Financial Services Blog

ACA Update: Keeping Your Current Health Insurance? It May Cost You Benefits

Beginning January 1, 2014, the health insurance mandate provision of the Patient Protection and Affordable Care Act (ACA) took effect. As you’ve read in our recent blogs, this provision requires most U.S. citizens and legal residents to have minimum essential health coverage or pay a penalty fee.

If you already have health insurance, you may have the option of keeping it or opting for a new plan. That's because the ACA includes provisions for grandfathering health insurance plans in existence on March 23, 2010, the date the ACA was enacted. But keeping your current plan of insurance may mean that you won't receive some of the benefits offered by new plans. That's because the ACA does not require grandfathered plans to include all of the coverage benefits found in new plans.

What's a grandfathered plan?

The ACA defines a grandfathered plan as one that has continually been in existence since March 23, 2010; has had at least one person covered at all times; and has not changed except as permitted by law. Grandfathered plans include both individual insurance policies as well as group plans purchased through an employer or an organization in which the insured is a member.

What benefits must be included in a grandfathered plan?

The ACA requires that all plans, including grandfathered plans, comply with the following provisions:

  • Plans can't impose lifetime limits on the value of coverage.
  • Coverage can't be rescinded or canceled due to illness or medical condition. However, coverage can be rescinded or canceled in cases where the insured intentionally puts false or incomplete information on the insurance application, or doesn't pay premiums when due.
  • Plans must extend dependent coverage to adult children up to age 26.
  • Plans must provide a summary of benefits and coverage in an easy-to-understand format.

Along with these provisions, additional requirements apply to grandfathered group plans (but not individual grandfathered plans). Grandfathered group plans can't:

  • Place annual limits on plan benefits
  • Include pre-existing condition exclusions on coverage for children under age 19

What patient benefits are not included in grandfathered plans?

There are several benefits that the ACA requires of new plans that do not apply to grandfathered plans. These benefits include:

  • New plans must provide for certain preventive services at no cost to the patient, such as blood pressure and cholesterol tests; mammograms and colonoscopy screenings; counseling for smoking cessation, weight loss, and alcohol addiction; vaccinations for diseases such as measles; and preventive inoculations for influenza and pneumonia.
  • New plans must give the insured the right to appeal health insurance plan decisions, such as a decision to deny payment for a particular service or treatment.
  • New plans must allow the insured to select a primary care doctor within the provider's network; ensure that female patients can see an ob-gyn without a primary care doctor's referral; and allow access to out-of-network emergency room services.

Can my plan lose its grandfathered status?

Group and individual grandfathered plans can lose their status if the plan significantly cuts or reduces benefits, increases co-insurance or co-payments, significantly raises deductibles, or significantly lowers employer contributions where applicable. If your plan is no longer considered a grandfathered plan, then it must comply with all of the plan requirements of the ACA.

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