6 Ways a Health Plan Can Lose ‘Grandfather’ Status Under ACA

The Affordable Care Act (ACA) imposes a large number of mandates on employers. But according to the terms of the law, most health plans that were purchased prior to March 23, 2010 are exempt from some of these provisions. They don’t have to offer the same selection of benefits or protections as do newly-offered plans. Indeed, they are exempt from these 13 additional requirements and mandates under the ACA:

  • Annual reporting
  • New government reporting
  • First dollar coverage
  • Prohibition of discrimination against pre-existing conditions
  • Guaranteed underwriting
  • Requirement to allow any willing provider to provide services
  • Emergency services
  • Maximum age-related premium differential of 3:1 (5:1 for smokers)
  • Claims review
  • Prohibition of lifetime caps
  • Gender-defined premiums. Non-grandfathered plans must underwrite based on ‘unisex’ premiums

Under certain circumstances, a plan may lose its ‘grandfathered’ status under the ACA, which would then trigger an obligation by the plan sponsor to bring group health plans into compliance with the ACA’s provisions for newer plans.

Cost-Sharing or Co-Insurance Increases

Any increase in your plan’s co-insurance amount, however small or trivial, will trigger the loss of your group plan’s ‘grandfathered’ status in the ACA, and therefore trigger a number of additional requirements and mandated coverage.

Deductible Increases

If you increase your plan’s deductible amounts by any amount that exceeds ‘medical inflation,’ plus 15 percentage points, the U.S. government will deem that to be a material increase, and therefore will deem your plan to be out of compliance with the ACA.

Out-of-Pocket Expense Increases

The same will apply to any ‘out of pocket’ maximums: If your plan increases them by an amount over medical inflation plus 15 points, your plan will lose its ‘grandfather’ status, and you will have to comply fully with the employer mandates of the ACA.

Withdrawing or cancelling benefits treating or diagnosing a specific medical condition

If your plan used to cover hair loss treatments, or drug addiction, or any other medical condition, and you change plans or your carrier withdraws benefits related to that particular condition, your plan will lose its grandfathered status under the terms of the ACA.


If you reclassify employees in such a manner as to qualify your employees for a different plan – even a grandfathered plan – without a legitimate employment reason, you will lose your plan’s grandfathered status.

Employer Contribution Changes

If your employer portion of premium payments goes down by more than five percentage points, your plan will likely lose its grandfathered status under the ACA. The change is measured for each tier of coverage. So if used to cover 60 % of total premiums for employees enrolled in bronze-level coverage, but you make no changes in silver- or gold-level coverage, your whole plan may lose its grandfather status.

Failure to maintain at least one person on the plan

If a plan has no enrollees, it’s no longer grandfathered.

Have more questions about your plan’s “grandfathered” status under the ACA , contact Doeren Mayhew Insurance Group’s employee benefit specialists to help you maintain it.