DEFINITION of 'Grandfathered Health Plan'

A health insurance policy created or purchased on or before March 23, 2010. A grandfathered health plan is exempt from many consumer protections required under the Patient Protection and Affordable Care Act (ACA), the U.S. health reform signed into law on March 23, 2010 by President Obama. Grandfathered status applies to group health plans that were created and individual health insurance policies that were purchased before the ACA was enacted. With group plans (through an employer), grandfathered status depends on the date the plan was created and not the date an employee and family members join.

BREAKING DOWN 'Grandfathered Health Plan'

Grandfathered plans enable consumers to keep the coverage they had in place before the ACA was enacted. A plan may lose its grandfathered status if considerable changes are made that reduce benefits or increase costs to consumers. For work-based plans, only limited changes can be made that affect the percent of the premium for which employees are responsible (significant changes would result in the loss of grandfathered status); however, plans may increase the total premium amount without losing grandfathered status. If the grandfathered status is lost, the plan will have to change to comply with new requirements under the ACA.

After Sept. 23, 2010, all plans, whether grandfathered or not, must include certain consumer protections:

  • Plans cannot apply lifetime dollar limits to key health benefits;
  • Your insurance plan cannot be canceled solely because of an honest mistake made by you or your employer on your insurance application; and
  • Plans must extend dependent coverage to adult children until they turn 26.

Job-based plans and grandfathered plans are not required to:

  • Provide at no cost certain recommended preventive services;
  • Offer new consumer protection regarding claim appeals and coverage denials;
  • Protect consumers’ choice of health care providers and access to emergency care.

 In addition, individual plans (not job-based coverage) that are grandfathered are not required to:

  • Phase out annual dollar limits on key benefits; or
  • Eliminate the pre-existing condition exclusion for children under age 19.
RELATED TERMS
  1. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible ...
  2. Grandfather Clause

    An exemption that allows persons or entities to continue with ...
  3. Minimum Essential Coverage

    The type of health insurance policy an individual needs to meet ...
  4. Group Health Insurance Plan

    An insurance plan that provides healthcare coverage to a select ...
  5. Health Plan Categories

    Four types of health insurance plans that are differentiated ...
  6. Catastrophic Health Insurance

    Affordable Care Act-compliant medical coverage open to people ...
Related Articles
  1. Insurance

    Defined Contribution Health Plans: A Primer

    A look at defined contribution health plans and how they work for both employees and employers.
  2. Financial Advisor

    Individual vs. Group Health Insurance: What's the Difference?

    The Affordable Care Act requires all Americans to get health insurance through employers or the federal exchange, and differences exist between both channels.
  3. Insurance

    What If Obamacare Is Repealed?

    During the campaign, Donald Trump promised to repeal Obamacare. If, as president, he follows through, how will that affect Americans?
  4. Insurance

    Essential Health Benefits Under The Affordable Care Act

    Under the Affordable Care Act, certain preventive health services and these 10 essential health benefits are the minimum requirements for many health insurance plans.
  5. Insurance

    Buying Private Health Insurance

    Getting your own policy isn't easy or cheap but in some cases, it's well worth the effort.
  6. Insurance

    5 Ways to Ace 2016's Health Insurance Marketplace

    Not sure how the Health Insurance Marketplace/Exchange works? Here are 5 ways to avoid frustration when enrolling through the federal or state exchanges.
  7. Insurance

    Did Obamacare Make Premiums Go Up?

    A careful look at data from nonpartisan sources suggests that any increases have actually been modest by historical standards.
  8. Insurance

    How To Assess A Group Health Insurance Plan

    Not all group healthcare plans will match up with your needs. Comparing coverage and costs will help you determine what you need and how much it should cost you.
  9. Insurance

    7 Mistakes to Avoid When Buying Health Insurance

    Understand the need for health insurance and why some undervalue the need for coverage. Learn about the top seven mistakes to avoid when purchasing insurance.
RELATED FAQS
  1. How do I calculate insurance premium tax?

    Find out how your health insurance premiums can affect your income taxes, including when you may be able to deduct premium ... Read Answer >>
  2. Why is my insurance premium so high/low?

    Insurance premiums can be affected by many factors including: type and amount of risk size of deductible amount of coverage ... Read Answer >>
  3. What is the best retirement plan option for a physician with her own practice, employees ...

    It is very unlikely that you will find a qualified plan or an IRA-based plan that will allow the employer to exclude other ... Read Answer >>
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  3. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
  4. Interest Rate Swap

    An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for ...
  5. Custodian

    A financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. ...
  6. Supply Chain

    The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, ...
Trading Center