Obamacare may not have reached your health insurance yet.
It’s been nearly five years since President Obama’s trademark healthcare law was passed, but one out of three or four insurance plans still doesn’t have to fully comply with the law’s requirements for how they must operate and what benefits they must cover.
As the Obama administration implemented the extensive law, government officials and advocates touted its various benefits for consumers. Insurers must now cover certain preventive services, including doctor well visits, without charging a co-pay. They must guarantee access to emergency, pediatric and ob-gyn services. They must allow consumers to appeal if a claim is denied.
But plans didn’t have to start playing by those new rules right away. Instead, they were given what’s called “grandfathered” status, which meant that until they were revised in some way, they could keep the status quo.
That means some Americans who expect their plan to now cover birth control for free, or to remove annual limits on how much it will fork out, may still be disappointed.
“It’s not easy for people to figure out if they’re in this kind of plan,” said Lynn Quincy, associated director of health reform policy for Consumers Union.
And the Obama administration has given even more plans license to abide by the old rules by twice extending the life of individual market plans that would otherwise have been cancelled for millions of people.
Amid the 2013 healthcare.gov failures, Obama announced that states could allow insurers to override their plan cancellations and allow consumers to re-enroll for one more year. A few months later his administration gave plans an additional two years before they must phase out, meaning they’ll still be around through most of 2017.
Experts have estimated that 6-10 million Americans got plan cancellation notices, and a proportion of those re-enrolled, although exactly how many is unknown.
The situation has led to some confusion among some consumers about which benefits their plan offers.
Until recently, Consumer Reports, managed by the Consumers Union, offered a forum on its website called “Ask Nancy,” where visitors could leave questions about their health insurance. The forum was retired in December, but Quincy says one of its top queries was from people who didn’t understand whether or not their plan was grandfathered or one of those formerly cancelled “transitional” plans.
Plans don’t typically volunteer information about whether they comply fully with the Affordable Care Act or whether they’re considered grandfathered or transitional. That’s something for which consumers would typically have to proactively ask. Or they just find out after visiting their doctor and getting a bill.
“If you’re covered under a compliant plan when you go for [an] annual physical, you won’t be charged for that,” said Cheryl Parcham, private insurance program director for Families USA. “Under a grandfathered plan, you might be.”
There’s no 2015 data yet on how many plans are still grandfathered. But an employer survey last year by the Kaiser Family Foundation found that 22 percent of covered workers in large firms and 35 percent of covered workers at small firms enrolled in such plans.
It’s a little harder to tell how many individual market plans still have grandfathered status. Back in 2010, the Department of Health and Human Services estimated that 40 to 67 percent of these plans would no longer be grandfathered by 2014 — meaning anywhere from 33-60 percent might still be grandfathered now.
No one knows for sure when the old plans will be totally phased out, but one thing’s certain: The share of grandfathered plans has been falling and will continue to fall. Under rules laid out by the administration, when a plan makes a change like significantly raising consumers’ out-of-pocket costs for co-payments or deductibles, it loses its grandfathered status.
“I think eventually it will pretty much go down to zero, I just don’t know when that would be,” said Sara Collins, a vice president at the Commonwealth Fund.
In 2011, 72 percent of employers providing workers with health coverage included at least one grandfathered plan among their offerings, according to Kaiser’s employer survey. Last year that dropped to 37 percent of firms.
The new requirements on health insurers have frustrated some consumers who don’t want to pay more for health insurance, since the new plans must cover more benefits and thus charge higher premiums or deductibles to cover the cost.
But advocates for the health care law, who had long worried about the meager benefits of many of the pre-Affordable Care Act plans, are pleased to see the old plans gradually fading away. That’s the ultimate goal of the healthcare law, even though Congress chose an incremental approach when writing it.
That approach, Collins says, was seen as a compromise at the time.
“It was really to strike a balance between allowing people who like their insurance to keep their plans but making sure people would ultimately benefit from the consumer protections and not [be] locked into plans that would deteriorate over time,” she said.
