What Is a Grandfathered Health Plan?

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A grandfathered plan is a plan that was in existence when the Affordable Care Act was signed into law on March 23, 2010, and hasn’t had substantial changes since then.

One of the promises made by the Affordable Care Act’s authors was that people who liked the health insurance they had could keep that insurance and wouldn’t be forced to sign up for a different type of health plan under Obamacare. The grandfathering of existing health plans is the mechanism that made this possible.

Grandfathered plans are exempt from some of the Affordable Care Act’s rules. This means they’re allowed to continue operating in a manner similar to the way they operated before the Affordable Care Act, making it possible for you to keep the plan you had if you so desire.

Why Does Grandfathered Status Matter?

Because grandfathered health plans are exempt from some of the Affordable Care Act's rules, some of the consumer protections mandated by the Affordable Care Act are missing from grandfathered plans. Those consumer protections won't matter to some people. To others, lack of those consumer protections could make a difference of thousands of dollars per year.

Because of this, you need to know whether or not your health insurance is grandfathered. You’ll be able to tell by reading the health plan’s written plan materials since grandfathered plans are required to disclose their grandfathered status in their written materials.

None of the health insurance sold on Affordable Care Act health insurance exchanges are grandfathered.

Don’t let the date you enrolled in a job-based health insurance plan fool you into thinking your health plan isn’t grandfathered. If the plan has existed relatively unchanged since March 23, 2010, it’s a grandfathered plan even though you may not have enrolled in it until years later.

A health plan can lose its grandfathered status by making substantial changes to its benefits or to its cost-sharing provisions. In that case, it would have to begin complying with all of the Affordable Care Act’s rules and consumer protections.

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