Affordable Care Act…Are You Grandfathered?

If you own a personal health insurance policy, not employer-sponsored group health insurance, AND if your personal health insurance policy went into effect prior to March 10, 2010, AND if you made no changes to your policy after 3/10/2010, such as changing its annual deductible amount or co-insurance percentages, your policy may be “Grandfathered”. Owners of grandfathered personal health insurance policies will not be forced to replace them with “Obamacare” policies in the future.

“If you like your insurance, you can keep your insurance.”…well not so much. Rules imposed by the Affordable Care Act (ACA) demand that personal health insurance policies which became effective after March 10, 2010, non-grandfathered plans, be replaced by health insurance plans meeting requirements imposed by ACA starting in January 2014. However, the effective date of the replacement rule has been postponed twice since ACA became law. Currently that replacement date has been pushed out to 2017. Most health insurance companies have opted to renew such policies through the end of 2015. Call the member service number on your insurance ID card to see what your health insurer intends to do regarding renewal of non-grandfathered policies.

ACA health insurance policies must provide benefits which may or may not be included in pre-2014 health insurance policies…items such as maternity benefits, juvenile vision/dental benefits. Your health history or occupation will not preclude your obtaining ACA health insurance plans. Premium rates are the same for men and women in ACA plans. Only age, number of family members to be covered, your zip code, and tobacco use are considered when determining the amount of premiums to be charged for ACA plans. Insureds’ Annual Out of Pocket claims costs for healthcare services received from in-network providers are capped at $6,350 for singles/$12,700 for a family in 2014. Insurers must pay out at least 80% of each year’s personal plan premium collections to cover claims, retaining only 20% to operate the company. If the claims pay-out is less than 80%, insurers must refund the difference to its policyowners.

Leaving insurers only 20% of premium income to operate the business while mandating they offer health insurance to anyone who applies forces them to seek ways to increase efficiencies and reduce operating costs. Thus ACA health insurance plans offer much less flexibility to their owners. No longer can one buy a health insurance policy containing a selection of annual deductibles and reduce his/her monthly premium by opting for a higher annual deductible. ACA plans contain one annual deductible…take it or leave it. ACA health insurance plans are open-ended…no annual benefit payout maximums. In the past most health insurance policies
expired after paying out a pre-determined dollar amount in benefits, most recently three to five million dollars.

“If you like your doctor, you can keep your doctor, period.”…well, not so much. Most ACA personal health insurance plans contain networks of doctors, hospitals and other healthcare service providers. Obtaining healthcare services from providers outside those networks greatly increases out-of-pocket costs. ACA plan healthcare service provider networks offer fewer choices of providers…and your family doc for the past twenty years may not be in your new ACA plan’s network.

So, if you own a grandfathered health insurance policy think long and hard before replacing it with an ACA compliant policy. Keeping much broader provider networks, avoiding forced-on premium costs for maternity, juvenile dental/vision services, and other add ons, makes owning grandfathered insurance quite attractive for the next several years.

Carpe diam.