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Will your employer continue to offer grandfathered health insurance coverage?


Employers around the country have been wondering if they can continue to offer the same health insurance plan under the Affordable Care Act.
Employers around the country have been wondering if they can continue to offer the same health insurance plan under the Affordable Care Act.
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When the Affordable Care Act was signed into law, all Americans with health insurance became eligible for certain customer protections. No longer could insurance companies enforce lifetime limits for coverage or make rescissions of coverage when people got sick. Parents are now able to keep their adult children on their policies until the child reaches the age of 26. But not all of act's provisions affect current insurance plans. During the campaign for health care reform, President Obama frequently said that those who liked their health plan would keep it. Health plans that were in existence when the bill was signed on March 23, 2010, would incorporate the basic consumer protections mentioned above, but nothing else.

In June 2010, the White House released regulations about these so-called "grandfathered" health plans. These plans remain exempt from certain provisions in the Affordable Care Act, such as offering free preventive care, providing a set of minimum benefits defined by the government or establishing an employer's minimum contribution to premiums. But they remain exempt only so long as they don't increase certain costs or cut benefit levels substantially.

At issue here are the more than 170 million Americans who have employer-sponsored insurance. The White House estimates that the 133 million Americans who work for a large employer (defined as a business with more than 100 employees) will see few changes in the next few years, while those who work for small employers will probably transition to a new non-grandfathered plan by 2013. Since it's unclear at this point how many employers will elect to keep their grandfathered plans, the White House released several estimates of how many Americans will be in a new plan by 2013; one mid-range estimate shows that 51 percent of American workers, mostly employed at small businesses, will lose their current coverage [source: Department of Health and Human Services].

Critics of Obama's health care plan claim that this is proof that Obama lied when he said that those who liked their insurance plan could keep it, while supporters say that enforcing the grandfathered regulations will protect consumers from rising costs. So what are these regulations for keeping grandfathered status? Who stands to win, and who's crying foul?


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