Is Staying Grandfathered The Way to Go?

It’s never been more difficult to manage one’s health insurance than it is right now…

Regardless of carrier, the Affordable Care Act has many individual policy holders scrambling to keep up. Constantly changing laws and ever shrinking networks have many people wondering when stability will be restored in the marketplace.

All except grandfathered policy holders, that is.

You see, as a grandfathered policy holder, many individuals have managed to stay “safe” from almost all of the recent turmoil in the marketplace. The reason? Grandfathered plans have not been forced to meet the majority of new requirements put forth by the Affordable Care Act. For many, this means peace of mind, a huge time savings, and a few other key advantages:

  1. Non-grandfathered plans are subjected to the costly 10 mandated “free” benefits and members have no choice but to pay for such things like juvenile optical and juvenile dental etc., regardless of need… like it or not. New plans must conform to strict rules and guidelines within the “Metallic Tiered” structure…  Your grandfathered plan won’t be affected.
  2. Your grandfathered plan is exempt from the new fees associated with the Affordable Care Act. Fees that are new, and do not apply to grandfathered plans, include the “Risk Adjustment Program and Fee”, “The Health Insurance Marketplace User Fee”, etc…
  3. Your plan will be able to keep the current full networks of providers and hospitals. (This is very important, as many plans, such as Anthem Blue Cross, give grandfathered members state wide, nationwide, and even WORLDWIDE access using the “Blue Card”) The new plans are experiencing drastic cuts in doctors and hospitals and Rx benefits. This is one of the most serious concerns. Your grandfathered plan won’t be affected.
  4. The new plans are also in a guaranteed issue (dirty) pool that now must support all of the prior serious and most expensive conditions that were not allowed in your current GF pool.  This will require far more substantial premiums to sustain. Your grandfathered plan won’t be affected by the adverse affects of guaranteed issue.
  5. The new (non grandfathered) premiums will also have to support those plans that are getting subsidies. Your grandfathered plan won’t be affected.
  6. The rates being quoted for new health plans are relying on a substantial amount of young people enrolling, and offsetting costs for older and less healthy individuals. This doesn’t appear to be happening as planned. Consequently, rates for the new plans should see fairly dramatic rate increases in the coming years. Grandfathered plans will not be affected by this.
  7. Finally, if you leave your grandfathered plan you can never go back as they can no longer be sold after March 23rd 2010. Whether for a billing related issue or otherwise, the carriers are being extremely strict about this.

All in all, it is difficult to know with any certainty what you best course of action will be. Ultimately, the advice we give our clients is to consider carefully whether or not stepping off of a grandfathered plan is a prudent decision. Although near-term cost savings can be attractive, the increasing level or risk, and balooning fee-schedule brought on by the Affordable Care Act is certain to bring increasing cost and frustration in the long run.

About the author: Nolan Waterfall
Nolan serves as a consultant, both to SCI, and within his own brokerage, Campfire Health, where he enjoys educating owners, C-level executives, and HR managers, on the in's and out's of all things compliance, technology, and benefits strategy. Nolan loves reading, anything outdoors, and spending time with his wife Joanna.

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