Should You Keep Your Grandfathered Health Insurance Plan? — Real Health Care Reform Healthshare

Should You Keep Your Grandfathered Health Insurance Plan?

grandfathered health insurance plansGrandfathered plans may be the most misunderstood part of health care reform. If you bought a policy before health care reform was enacted, it’s not subject to all the new mandates. That’s all the term “grandfathered” means in this case. Whether you keep one of these policies or upgrade to a new policy can make a world of difference in your health care. Here are the main questions you need to consider.


Would You Benefit from More Fully Covered Health Care?


Grandfathered plans do not have to cover recommended preventive health care. These services are recommended specifically because research shows they help prevent major medical problems, and major expenses, in the long run.  But keep in mind that you are paying for this extra coverage, and many people may be better off with a less expensive plan, and paying for their own preventive care.


How Do My Current Premiums Compare to New Plans?


A grandfathered plan could offer lower premiums because it doesn’t have to include all health care reform required benefits.  The numerous mandates and requirements on new plans are expected to result in large premium increases in 2014.


I recommend being cautious about dropping a grandfathered plan because you won’t be able to get it back once you cancel it or stop paying the premiums.  I think new plans will be more expensive than many grandfathered plans because applications from people who are sick cannot be declined in 2014.  The huge influx of people who need health care is going to put massive upward pressure on premiums.  But the only way to make a smart decision is to compare your current rates with what a new plan would cost.


There’s a similar issue, though not as immediate, with grandfathered plans.  Because these policies are no longer being sold to new applicants, the premium rates for grandfathered policies will probably ultimately rise.  No healthy, young people will be buying those plans, but aging policyholders will need more health care. So ultimately, you may end up eventually changing to a new plan anyway.


Will My Present Plan Qualify for Minimum Coverage in 2014?


Essential benefits to be offered by all newly issued plans next year are still being debated. States have already begun to make different decisions about what basic coverage will be required from plans in their territory.  Some changes taking place in 2014 may be limiting. Your current policy may offer you greater options with provider choices, prescription benefits and more.


If you have a grandfathered plan, then you can keep it even though it will not meet minimum coverage requirements in 2014.  If your coverage started after March of 2010, then you will be forced to get a new plan.


Right now I’m keeping my grandfathered plan.  We’ll see how things play out…


4 thoughts on “Should You Keep Your Grandfathered Health Insurance Plan?”

  1. Mike P says:

    Of course it is in the best interest of the insurance company to cancel any policies to steer them into the 2014 rates. I set mine up in 2009, what recourse if any do we have to fight or appeal the decision from BCBS to attempt to cancel any policies which legally apply for grandfather status? My specific issue is with Michigan.

    2014 Coverage is down right horrible. Most deductibles range from 8000 to a whopping 12,000 a year. In addition to premiums based on my rate (family self-employed HSA) are increasing a stratospheric 250%. My “old” one is 5000.

    Any state regulator’s office or appellate system information would be greatly appreciated to force them to legally retain what they are required to instead of turning me into a cash cow.

  2. Wiley Long says:

    Hi Mike,

    Yes, it is unfortunate that BCBS is canceling all their current policies at the end of this year. Because you are correct, new rates are going to be much higher, particularly for those who do not qualify for a subsidy to help them pay for their premiums.

    Keep in mind you’re not required to stay with BCBS. Your best bet is to look at rates from several companies. One word of caution – check out the doctor network closely. Many plans will have much smaller networks of doctors and hospitals to choose from, than has been the case.

  3. joel says:

    I have a grandfathered HSA plan, 8000 dollar deductible, and have seen the rates go up 15% the past two months. I am under the impression that there is NO protection for what they can do to my rates, and, we can anticipate more people will leave grandfathered plans (obviously, since you can’t join them) which will of course pressure rates up.

    I have read that rates on plans like mine have risen a higher percentage over the last few years, even though utilization for plans like mine is less than HMO style plans. Sad, but true. I have no doubt BCBS folks can see this, and are fine with it.

  4. Wiley Long says:

    Joel, yes, older plans have gone up more over the years, as healthy people leave them and unhealthy stay, causing claims to increase. Now, however, we are expecting an opposite trend – unhealthy people signing up for new guaranteed issue plans, healthy people staying with grandfathered plans. If that occurs, we may expect grandfathered plans to maintain lower rate increases.

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