Health Policy Brief: Grandfathered Health Plans
November 1st, 2010
by
Chris Fleming
|
A new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation (RWJF) examines the topic of health insurance plans that are “grandfathered” under the recently enacted health reform law—and the resulting issues for consumers, employers, and insurers.
Under the law, Americans covered by an insurance plan on the legislation’s enactment date are allowed to keep their existing policies. To make that possible, the Affordable Care Act exempts existing plans from many, but not all, of the law’s required changes. The law and subsequent regulations also limit how much a plan can change over time and still retain its “grandfathered” status. For example, grandfathered plans must comply with some of the provisions imposed on other health plans, including no lifetime limits on coverage and extending coverage of dependent children to age 26. Although grandfathered plans are not required to adhere to all of the rules that apply to new plans, they can only make limited changes to cost sharing, employer contributions, and annual maximum benefits.
Now consumers, employers, and insurers must make choices. Employers and insurers can, but are not required to, continue offering their pre-reform law policies (even after 2014) and an individual may continue to participate, and add family members or dependents. Some companies and insurers may decide to abandon existing plans rather than abide by the new limitations on plan changes. According to survey data cited in the brief, many employers will relinquish grandfathered plans in the next few years because the financial benefits are outweighed by the disadvantages. Consumers may wonder whether they are better off with grandfathered plans or with new ones.
The brief outlines the pros and cons for consumers as well as how the landscape could change in 2014, when mandatory coverage contained in the Affordable Care Act is fully implemented. The Obama administration has called for public comments on regulations issued last June, and may alter those in the future depending on the feedback.
About Health Policy Briefs:
Health Policy Briefs are aimed at policy makers, congressional staffers, and others who need short, jargon-free explanations of health policy basics. The briefs include competing arguments on policy proposals from various sides and the relevant research supporting each perspective. The information is objective and reviewed by Health Affairs authors and other specialists with years of expertise in health policy.
Previous policy briefs have addressed:
– Comparative Effectiveness Research: Some of the key issues, including those that are controversial.
– Standards and Certification of Electronic Medical Records: Steps providers will take to make records compliant
– The Patient-Centered Medical Home: How this concept could address current primary care concerns.
SIGN UP FOR HEALTH POLICY BRIEFS
You can sign up for e-mail alerts about upcoming briefs. The briefs are also available from the RWJF’s website. Please feel free to forward the briefs to any of your colleagues who are tracking health issues. And after you’ve taken a look, we welcome your feedback at: hpbrief@healthaffairs.org
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