Advantages of Grandfathered Plans

-Full nationwide network: You can usually see in-network providers all over the US plus you are tapping into the largest/full network vs. ACA plans that have smaller networks. This means that a lot more doctors and hospitals will be contracted with grandfathered plans. This is by far, the most important advantage.

-Insurance companies can’t significantly change your plan benefits: Your deductible, co-pays, and co-insurance won’t change much from year to year, if at all. Exceptions do all, but in California most carriers haven’t modified grandfathered plans since 2012.

-Some misc. coverage is better: Some grandfathered plans have better coverage when it comes to misc. items such as cochlear implants and other rare services.

Disadvantages of ACA Plans

-Smaller / Narrow Network: Most individual ACA plans use a smaller PPO or HMO network meaning that there are less contracted doctors and hospitals. When considering moving from a grandfathered to ACA plan, it’s critical to ask your agent to check your doctors or for you to do some homework by calling them directly.

-Limited services outside of California: As of 2020, ACA plans only fully work in California. Outside of California, most plans only work for emergency rooms, pharmacies, telemedicine, and sometimes urgent care.

-Open enrollment and Qualifying Life Events (QLE): Plan changes or new enrollments are typically only allow during the open enrollment (typically October 15 - January 15). Outside of this window, a Qualifying Life Event or special valid excuse is required to sign up or add family members and the excuse needs to have occurred in the last 60 calendar days. The most common excuses are losing group health insurance (losing or quitting a job), getting married/divorced, having/adopting a child, losing Medi-Cal, moving states or back to the US, or turning 26 and getting kicked out of the parents’ plan. For more info, please send us a message with your situation.

Disadvantages of Grandfathered Plans

-Rate increases and potentially no transfer opportunities: Since new, healthy people cannot be added to grandfathered plans, the pool of members is essentially an aging pool which has higher claims utilization year after year. As such, insurance companies will probably have to keep increasing the rates which tend to happen at odd times of the year (typically April or May). In our experience, the average rate increase seems to have about 20% every year. Also, sometimes it’s not possible to move from a grandfathered to an ACA plan outside of the ACA open enrollment (typically October 15 - January 15), thus if someone expirences a rate increase outside of that window, they may be stuck in their grandfathered plan until the next ACA open enrollment.

-Extra Premium / Rating Load: Grandfathered plans were subject to medical underwriting at the time of the application which means that insurance companies determine someone’s rate based on their health history. A lot of people don’t realize that they might still have an “extra premium load” on top of the regular base rate. The ratings were as follows: +0% (standard rate), +25%, +50%, +75%, +100%, and sometimes even more. This extra load stays forever on the policy unless someone requests a review to have it reduced or removed.

-Annual Out-of-pocket maximum: On most grandfathered plans, meeting the out-of-pocket max doesn’t fully mean you don’t have to pay. On a lot of plans, you still have to continue to pay for medications and other misc. items. It’s a strange reality.

-Annual check-ups: NOT free like ACA plans. There is usually a small co-pay for annual physicals.

-Birth control: NOT free like ACA plans.

-Payment grace period: Typically 30 days, sometimes 60 days.

-Can’t add future family members: Future spouses or children cannot be added to a grandfathered plan, they must have an ACA plan.

What should you do?

Sometimes grandfathered plans make financial or logical sense.

And sometimes ACA plans make more financial or logical sense. However, little by little, more and more people are switching to an ACA plan mainly because the rate increases in grandfathered plans are too much for most people.

The only way to get a straight, professional answer is to send us a message. We provide free in-depth comparisons and let you decide without any sales pressure. Just the facts.