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. Health Insurance

    A type of insurance coverage that pays for medical and surgical ...
  2. Group Health Insurance Plan

    An insurance plan that provides healthcare coverage to a select ...
  3. Affordable Care Act

    A federal statute signed into law in March 2010 as a part of ...
  4. Essential Health Benefits

    A set of benefit requirements that must be included in certain ...
  5. Benefit Expense Ratio

    An operating metric used in the health insurance industry computed ...
  6. Portability

    An employee's ability or right to retain certain benefits when ...
Related Articles
  1. Financial Advisor

    Fiduciary Rule Grandfathering Gray Area for FAs

    Advisors who change companies after April 10th may lose the grandfathering exemption under the DOL's fiduciary rule.
  2. Insurance

    Defined Contribution Health Plans: A Primer

    A look at defined contribution health plans and how they work for both employees and employers.
  3. 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.
  4. Insurance

    Do You Need Short-Term Health Insurance?

    Yes, if you've no other coverage options. Here’s what you need to know about how it works and how it differs from employer-provided and marketplace plans.
  5. Insurance

    Health Care Premiums Rise Faster Than Wages in Recent Years

    Discover why the Affordable Care Act is not fulfilling its intended purpose of lowering health care costs and how Americans are responding.
  6. Insights

    The Evolution of Obamacare Since Its Inception

    Find out whether the Patient Protection and Affordable Care Act, also known as Obamacare, has lived up to its lofty projections from 2010.
  7. 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?
  8. 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.
  9. Insurance

    Buying Private Health Insurance

    Getting your own policy isn't easy or cheap but in some cases, it's well worth the effort.
  10. 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.
RELATED FAQS
  1. What role does the agency problem play in the modern Health Care industry?

    Read about the role of the principal-agent problem in the modern American health care industry, and learn why health insurance ... Read Answer >>
  2. Can I get dental insurance with Obamacare?

    Discover how you can obtain dental insurance as part of a health plan or on a standalone basis through the Health Insurance ... Read Answer >>
Hot Definitions
  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  2. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  3. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  4. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  5. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center