What is a “Grandmothered” Healthcare Plan?

According to the most recent Small Business Resource Group survey, 75% of small group plan administrators report that they “don’t know” if their plan is Transition Relief – or ACA. That could be a problem, sooner than you think.

Right before January 1, 2014, when the Affordable Care Act (ACA) was to go into effect for SMALL BUSINESSES, President Obama’s administration announced a transitional relief program that would let states and insurance companies allow these small group policies to early renew at the end of (12/1/2013) and remain in force until their new renewal date in late 2014. In March 2014, HHS extended the transitional relief, permitting renewals as late as October 1, 2016, with the plans allowed to remain in force until as late as September 30, 2017. Then another extension was issued in February 2016, allowing “Grandmothered” plans to continue to renew up until October 1, 2017, but with a termination date no later than December 31, 2017 (carriers can use plan years of less than 12 months, or early renewal as of January 1, 2017 in order to make this work). As was the case with previous extensions, this one is also subject to the discretion of states and health insurance carriers.

According to insurance industry sources, as much as 66% of the small business community took advantage of this opportunity.

HERE IS A SIMPLE WAY TO CHECK: In most cases if your group premiums are age rated (i.e. each person has a rate based on that person’s age) then you don’t have to worry. But, if your rates are still “composite” (i.e. there is a rate for all singles, employees + spouse, Family, etc.) then you probably have a “Grandmothered” plan.

Will you have to worry about this right away? Well, you could have one more unaffected renewal, but as of now, that’s it.

Many small businesses report that they will need to know what the differences are between the two types of plans. There will be premium differences as well as coverage differences.

Learning which of these plans is best for your group will take extra time and analysis.

RECOMMENDATION: Get started now! What I mean to say is, start learning the differences between the two plans. Do projections of premiums. Understand how age rating could affect your cost environment.

The sky isn’t falling….but sometimes it feels that way!