Will your employer continue to offer grandfathered health insurance coverage?

By: Molly Edmonds

Employers and Grandfathered Health Plans: What Small Businesses Say

Some critics wonder if the new regulations unfairly target employers of small businesses, such as this restaurant owner.
Some critics wonder if the new regulations unfairly target employers of small businesses, such as this restaurant owner.
Jupiter Images/Thinkstock

As we mentioned on the first page, it's impossible to know how many companies will elect to keep their grandfathered plans. The Chamber of Commerce estimates that enacting all of the new rules under the Affordable Care Act could raise costs between 1 and 3 percent, a cost that small businesses in particular would like to avoid [source: Johnson]. But small businesses are already facing steep cost increases -- between 10 and 20 percent -- for their current insurance plans next year [source: Johnson]. Since small business owners can't substantially restructure the cost-sharing agreements, lest they lose grandfathered status, current plans may prove too expensive to keep.

Small businesses are eligible for a new tax credit under the Affordable Care Act, which may help alleviate some of the financial strain, but the White House admits that many of them may not be able to continue to offer their current coverage. Rather than seeing this outcome as a broken campaign promise, the administration sees it as a good thing for consumers. In 2014, the health insurance exchanges will be open, and small businesses will be able to get much more competitive rates than they're able to get now. For example, the non-partisan Congressional Budget Office (CBO) estimates that premiums in the exchange in 2016 will be 14 to 20 percent lower than they would have been without the new exchange [source: Department of Health and Human Services]. Additionally, these new plans will include all of the benefits in the Affordable Care Act.


What larger employers will do is also up in the air. Though the White House estimates predict that most large employers will keep grandfathered status -- and large employers already tend to offer most of the Affordable Care Act's benefits, such as preventive care -- a survey by human resources consulting firm Hewitt Associates shows otherwise. The survey of 466 companies revealed that most employers planned to lose grandfather status, a finding that Hewitt attributed to an employer's desire to have flexibility over changing the cost structures of the plan.

Stay tuned to see how these new regulations will affect the landscape of insurance in this country. Discovery Health will always bring you the latest in the health care reform debate; to learn more about this issue, see the links below.

Related Articles


  • Andrews, Michelle. "Will My Premiums Rise Because of the New Law?" New York Times. June 22, 2010. (Aug. 25, 2010)
  • Brin, Dinah Wisenberg. "'Grandfathered' Health Plans Less Inviting For Some Employers." Wall Street Journal. Aug. 25, 2010. (Aug. 25, 2010)
  • Hewitt Associates. "Nine out of 10 U.S. Companies Anticipate Losing Grandfather Status Under Health Care Reform, According to New Hewitt Survey." New York Times. Aug. 10, 2010. (Aug. 25, 2010)
  • Johnson, Avery. "Draft Health Rules Set Hurdles." Wall Street Journal. June 12, 2010.
  • Johnson, Avery. "Firms Find Changing Insurance is Trickier." Wall Street Journal. June 23, 2010. (Aug. 25, 2010)
  • "Keeping the Health Plan You Have: The Affordable Care Act and "Grandfathered" Health Plans." U.S. Department of Health and Human Services. (Aug. 25, 2010)
  • Mandelbaum, Robb. "Small Firms May Not Keep Current Health Plans After White House Decision." New York Times. June 15, 2010. (Aug. 25, 2010)
  • Pear, Robert. "New Rules on Changes to Benefits." New York Times. June 14, 2010. (Aug. 25, 2010)
  • Pickert, Kate. "How Health Reform Will Impact Existing Plans." Time. June 24, 2010. (Aug. 25, 2010),8599,1999208,00.html
  • Serafini, Marilyn Werber. "Heartburn Over Grandfathering." National Journal. June 21, 2010. (Aug. 25, 2010)