Be Well: Keeping Your Old Health Plan Under the ACA
Federal officials announced in early March that individual and small businesses could renew old policies that failed to meet Affordable Care Act standards for another two years.
The guidance, announced March 5, states that old policies meeting certain criteria could be renewed until Oct. 1, 2016 - effectively meaning that individuals and small businesses could have non-compliant coverage well into 2017. The move is called "grandfathering."
"You know how the president has been criticized for saying if you like your health care plan you can keep it? Well we're one of those people who got to keep it, because it qualified,"
says Tim Reynolds, owner of small software development firm in Hudson, Ohio.
Reynolds, former chair of Northeast Ohio's Council of Smaller Enterprises, or COSE, considers providing good benefits an important part of his compensation package.
"I think that our employees appreciate not only the benefit itself but the fact that that aspect is being managed for them. That we're out actively making sure we have a competitive health insurance program and we're evaluating it and trying to get the best program and a good value for their premium," he says.
What qualifies as a grandfathered plan?
The plan must have been created before the ACA became law in March 2010. In addition, the plan can't have any changes that could reduce benefits or increase costs to the consumers.
When the ACA became law, it required all new insurance plans to meet certain standards. One of the biggest of those is providing "essential health benefits" such as offering preventive services like annual wellness visits with no cost sharing, or co-pays.
Grandfathered plans don't have to offer preventive services with no cost-sharing, or co-pays. So, you might have to pay a share of your annual wellness visit. And, if you are a woman, you may have to pay out of pocket for contraceptive coverage - which is a mandated benefit under the ACA.
In addition, there are differences in the way consumers appeal coverage issues under grandfathered plans. .
Thirty-six percent of workers nationwide
A 2013 employer survey done by the Kaiser Family Foundation found that 36 percentT of covered workers nationwide are in grandfathered plans. And workers at small firms - defined under this rule as those with less than 200 employees - are more likely to be on grandfathered plans. According to the survey, 49 percent of workers at small firms have a grandfathered plan.
Cost is a key reason for keeping the plans, says Reynolds.
"If my rates go up on that one policy 20 or 30 percent, we'll do what we do every year, which is we compare what that proposal is against what else might be offered by other insurance companies or if by that time the SHOP exchange, the small business exchange is open, we'll look at those rates as well. We'll pick the best policy for the money, " Reynolds says.
Clarification added 4/1/13: The SHOP – or small business exchange – is open in Ohio. But folks like Tim, don’t really think so. That’s because in order to use it, you have to use paper applications. In addition, many of the features required for that exchange that were in the initial writing of the federal reform law have also been delayed.
Insurers dropping old plans
During a Health and Human Services call about the new guidelines, federal officials speaking on background said they expect the number of grandfathered plans to naturally taper in the coming years.
And that appears to be happening: While 36 percent of people were in grandfathered plans in 2013, that number is down from 48 percent in 2012.
There are several reasons why: First, many insurers are refusing to continue old plans. Insurers often find offering the plans not profitable because they can't offer these old plans to new customers and the cost of administering these plans is extra on top of newer plans that they are out there marketing.
In addition, individual states have to allow insurance companies to keep offering the old plans. So far, that has happened in Ohio.
So, for those still clinging to old plans in a few years, the administration did give an ending date: Grandfathered plans can't be renewed after October 2016.