Understanding Grandfathered Plans Under Health Care Reform

What is a Grandfathered Plan?

The Affordable Care Act (ACA) was signed into law on March 23, 2010. If your current health insurance plan was effective before that date (and continuously in force since then) your policy is considered to be “grandfathered.” The good news is that you can keep it, and you will not be required to switch to an ACA-approved plan. Your premiums are likely to be lower than ACA-qualified plans, so you may want to hold on to what you’ve got.

Why Switch From a Grandfathered Plan?

Keeping your grandfathered plan means you won’t get the full benefits (including coverage of pre-existing conditions and preventive care) written into the new health care law. If you have a pre-existing condition that is excluded on your current policy, you may want to switch to a new plan now. ACA plans offer guaranteed acceptance of pre-existing conditions, and include preventive care services that are 100% covered.

If your income level qualifies you for a health care tax-credit (premium subsidy), you may also want to switch to a new plan. To qualify, your income must not exceed 400 percent of the federal poverty level (FPL). The following maximum incomes meet the criteria of the FPL:

• Individual annual income of $49,960
• Two-person family income of $67,640
• Three-person family income of $85,320
• Four-person family income of $103,000
• Five-person family income of $173,520

These tax-credits do not apply to grandfathered plans. A Colohealth Personal Benefits Manager can easily help you determine whether or not you qualify for a tax-credit, and what the best options are for you.

What is a Non-Grandfathered Plan?

​To be considered a grandfathered plan, enrollment must have taken place before March 23, 2010 (and carriers may make small changes to plans that nullify their grandfathered status, so check with your insurance provider to be sure). If you have a non-grandfathered plan, you can keep it until the anniversary date of the policy, but at that time you will be required to switch to an ACA-qualified plan. Some carriers will also be offering the option to extend your effective date until December 2014.

Many companies will automatically match your current policy to a similar ACA plan when the time comes to switch, but this may not necessarily be the best plan for your money. A wise approach to transitioning to an ACA-compliant plan is to compare rates and plans in order to maximize coverage while saving money, Colohealth Personal Benefits Managers can help you review your options in a clear and simple way. There is never a charge for our services.

What is an ACA-qualified plan?

​Qualified health insurance plans are required to include benefits mandated by the ACA. Every plan must offer the defined 10 Essential Benefits, guaranteed acceptance for pre-existing conditions, and preventive care for all ages. Employers with 50 or more employees are required to provide health plans that are “adequate and affordable” under the law. The ACA defines health plan levels based on actuarial values (percentage of benefit coverage for a standard population over a yearly period). Colohealth Personal Benefits Managers can clear away the confusion you’re facing with years of insurance experience not found on the state exchanges. In addition we can show you new plans that are not on the state exchange, as well as those that can be combined with a health savings account (HSA). HSAs are tax-favored accounts that can be rolled over year-to-year, pay for medical expenses, and be used at your discretion after age 65. HSAs can also lower your taxable income to lower your tax bill (and qualify you for a subsidy on health insurance premiums).

Choose to Work With an Experienced, Licensed Insurance Advisor

​With 25 years of insurance expertise, Colohealth will simplify the important and often confusing process of choosing the best coverage for you and your family. Maximizing your health care coverage while saving the greatest amount of your money should not be left to inexperienced navigators on the state insurance exchange. Now, more than ever, it’s critical to get straight-forward answers and solutions to your health insurance and savings questions. Our services are always free.