Grandfathered Health Plans Under the Patient Protection and Affordable Care Act (ACA)

Bernadette Fernandez
Specialist in Health Care Financing

The Patient Protection and Affordable Care Act (P.L. 111-148, ACA), as amended, includes provisions for the grandfathering of existing health insurance plans. Given that most Americans had private health insurance coverage on the date of enactment of ACA, most Americans’ health coverage was affected by the grandfathering provisions.

A grandfathered health plan is an existing group health plan or health insurance coverage (including coverage from the individual health insurance market) in which a person was enrolled on the date of enactment. Therefore, as long as a person was enrolled in a health insurance plan on March 23, 2010, that plan has been grandfathered.

Current enrollees in grandfathered health plans are allowed to re-enroll in that plan, even if renewal occurs after the date of enactment. Family members are allowed to enroll in the grandfathered plan, if such enrollment is permitted under the terms of the plan in effect on the date of enactment. For grandfathered group plans, new employees (and their families) may enroll in such plans.

Grandfathered health plans are exempt from the majority of new insurance reforms under ACA. However, grandfathered plans are subject to a handful of requirements: (1) uniform explanation of coverage documents; (2) medical loss ratio reporting and premium rebates; (3) prohibition on lifetime limits; (4) restriction on rescissions; (5) dependent coverage for children under 26 years of age; (6) prohibition on excessive waiting periods; (7) restricted annual limits; and (8) coverage for preexisting health conditions.

Enrollment in a grandfathered plan meets the individual mandate requirements that are effective in 2014.

On June 17, 2010, the Departments of Health and Human Services, Labor, and Treasury (“Departments”) issued interim final rules with request for comments regarding grandfathered plans. The regulation identified certain changes to benefits, cost-sharing, employer contributions, and access to coverage that would cause the loss of grandfathered status. It also clarified the loss of grandfathered status in either of the following instances: for a plan that did not have continuous enrollment (does not need to be the same enrollee), and termination of an existing collective bargaining agreement under which grandfathered health coverage was provided. In addition, the regulation included transitional rules that provide some flexibility in allowing changes to be made to the terms of a plan or coverage after enactment that do not cause loss of grandfathered status, and analysis of the potential impact of grandfathering rules on group and individual health plans. Comments on the interim final rules were due by August 16, 2010. Among the issues that generated comments from different stakeholder groups (health plans, employers, consumers, and state regulators) are prescription drug formularies, provider networks, cost-sharing, plan design and funding, and plan disclose requirements.

On November 17, 2010, the Departments published an amendment to the interim final rules on grandfathered health plans. The amendment permits group health plans to change insurance carriers and still maintain grandfathered status.


Date of Report: January 23, 2012
Number of Pages: 14
Order Number: R41166
Price: $29.95

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