Here’s the question of the day: If you have a choice (and you many not for long because companies are abandoning grandfathered plans) Should you skip Obamacare and keep your old plan?
Any policy in place on March 23, 2010, the day health reform was enacted, falls under the grandfather exemption. As the Obama administration put it, if you like your plan, your doctor or both, you can keep them. Last year some 60 percent of employers, large and small, offered at least one grandfathered plan during open enrollment, according to the Kaiser survey. New employees can also join a grandfathered plan so long as the company has maintained consecutive enrollment in it.
For old plans as well as new ones, premiums are likely to rise next year – though the old plans still could be considerably more affordable than the newer ones.
Technically, a plan can stay grandfathered indefinitely, but few, if any, will. Most grandfathered plans have gone away already, according to the human-resources consultancy Mercer, which estimates only about a third of employers are expected to offer one in 2013.
Across the board, it is costs that will lead to the disappearance of most grandfathered plans. If employers or individual plans want to keep grandfathered status, they will have little leeway to pass higher costs along to policyholders. Any policy that increases co-payments, deductibles or co-insurance forfeits its grandfathered status.
- Grandfathered plans don’t have to provide full, co-payment-free coverage of preventive services, such as flu shots, mammograms and cholesterol screenings.
- Grandfathered plans don’t have to cover a government-designated “essential benefits package” of procedures and treatments.
- Grandfathered plans may require prior authorization for out-of-network emergency care, unlike with new plans.
- Grandfathered policies bought by individuals carry their own exclusions, like a $750,000 annual cap on reimbursement for the aforementioned essential benefits, including hospitalization, emergency services or pediatric care.
- The online insurance broker eHealthInsurance found that premiums were 47 percent higher and deductibles were 27 percent lower than for individual plans that will incorporate all of PPACA’s new rules.
- Average monthly premiums for individuals in plans without the newly required benefits — the closest equivalent to grandfathered plans — were $190 versus $279. Average deductibles for individuals were $2,257 versus $3,079.
Obamacare Lie: “You Can Keep Your Existing Plan”
That difference in monthly premiums of $190 vs. $279 will entice many to keep their existing plan, assuming it is still offered. However, that setup won’t last very long because companies cannot raise premiums on grandfathered plans.
Simply put, Obama lied when he said “you can keep your existing plan“, knowing full well the law was purposely written to make sure that would not happen over time.
Eventually you will be stuck with a new Obamacare plan and higher premiums whether you like your existing plan or not.
Mike “Mish” Shedlock