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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Does He Lose Grandfathered Status?

By on | 20 Comments

Question: If a family is on a grandfathered plan and the 26-year-old ages off to his own policy with same plan, does he lose grandfathered status?

Answer: Yes. Because grandfathered plan status in the individual market is based solely on effective date of coverage. It must be before March 23, 2010. In your example, when the 26-year-old purchases his own policy, he will have a new effective date. Likewise, any plan transfers or plan downgrades since March 23, 2010 would have resulted in new effective dates thus loss of grandfathered status.

20 Comments

Hello,

I too have a Blueshield Essentials Plan 1750..I too have been informed that my plan will no longer be available after 12/31/13 (however can extend now until 3/31/13) I also have had my plan since 2008. I asked why my plan is not grandfathered and was told it was because I have added on services. I did not add on any services and am unsure of what services BSCA may have added. The critical issue for me is I live in a rural area near the border of California and Nevada. I receive almost all of my health care in Reno Nevada which is the closest Major Regional Medical Center and the only place to receive any specialist care including Orthopedic care which I desperately need. According to BSCA once I am forced in the the ACA plans rather than my current plan I will no longer be able to receive care in Reno Nevada which is basicly at my door step. I will now be forced to travel a minimum of four hours some of that on dangerous roads to receive the care I need. I have a terminally ill husband at home who is on Medicare and receives his care in Reno Nevada as well. Currently I am able to coordinate my health care with his in on trip to Reno and minimize the time I am away from my full time job. Is there any chance that an exception would be made for these circumstances? There are many folks in my county who face tragic outcomes due to the fact no one can receive care across state lines unless they have a grandfathered plan either individually or through a group. To make matters worse our area has been changed to an EPO. Also should I need emergency care the nearest trauma center IS Reno. I have been informed that in that circumstance I would be air lifted to Reno but would have to pay for ground transport myself to get back in network once stabilized. That bill would be thousands of dollars. How does this help avoid medical bankruptcy? How are providers going to make money under this structure? As it stands Reno Nevada stands to lose a ton of patients.. I just cannon believe the american people were deceived and lied to in regards to being told we could keep our plans and doctors. I am desperately looking for answers and advice on how I can receive the care I need. Why are the people who work hard and pay their premiums the ones who are getting hurt the most. Thank you in advance for any help.

This was to be expected, especially in the individual market. Almost all insurers have chosen to terminate their grandfathered plans beginning in 2014. Why? So they can charge rates that are more in line with the actuarial reality of the ACA — having to provide unlimited lifetime benefits to persons who may have dreadful preexisting conditions, and only being able to charge the oldest persons 3x the premiums of the youngest adults means they have to raise the rates on the youngest people in order to charge what they need for the oldest ones.

Anyone who believed the politicians who told them that the ACA was going to reduce the cost of health insurance does not understand the economics of insurance.

If the CA legislature actually ever gives the insurance commissioner the authority to reject rate increases, things might improve temporarily, but it would also mean more insurance companies than just Aetna and United Healthcare exiting the individual market. But that’s also the goal of the ACA … to force commercial insurers out of the business and leave it up to the federal government to provide health insurance to all of America. In that, we are doomed.

My 30 year old son has been on the Blue Shield of California Essential 300 plan since early 2008. He recently received a notice from Blue Shield that the “plan will no longer be available to you after December 31, 2013”, and that they have a new plan available that meets the ACA requirements. The premium for that plan is a 25% increase and the out-of-pocket maximum increases by 112%. When I asked Blue Shield why his plan wasn’t grandfathered, they said the reason was that they made changes to the plan during or after 2010, which makes it ineligible for grandfathering. It is my understanding that the ACA became law in March, 2010, so Blue Shield obviously must have known that the plan would not be eligible for grandfathering if they made the changes. I am displeased with the fact that Blue Shield likely intentionally made changes in the plan, knowing that it would make it ineligible for grandfathering. What, if any, form of recourse does my son have?

Although your grandfathered plan will be required to provide the “essential health benefits”, it does not have to comply with certain other aspects of the ACA, such as annual and lifetime unlimited coverage for those EHBs. There may be specific other advantages to your grandfathered plan compared to ACA-compliant plans (on or off the exchange), but no one here can tell you because we don’t know what your current plan covers or does not cover.

