Grandfathered Health Plans

A grandfathered plan is a group health plan that was in place when President Obama signed the new health care reform law, the Patient Protection and Affordable Care Act (PPACA), on March 23, 2010. Plans remain grandfathered indefinitely unless companies:

Significantly reduce benefits
Increase costs to their employees, or
Reduce how much the employer pays toward benefits

As of November 17, 2010, employers have additional flexibility to keep grandfathered status if they:

Change plan funding from self-insured to fully-insured
Change insurance companies if they offer the same coverage

Grandfathered plans are not required to comply with some of the PPACA provisions. See our timeline for more details.

Weighing the decision to keep grandfathered status
So far, about 80 percent of Cigna clients have given up grandfathered status. Flexibility is the most common reason. For example, many employers want to offer a consumer-driven plan such as one with a Health Reimbursement Account (HRA). These plans can help improve health and better engage employees in their health while lowering costs for both the employer and employees.

As health care reform continues to unfold, employers need to think through whether it’s in their best interest to stay grandfathered.

Cigna is here to help clients assess their plans and costs in order to make the best choices during health care reform.