Under the Affordable Care Act, health insurance plans must fully
cover preventive care without charging members anything out of
But there's one big exception that affects almost half of
If a health plan is "grandfathered," it doesn't have to follow
this and a handful of other Affordable Care Act provisions.
According to the recent Kaiser Family Foundation/Health Research
& Educational Trust
2012 Employer Health Benefits Survey
, 48 percent of covered workers are in grandfathered plans this
year, down from 56 percent last year.
A grandfathered group plan is one that your employer established
before March 23, 2010, and has not changed substantially since
then. To maintain a health plan's grandfathered status, an employer
can't significantly increase your out-of-pocket costs, such as your
deductible, or reduce your benefits.
Individual plans -- the kind you buy for yourself instead of
getting through an employer -- can also be grandfathered. If your
individual plan covered you on or before March 23, 2010, then it
can be grandfathered.
A job-based grandfathered plan still can sign up new employees,
so even if the employer plan is new to you, it could be
Rules for grandfathered health plans
Unlike other health plans, grandfathered plans
- Fully cover preventive care. A grandfathered plan can still
charge you a copayment, deductible and co-insurance for
- Provide access to an obstetrician or gynecologist without a
- Let you get emergency care outside the health plan's network
without prior authorization.
- Give you additional rights for appealing health plan denials.
Non-grandfathered health plans must give you the right to an
external review if the health plan rejects your appeal.
In addition, individual grandfathered plans avoid a couple of
other requirements. They still can put annual dollar limits on
coverage, and they can exclude pre-existing conditions from
coverage for children under 19.
plans, whether they're grandfathered or not, have to extend
coverage to adult children up to age 26. However, until 2014,
grandfathered group plans don't have to extend that coverage if the
young-adult dependent has access to job-based health benefits
The fact that almost half of workers are still in grandfathered
plans doesn't surprise Judy Waxman, the National Women's Law Center
vice president for health and reproductive rights. The center is a
strong proponent of the Affordable Care Act.
"It's right on target for what I expected," she says. "It's only
been two and a half years (since the health care reform law was
passed) and already half are not grandfathered. I think we're
coming along nicely."
And some grandfathered health plans are providing more
protection than they have to, Waxman says. Her employer's health
plan is grandfathered but fully covers preventive care, including
preventive services for women, without charging a copayment,
deductible or coinsurance. The law's requirement for
non-grandfathered plans to fully cover general preventive care went
into effect two years ago, and the requirement to cover a specific
list of women's preventive care services, including birth control,
went into effect in August of this year. More information is in:
"Ladies: More medical care without health insurance
co-pays coming in 2012."
The outlook for grandfathered health plans
A health plan can stay grandfathered indefinitely, but most
plans offered by midsize and large employers will probably lose
that status in the next two years, says Julie Stone, a senior
consultant for Towers Watson, a global consulting firm. To maintain
grandfathered status, an employer can't increase the plan's costs
for workers -- a tough limitation for companies in the midst of
rising health care costs.
Stone says most employers who maintained grandfathered status
did so as a strategic move to keep their options open while they
evaluated how to move forward.
Even after the Affordable Care Act was passed, many unknowns
remained, says Chris Renz, a partner and Northern California leader
of global consulting firm Mercer's health and benefits
"Regulations had not been issued for many of the health care
provisions," he says.
The list of women's preventive services that health plans must
fully cover wasn't hammered out until August of 2011, for instance.
"Employers who lost grandfathered status early on have no choice
but to implement that standard," Renz says.
Still, he says, "Our surveys have been fairly consistent -- the
number of grandfathered plans will continue to dwindle each
So are you at a disadvantage if you're in a grandfathered
"I don't think it's clear-cut from an employee's perspective,"
A grandfathered plan might provide you with more
affordable health insurance
overall. Remember, your employer can't significantly increase your
costs, including the portion of premium you pay to keep a plan
grandfathered. So even if it doesn't fully cover preventive care, a
grandfathered plan might cost you less than a non-grandfathered
plan when you add and compare the premiums, deductibles, and other
An overview of grandfathered health plans can be found at