Your best course of action is to contact a Certified Insurance Agent and go over what you have and compare that to what is available. Then you can make a decision based on apples-to-apples.

I am 29 yrs.old and currently enrolled in a grandfather individual coverage with Anthem, and having economic hardship..but still able to make my premium pmts. Would it be advisable to change my insurance to the new Covered California? I still don’t understand it completely and I am afraid I would loose the protection I have with Anthem… Grandfather vs Covered California???

Hi Sarah.

Yes, I see Health Net is offering new IFP plan effective date coverage up through March 31st, 2014 for current for 4th Quarter HN IFP sales.

Not exactly sure how Health Net is doing this. But I have a clue (though may be off). Today’s Covered California webinar (though it continually cut out I was able to catch some of it and some Q&A), someone at Covered California said something about up to three (3) months to after-the-fact apply for and retroactively acquire health plan coverage, going back up to three (3) months. Maybe Phil and others know more about this, as I too would like more info about this three (3) month retro effective date situation.

Maybe in relation to some rule regarding this three (3) month retro coverage allowance Health Net is able to offer plans three (3) months deep into 2014.

Additionally, as you may know, Cigna’s current non-ACA-compliant IFP plans will remain active through Dec 31st, 2014. Cigna the only California IFP carrier to offer this for current IFP plan members. Cigna is changing its current plans plan-year to Dec 31st, 2013, and then providing a 12 month rate guarantee through the 12 month plan year, and then they tell me, are kicking in one final day of the year (Dec 31st, 2014) to boot.

Michael, I just saw this on the Health Net broker site. How is it that all other carriers will terminate their non-grandfathered individual plans effective 12/13/13 but Health Net is running these until 3/31/14?

For our California Brokers

Health Net has fourth quarter sales opportunities for you! Our Individual & Family (IFP) PPO plans are available for new sales with effective dates from 10/1/13 to 12/1/13.

The PPO plans available for this opportunity are: • IFP PPO Value 4500 and 7500 • IFP PPO Advantage 3500 and 6500

Same great plans, same affordable premiums! Plus, online quoting is also available.

What you need to know

These policies will end 3/31/14. All insureds will receive the required notifications in advance of the policy end date so they can enroll in an ACA-compliant plan, either directly through Health Net or through Covered California – the state’s health insurance marketplace. Insureds must enroll in a new ACA-compliant plan by 3/15/14 for a 4/1/14 effective date to ensure there is no lapse in coverage between plans.

If you have any questions, please contact your sales representative, or you may email our Broker Services department at brokers@healthnet.com.

I stick by my response above. Grandfathering applies to the original plan, not to any single participant. As long as the plan was in place prior to March 27, 2010, it can maintain its grandfathered status — whether it adds new participants or drops dead or departed participants. The ACA does not address the inner workings of grandfathered plans other than the few mandates that apply as far as what must be covered and to what extent. The IRC revokes grandfathered status only if the PLAN undergoes a material change — adding or dropping participants, and reasonable premium increases are not material changes. Raising deductibles or coinsurance, or reducing annual benefit limits are.

The participant’s effective date of coverage has nothing to do with the plan’s inception date and grandfathered status. Think about it this way: Jane and her two children have been covered by a grandfathered plan — she has been a participant since 2008, and her last child was born in 2007. She gives birth to a new child in 2014. Is the child covered by the grandfathered plan or not? Of course it is. Is there a cost for a third child? Maybe, maybe not, but none of that would affect the grandfathered status of the plan.

There is no grandfathering of participants. Perhaps what Anthem and Blue Shield are doing is not allowing a child who ages out to remain on the same grandfathered plan. Except as COBRA applies to an employer-sponsored plan, there is no entitlement to remaining on the same plan, unless the insurer permits it in the contract.

Diana wrote: “Our client is on a Blue Shield individual gf plan… . Blue Shield says he ceases to be grandfathered because he now has his own ID# and contract.” If it’s not the same contract, the discussion is moot.

