[Editor’s note: This post was originally published in October 2014, but was updated in September 2015 to reflect additional or changed regulations in some states.]
As we head into the fourth quarter of the year, policy cancellations are once again in the news – although certainly not as much as they were two years ago. The majority of the states have opted to allow grandmothered plans to renew again rather than be cancelled, although carriers in those states must make a business decision as to whether or not they want to continue their grandmothered policies.
Grandmothered – or transitional – plans are those that are not grandfathered but were effective prior to 2014. Grandfathered plans are allowed to remain in force indefinitely, without having to become fully compliant with the Affordable Care Act, as long as they don’t make changes that would substantially cut benefits or increase costs for insureds. Although most of Obamacare’s regulations don’t apply to grandfathered plans, grandmothered plans do have to adhere to some additional provisions of the health law.
Even when policies are cancelled, it’s not necessarily bad news. There’s a very good chance that the policy holder will be able to obtain much better coverage in the exchange, possibly for a lower premium once subsidies are taken into consideration. Nationwide, nearly 84 percent of the current exchange enrollees are receiving premium subsidies. For enrollees receiving subsidies in states using Healthcare.gov, the average after-subsidy premium is $101 per month – significantly lower than the pre-subsidy price of $364 per month, and lower than most grandmothered plans.
So although you may have the option to keep your grandmothered plan in 2016, be sure to shop around during open enrollment before you decide to renew your existing coverage. The new plans offer more comprehensive coverage than most grandmothered plans, and if you qualify for premium subsidies, the price could be significantly lower on a new plan.
Extension of an extension
In the fall of 2013, the Department of Health & Human Services announced a transitional relief program under which states and carriers could allow non-grandfathered individual and small-group policies to renew at the end of 2013 and remain in force until late 2014.
Originally, the idea was that all of those plans would have to replaced with ACA-compliant coverage by the beginning of 2015. But in March 2014, HHS extended the transitional relief, allowing grandmothered plans to renew up until October 1, 2016 and remain in force as late as September 30, 2017.
Under the transitional relief program, the final call on renewing grandmothered plans is up to the states and carriers. Thirty-five states are permitting grandmothered individual plans to renew again in 2016. Carriers in those states have the option of renewing or cancelling their grandmothered plans, so not all grandmothered plans in those states will be available for renewal again this fall. But a lot of them will.
States allowing renewals of grandmother plans
The following states have said that they will allow grandmothered plans to be renewed again this year and remain in force in 2016. For states that do not include links to regulations, I got verbal confirmation from their state insurance commissioners’ offices.
- Alabama (but Blue Cross Blue Shield, which had 91% of the individual market in Alabama in 2013, decided not to renew non-compliant plans into 2014)
- Alaska
- Arizona
- Arkansas
- Florida (Officials confirmed with me by phone that renewals will be permitted through October 1, 2016, but the state has not released any official statements since November, 2013.)
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine (Anthem is the only individual market carrier in Maine carrier with grandmothered plans.)
- Michigan
- Mississippi
- Missouri
- Nebraska
- New Hampshire
- New Jersey
- New Mexico (plans cannot be renewed after the end of 2014, but may continue to exist until their 2015 renewal date. At that point, they must be replaced with an ACA-compliant plan)
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Pennsylvania
- South Carolina
- South Dakota
- Tennessee (renewals are permitted, however BCBS, which insured 42% of the individual market in 2013, only renewed grandmothered plans through 2014).
- Texas
- Utah
- West Virginia (WV said in November 2013 that grandmothered plans would not be allowed to renew in 2014, but reversed course in April 2014, agreeing to allow grandmothered plans to renew as late as October 2016. The state has also filed a lawsuit against HHS over the extension of transitional plans).
- Wisconsin
- Wyoming
States not permitting renewals of grandmothered plans
Fifteen states and the District of Columbia are not permitting renewals of non-ACA-compliant plans. In most cases, this was effective as of 2014, although Oregon and Colorado allowed grandmothered plans to remain in force through the end of 2015).
- California (grandmothered small group plans were allowed to remain in force through the end of 2015).
- Colorado (The state allowed renewal through 2015, but not into 2016.)
- Connecticut (CT’s insurance commissioner confirmed the state made no changes after the March announcement from HHS.)
- Delaware
- District of Columbia
- Maryland
- Massachusetts
- Minnesota (Non-grandfathered plans were required to be updated in order to become compliant with the ACA as of January 1, 2014. Carriers in Minnesota were not permitted to cancel coverage unless they left the market entirely.)
- Montana (state regulators didn’t prohibit renewal of grandmothered plans, although they did encourage carriers to switch to ACA-compliant plans instead of renewing grandmothered plans. Ultimately, all individual market carriers decided to switch to ACA-compliant plans, so there are no grandmothered plans in Montana)
- Nevada
- New York
- Oregon (Grandmothered plans can only remain in force through December 31, 2015.)
- Rhode Island
- Washington
- Vermont (The state allowed 2013 plans to be extended only briefly, until March 31, 2014.)
- Virginia