Consumers With ‘Grandfathered’ Health Plans Could Face High Costs

U.S. residents whose health plans are considered "grandfathered" into the Affordable Care Act could encounter unexpected charges for preventive services, Kaiser Health News reports (Andrews, Kaiser Health News, 6/9).

Grandfathered plans were in effect as of March 2010, when the law was enacted (California Healthline, 1/31/14). Such plans have not significantly changed their benefits or consumer out-of-pocket costs since that time. Grandfathered health plans do not have to comply with the ACA's requirements that:

• Insurers cover certain preventive health services at no cost;
• Insurers allow members to appeal coverage decisions; or
• Insurers cannot charge enrollees higher copayments or coinsurance for out-of-network emergency care.

In addition, the plans do not have to comply with the ACA's limits on annual out-of-pocket costs.

According to the Kaiser Family Foundation, around 25% of individuals with employer-sponsored health plans have grandfathered coverage. Further, KFF's annual employer health benefits survey found that 37% of health insurers still offered at least one grandfathered plan in 2014. However, that number was down from 72% that had offered such plans in 2011.

Benefits experts say the decline in grandfathered plans is expected. Steve Wojcik, vice president of public policy at the National Business Group on Health, said, "Large employers make changes every year to improve care and reduce costs."

However, Joe Kra, a partner and actuary at Mercer, said some large, self-funded companies might keep grandfathered plans as a recruiting and retention mechanism.

Still, Wojcik noted that smaller businesses are more likely than larger companies to offer grandfathered plans by now, since small companies usually purchase plans from insurers that reimburse their claims instead of designing their own plans.

According to KHN, some health policy experts welcome the decline in grandfathered plans, which they argue lack consumer protections and are subject to less stringent regulations.

Meanwhile, Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities, said such plans can be beneficial for "people who are low risk," such as younger and healthier individuals.

Further, Kra said such plans could offer lower cost-sharing, since such plans are limited in the amounts they can increase copayments, deductibles and some other out-of-pocket costs (Kaiser Health News, 6/9).