No one here has read the actual contract of the grandfathered plan to see what it says about conversion (as a Life & Disability Analyst, I read contracts all the time — that’s my starting point — and I find that most agents never do it). I doubt that Diana has either. Get me a copy of the contract, and I can give a definitive answer.

Perhaps we are both right. The Anthem method must be maintaining the original effective date - prior to 3/27/10.

Sorry Phil, with Anthem Blue Cross you are incorrect. There are a variety of ways to preserve grandfathered status with Anthem for those on GF plans including loss of dependent status, additions to the family, policy changes to reduce cost and GF feller-freed class action settlement changes.

As Michael pointed out above, with Blue Shield you get shafted with ANY change that changes the ID number of the policy and renders everyone on the policy NGF if any of those things happen.

Grandfathering is determined by a date not a plan. Any plan can be grandfathered if the effective date of coverage is before March 23, 2010. So the child may remain in the same plan, but with a new policy number and effective date. Therefore, no longer grandfathered.

The 26 year old in the example old can move to the “same plan”, but his effective date of coverage will change to the new date. Grandfathering is determined by an effective date of coverage before March 23, 2010. Regardless of plan, his effective date of coverage will no longer meet grandfathering rules.

Grandfathering is determined by a date not a plan. Any plan can be grandfathered if the effective date of coverage is before March 23, 2010. The 26 year old can age off to the “same plan” but his effective date of coverage will change to the new date.

Diana, you are right, my mistake.

Called Blue Shield and amazingly they do not allow Grandfathered status to be maintained. Any split will maintain GF status for the primary subscriber only, says Blue Shield.

Anthem and Health Net differ, and will allow splits of all members to maintain GF status. However, Health Net made that a mute point as it is now cancelling all its IFP plans come Jan 1st, 2014, GF plans included.

Boy, what a game they play us.

My understanding is that “grandfathered” status applies to the plan not the participant. A grandfathered plan may enroll new members and retain its grandfathered status. If the “child” remains in the same plan, albeit with a different ID #, the plan is still grandfathered.

There could be a significant downside to remaining in a grandfathered plan … the most significant one is the imposition of annual limits on covered essential health benefits. While they cannot impose lifetime limits, the annual limits can remain (any significant increase or decrease in annual limits would cause the plan to lose its grandfathered status), along with preexisting condition exclusions.

The real question is “Does this 26-year-old child want to remain in the same plan or not, and are there other options available that provide a better combination of cost and benefits?”

Our client is on a Blue Shield individual gf plan. Their son is aging off 10/1. Blue Shield says he ceases to be grandfathered because he now has his own ID# and contract. My contention is that he was on a grandfathered plan with family since 2006 and nothing has changed for him, except that he turned 26. He is aging to his own plan, SAME PLAN, with no changes. The way I read guidelines, he qualifies to stay grandfathered. You said that Blue Shield does the same. Same as Blue Cross? Should he qualify to stay grandfathered?

Missing from all of this is any question about whether the “grandfathered” plan is individual or group. If a group plan, the 26-year-old has up to three years of continuation of the grandfathered plan thanks to COBRA. Of course, the 26-27-28-year old “child” would be responsible for paying the individual premium for his COBRA continuation.

Blue Shield does as well.

The answer is actually ‘No’ as I understand the question. You are asking if the 26 year old then separates by aging off the family policy to his or her own SAME plan, the SAME plan which is also the same grandfathered plan but now a separate policy (which the carriers will provide option to do), then ‘No’ he or she will not lose grandfathered status and will have their separate grandfathered plan.

As Phil said, if the 26 buys a new market-available plan, then this new plan will not be grandfathered.

Except Anthem Blue Cross which would move the child to an individual Grandfathered version of the same plan automatically and preserve grandfathered status. The other carriers have no GF go GF provisions for these situations, but Anthem does. I’ve done it for clients dozens of times.

For example: Family on SmartSense 1750 GF, child ages off and is moved to the GF SmartSense 1750 plan as a grandfathered individual.

Anthem has extensive matrices of plan change options from GF to GF plan changes for a variety of situations including loss of dependent status.

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