We can categorize health insurance plans in a number of different ways. There are fully-insured and self-insured plans, HMOs and PPOs, high deductibles and low deductibles, and metallic tiers (bronze, silver, gold and platinum) which are used in some market segments. There’s also one other way to categorize health insurance plans, and that’s by their “grandparent” status. The grandparent status determines which Affordable Care Act (ACA) rules a health insurance plan must comply with.

 

Grandfathered plans are health plans that were in existence on or before March 23, 2010 (the date the ACA became law), and haven’t been changed in ways that substantially cut benefits or increase costs since that time. Grandfathered plans are exempt from most ACA requirements.

 

Grandmothered Plans (a.k.a. Transitional Plans)

Grandmothered plans are health plans that were purchased after March 23, 2010 and before January 1, 2014. These plans must comply with some of the ACA requirements, but not all of them. For example, grandmothered plans must cover in-network preventive care at 100%, but they do not have to cover all 10 of the essential health benefits.  

 

Grandmothered plans were supposed to be phased out in 2014 when the ACA is said to have been fully implemented. However, the Centers for Medicare and Medicaid Services (CMS) continues to allow extensions for these plans. In their most recent announcement issued on February 29, 2016, CMS has indicated grandmothered plans can be renewed in the individual and small group markets for policy years on or before October 1, 2017, but any grandmothered plan that is renewed must not extend beyond December 31, 2017. That means grandmothered plans are expected to be fully eliminated by 2018.

 

The latest announcement is not a requirement, but rather it’s an option for states to adopt. Even if states choose to adopt this option, it is then up to each health insurance company to decide if they will continue to renew grandmothered plans for the maximum time allowed by CMS. We are currently in a “wait and see” mode in most states until further guidance is issued.

 

Non-grandfathered plans are those health plans that were issued or purchased on or after January 1, 2014. These plans generally must comply with all of the ACA requirements.
 

Barring any further extensions to grandmothered plans, there should just be grandfathered and non-grandfathered plans in existence by 2018. There will also be fewer and fewer grandfathered plans that are in existence over time. That’s due to the fact that employers and health insurance issuers can’t make very many changes to a grandfathered plan without that plan losing its grandfathered status. For example, increasing a copay charged under the plan by more than $5 could result in a loss of grandfathered status, thus making the plan subject to all of the ACA rules. At some point down the road maintaining a grandfathered plan will likely become too expensive, leaving only non-grandfathered plans to remain.