Grandfathered Health Plans Gain New Flexibility

Their numbers have steadily dwindled but the Trump administration has now taken steps aimed at helping preserve “grandfathered” group health plans a bit longer.

Working in coordination, the departments of Labor, Health and Human Services, and Treasury adopted a new rule allowing such plans to make changes in their cost-sharing arrangements without the risk of losing their grandfather status.

Grandfathered plans are plans that were already in existence on the day the Affordable Care Act was enacted, March 23, 2010. As such, they are able to offer coverage that does not comply with all ACA requirements. For example, they need not include free preventive care to employees. But to stay grandfathered, these plans were limited in how much they could increase premiums (not more than 5 percent annually) and co-insurance or co-pays (no more than the rate of medical inflation).

Until now.

The new rule does the following, among other things:

  • Clarifies that grandfathered group health coverage that is a high deductible health plan (HDHP) may increase fixed-amount cost-sharing requirements, such as deductibles, to the extent necessary to maintain its status as an HDHP.
  • Changes the definition of maximum percentage increases to now rely on the premium adjustment percentage rather than medical inflation.

The rule goes into effect Jan. 14, but the administration included a six-month delay before it is “applicable.”

The Kaiser Family Foundation in 2018 estimated 16 percent of U.S. workers were enrolled in a grandfathered plan, far below a high of about 50 percent before the adoption of the ACA.

Grandfathered plans are only expected to continue shedding enrollees, in part simply because they are not permitted to add new members. 

For the final ruling, click here.

The Mahoney Group is the largest independent insurance and employee benefits brokerage in Arizona. As an employee-owned organization, we’ve been protecting what’s yours since 1915. Contact us at or 480-730-4920.

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.


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