year (and in the years to come). Why?
Grandfathered plans have always been considered major medical coverage although they don’t necessarily offer the same consumer benefits and protections as the major medical insurance plans sold today. If you’ve had one, it’s fulfilled the individual mandate and prevented you from owing the federal tax penalty.
Thing have changed, though. The federal tax penalty is repealed as of Jan. 1, 2019 (though some states may impose their own individual mandates and penalties).
As such, you may want to explore your ACA-compliant and other health insurance options and compare them with your grandfathered plan to see if there’s another solution that better fits your healthcare needs and budget.
How do I know if I have a grandfathered plan?
Where and when did you initially purchase your current health insurance? If you bought it on or before March 23, 2010, then it is considered a grandfathered plan unless its benefits have significantly changed since then.3
Your health insurance policy must also disclose if it’s a grandfathered plan. No plan sold through HealthCare.gov or a state-based exchange is considered a grandfathered plan—if you’ve ever purchased coverage from these sources, then you do not have a grandfathered plan.
How is a grandfathered health insurance plan different from other major medical insurance?
Grandfathered health insurance plans do not adhere to all of the ACA’s consumer protections—they aren’t required to.4 That said, they may choose to offer some protections; it is at their discretion.
When do grandfathered health insurance plans expire?
A grandfathered health insurance plan will lose its grandfathered status for any of the following reasons:5
- Coverage is cut or significantly lowered
- The policy’s coinsurance is raised
- Copayments are significantly raised
- Deductibles are significantly raised
- Employer contributions are significantly lowered (applies to job-based health insurance)
- A yearly limit on what the health plan pays is either added or decreased
Your health insurance company must notify you if your health insurance plan changes and is no longer considered grandfathered.
Will I be notified that my grandfathered health insurance policy is no longer being offered?
Yes, your health insurance company must notify you 90 days before it cancels the plan, and it must also offer you other coverage options.6
What do I do if my grandfathered health insurance is withdrawn?
If your grandfathered health insurance plan is no longer offered, then you’ll need to find new coverage.
Your coverage options may include:
- Job-based health insurance or a partner’s job-based health insurance, if it is available to you (these are ACA-compliant options)
- An individual health insurance plan purchased during open enrollment—outside of open enrollment, you’ll need to qualify for a special enrollment period (this is an ACA-compliant option)
- Alternative health insurance such as short-term medical policies (these are not ACA-compliant options, which means they do not include essential health benefits and are not guaranteed issue)
What if I can’t afford different coverage?
A canceled grandfathered plan may leave you with concerns about affordability. If you buy an individual health insurance plan from HealthCare.gov or a state-based exchange during open or special enrollment, you may qualify for subsidies that lower your monthly premium and out-of-pocket expenses.
If you are willing to leave some of the ACA’s essential health benefits on the table in exchange for potentially lower monthly premiums and you’re able to qualify for coverage when you apply, you may want to explore alternative health insurance options.
Alternative health insurance options may include:
Short-term medical (STM) insurance: Temporary benefits for as few as 30 days and up to 364, depending on your state, short-term policies provide a range of benefits for medical expenses such as hospital room and board, emergency room visits, and doctor visits. Premiums vary based on the benefits selected.
A short-term and hospital insurance bundle: A package that combines both short-term medical and hospital insurance is one way to obtain benefits that help pay for medical expenses that range from relatively minor to catastrophic. However, if you live in a state where hospital insurance policies are only available as a supplement to ACA-compliant coverage, a bundle probably will not make sense for you.
Call 866-278-1464 to learn more about health insurance packages.
Alternative health insurance policies are available year-round, but they are not guaranteed issue, so you will need to apply and be approved in order to enroll.
Should I keep my grandfathered plan or switch?
Has your grandfathered health insurance plan truly withstood the test of time? Or have you just kept it around out of convenience?
It’s possible you like your grandfathered health insurance and that it makes sense for you. It is also possible that you could be missing out on coverage that better meets your needs or coverage that better suits your budget.
Start by considering the following:
- Does your existing health plan still meet your healthcare needs?
- Do you avoid getting preventive care due to cost?
- Would changing plans mean losing benefits you use?
- Does your grandfathered health plan still make sense financially?
- Will your premium, deductible, copay or coinsurance amounts increase next year?
- Would you be eligible for income-based subsidies such as premium tax credits and cost-sharing reductions if you purchased health insurance from a state-based or federally facilitated exchange?
- Does switching coverage mean losing access to your preferred healthcare providers and hospitals?
Then, consider familiarizing yourself with what else is available—both ACA-compliant health insurance policies and alternative health insurance options.
Gather quotes and compare costs. If you need guidance, work with an agent who can answer your questions and help you understand your options.
Summary + next steps
Grandfathered health insurance plans are policies that have been around since before the ACA was signed into law.
As your life changes, and with the federal tax penalty repeal in effect, you may want to consider additional coverage options such as an ACA-compliant major medical policy or alternative health insurance policies.