The Affordable Care Act (ACA) allows certain group health plans that existed on March 23, 2010 (the date the ACA was enacted) to maintain their status as “grandfathered.” These plans are exempt from some ACA requirements, provided they maintain their status by not making significant changes to benefits or cost-sharing structures.
Definition
- A grandfathered plan is one that was in existence on March 23, 2010, and has continuously covered at least one person since that date.
- These plans are allowed to keep certain pre-ACA features while avoiding some ACA requirements, as long as they do not make prohibited changes.
Key Exemptions
Grandfathered plans are not required to comply with some of the ACA’s consumer-protection provisions, including:
- Coverage of preventive services without cost-sharing
- Patient protections related to provider choice and emergency services
- Certain appeals and external review procedures
- Application of essential health benefits (for large group and self-funded grandfathered plans)
Requirements That Still Apply
Despite their exemptions, grandfathered plans must comply with many core ACA requirements, such as:
- Prohibition on lifetime and annual dollar limits on essential health benefits
- Coverage of dependents up to age 26
- Prohibition on preexisting condition exclusions
- Medical loss ratio (MLR) reporting and rebate rules
- Employer shared responsibility provisions for Applicable Large Employers
Losing Grandfathered Status
Plans lose grandfathered status permanently if they make significant changes, such as:
- Eliminating or substantially reducing benefits for specific conditions
- Increasing cost-sharing beyond allowed thresholds
- Raising the employee share of premiums significantly
- Reducing the employer contribution rate by more than 5 percentage points
Once lost, the plan must comply with all ACA requirements going forward.
Notice Requirements
Grandfathered plans must include a notice of grandfathered status in materials provided to participants. The notice explains that the plan is grandfathered and what that means for benefits and rights. A model notice is available from the U.S. Department of Labor.
Brief Note on Grandmothered Plans
“Grandmothered” plans refer to certain non-ACA-compliant plans issued after March 23, 2010 but before January 1, 2014, that were allowed to continue temporarily under transition relief. Over time, these plans have largely been phased out and are no longer common today.