Now that we’re in the “reform era” in health insurance, the issue of “grandfathered plans” has emerged as something you need to consider. At the outset, we’ll remind you that anyone who claims to have all the answers and understand everything about health reform is either ignorant or lying (or a politician, which is to say both!). Things are pretty fluid. A “grandfathered” plan is one that was in place prior to the bill’s passage on March 23, 2010 and has been relatively unchanged since then. These plans are not subjected to many of the mandates and regulatory changes in the health reform bill.
A grandfathered plan, for example, would not be subject to the mandate that preventive care be covered at 100% with no “cost sharing” from the insured. (In ordinary English, that means the insured person pays nothing for preventive care). That’s a great benefit, but the premiums rise to pay for it. Looking down the road, a grandfathered plan would not have to come into line with other mandates that arrive in 2014, such as a maximum allowable individual deductible of $2,000. There are several other issues of this type.
To maintain grandfathered status, an employer cannot change their contribution to employee premiums by more than 5%, the deductible must stay essentially the same (there is room for modest changes), benefits cannot be cut, and copays cannot go up much. Under a recent ruling, you can change health insurance carriers provided the plan does not change in substantial ways.
So should you try to stay with a grandfathered plan? It’s hard to say. For one thing, there’s certainly no guarantee that the health reform bill will continue unchanged into 2014 (when most of the big changes are scheduled to go into effect). There will almost certainly be changes, but who knows what they will be? If unchanged, however, the premiums on grandfathered plans will probably be cheaper than those on non-grandfathered plans.
At the same time, however, many individuals and businesses may find themselves in the position of having to make changes to their health insurance coverage due to budgetary concerns or other issues that just can’t wait until 2014 or later. For that reason, it’s hard to make a blanket recommendation for everyone when it comes to the issue of grandfathered plans.
