2016 Employer Health Benefits Survey
Section Thirteen: Grandfathered Health Plans
The Affordable Care Act (ACA) exempts certain health plans that were in effect when the law was passed, referred to as grandfathered plans, from some standards in the law, including the requirement to cover preventive benefits without cost sharing, have an external appeals process, or comply with the new benefit and rating provisions in the small group market. In 2016, 23% of firms offering health benefits offer at least one grandfathered health plan, and 23% of covered workers are enrolled in a grandfathered plan.
Grandfathered Plans: In the employer-sponsored market, health plans that were in place when the ACA was enacted (March 2010) can be grandfathered health plans. Department of Health and Human Services (HSS) rules stipulate that firms cannot significantly change cost sharing, benefits, employer contributions, or access to coverage in grandfathered plans. New employees can enroll in a grandfathered plan as long as the firm has maintained consecutive enrollment in the plan. Grandfathered plans are exempted from many, but not all, of the ACA’s consumer protection provisions.
In responding to the 2016 survey, some employers found it difficult to distinguish between the grandfathering provisions in the ACA and the guidance (sometimes called “grandmothering”) issued by HHS. We would note that smaller firms in particular appear to have some confusion about whether or not they are grandfathered. Many smaller firms, even those offering a health plan in effect in March 2010 (when the ACA was enacted), were unsure about whether their plan was grandfathered.
- Twenty-three percent of offering firms report having at least one grandfathered plan in 2016, down from 35% in 2015 (Exhibit 13.1).
- Twenty-three percent of covered workers are enrolled in a grandfathered health plan in 2016 (Exhibit 13.2).
- The percentage of covered workers enrolled in a grandfathered plan is similar to 2015 (25%), but down from 36% in 2013, 48% in 2012, and 56% in 2011 (Exhibit 13.4).
- Covered workers in the south are more likely to be enrolled in a grandfathered plan and covered workers in the Midwest are less likely to be enrolled in a grandfathered plan than covered workers in other regions (Exhibit 13.2).