Update on “Grandmothered” Plans
Recent update on “grandmothered” plans—a transitional policy for the first two years
On November 14, 2013, President Obama announced that States could decide whether to allow small group and individual health insurance policies existing on October 1, 2013, to be renewed for a policy year starting between January 1 and October 1, 2014. To give Hawaii consumers the most options, the State of Hawaii has allowed Hawaii health insurers to offer the renewal option.
Essentially, in 2014, Hawaii consumers had selection of choices below:
- “Grandfathered 2010” health plans. The federal law specifies conditions for grandfathered plans that existed in March 2010. Grandfathered health plans cannot be sold on the online marketplace. Many people will not have access to this option because their policies changed after March 2010.
- “Transitional renewal plans” also called “Grandmothered” health plans. These plans must have been in existence on October 1, 2013, and renewed prior to October 1, 2014. They include some but not all of the ACA features. Transitional or Grandmothered health plans cannot be sold on the online marketplace or the Hawaii Health Connector. These plans will be subject to updated premium rates. You may only apply for a renewal policy, not a newly issued policy.
- “Fully compliant ACA” plans. Non-Grandmothered plans must include all ACA features, including the 10 Essential Health Benefits. Fully compliant ACA plans will be sold on and off the HealthCare.gov marketplace.
Consumers may wonder whether to keep an existing Grandmothered plan or buy a plan that is fully compliant with ACA.
The quality of the coverage being provided should be considered. The ACA has a minimum floor for coverage for fully compliant ACA plans. This floor may be better than the coverage being provided under the Grandmothered plans, particularly in the individual market.
The cost of premiums should be considered. The ACA has new rating factors which emphasize age rating. This will be more favorable for some people than others. Some people may find that the rates under the Grandmothered plans are better than new fully compliant ACA plans. For others, the opposite may be true.
In addition to the premium costs, the possibility of obtaining tax credits for the purchase of health insurance through HealthCare.gov should also be taken into consideration.
Due to the complexity of the law that may require very fact-specific analysis, this material is not intended to be legal, accounting, or other professional advice, and is provided only as general information.
Last reviewed: Oct. 29, 2015.