By Louise Norris

healthinsurance.org contributor

March 22, 2016

If your current health insurance policy is not grandfathered but was in effect prior to 2014, your plan is considered a transitional, or “grandmothered” policy. These plans are not fully ACA-compliant, and were purchased between March 23, 2010 – when the ACA was signed into law – and October 1, 2013 (in some states, policies purchased through December 31, 2013 are considered grandmothered).

They are different from grandfathered plans, which are policies that were already in force on March 23, 2010. Grandfathered policies are allowed to remain in force indefinitely, without having to become fully compliant with the ACA, as long as they don’t make changes that would substantially cut benefits or increase costs for insureds. Although most of the ACA’s regulations do not apply to grandfathered plans, they do have to adhere to some provisions of the healthcare reform law.  

What grandmothered plans must cover

Grandmothered plans must to comply with more ACA regulations than grandfathered plans. These include covering preventive care with no cost-sharing, and eliminating annual benefit limits for any essential health benefits(EHBs) that the plan covers (grandmothered plans are not required to cover EHBs other than preventive care, but if they do provide coverage, they cannot place an annual dollar limit on it).

Individual grandmothered plans must also comply with mental health parity rules starting with plan years that began on or after July 1, 2014. In addition, in the small group market, grandmothered plans cannot have pre-existing condition exclusions, or benefit waiting periods that exceed 90 days. But in both the individual and small group market, grandmothered plans are exempt from some of the main consumer protections and mandates in the ACA, most of which went into effect on January 1, 2014.

How grandmothered plans came about

There was nearly a four year gap between the passage of the ACA and the bulk of the implementation at the start of 2014. During that time, hundreds of thousands of new individual and small group policies were sold. Originally, the plan was that all existing, non-grandfathered policies (ie, the ones that had become effective after March 23, 2010) would have to be swapped for ACA-compliant coverage as January 1, 2014, or in some states, as of their 2014 renewal date.

Then in the fall of 2013, the Obama Administration announced a transitional relief program that would let states and carriers allow these individual and small group policies to early renew at the end of 2013 (regardless of when the plans’ original renewal date would have been) and remain in force until their new renewal date in late 2014. This provision had already been adopted by some states prior to the federal announcement, but the HHS announcement caused many states to reexamine the issue.  

This was seen by some as an unfortunate loophole, and a few states had already taken steps in the summer of 2013 to prohibit early renewal. But many states and carriers accepted the new guidelines.

2 more extensions; final expiration date = December 2017

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. Grandmothered plans that were renewed in late 2013 and scheduled to expire in late 2014 (under the terms of the initial transitional relief) were eligible to be renewed instead, if the state and the insurance carrier allowed it. In many states, those plans were once again eligible for renewal in late 2015, and are still in force.

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.

The new extension helps to align the termination date of grandmothered plans with the open enrollment period for 2018 coverage. So instead of having grandmothered plans terminate at their first renewal date after October 1, 2016, grandmothered plans will be eligible for renewal again throughout most of 2017 (up until October 1, 2017). But they must terminate by the end of 2017, regardless of their renewal date.

The provision allowing grandmothered plans to renew up until October 1, 2017 (instead of October 1, 2016) will be particularly helpful for people with grandmothered plans that have renewal dates between October 2 and December 31, and who wish to keep their coverage in 2017. Without the extension that HHS issued in February 2016, all of those plans would have had to terminate in late 2016, as their renewal date would have been after October 1, 2016. With the new extension – assuming states and carriers agree to allow it – those plans will instead be eligible for renewal in late 2016, and will be able to remain in force in 2017.

But by the end of 2017, all non-grandfathered health plans that are not yet fully compliant with the ACA will have to be replaced with ACA-compliant coverage, purchased either on or off-exchange.

It’s important to note that even in states where these plans are still eligible for renewal, they cannot be sold to new customers – all new policies must be fully ACA-compliant.

States allowing renewals of grandmother plans

The transitional relief program leaves the final decisions up to states and carriers. Each state had to decide whether it would allow grandmothered policies to renew again after January 1, 2014, and whether they will allow those renewals to continue as late as October 2017 (with coverage allowed to remain in force through the end of 2017). If a state agrees to allow transitional plans to continue to renew, the final decision is left to the carriers to determine whether to offer those policies for renewal.

35 states have allowed grandmothered plans to remain in force in 2016 and renew one last time as late as October 1, 2016. But many of these states have not yet said whether they’ll go along with the final extension issued by HHS that would allow grandmothered plans to renew as late as October 2017, as long as they terminate by the end of December 2017. This page will be updated periodically to reflect state Insurance Commissioners’ decisions on the final extension.

Grandmothered plans still exist in 2016 in the following states:

• Alabama (plans can remain in force until December 2017. However, Blue Cross Blue Shield, which had 91% of the individual market in Alabama in 2013, decided not to renew non-compliant plans into 2014)
• Alaska (plans can remain in force through December 2017)
• Arizona (plans can remain in force through December 2017)
• Arkansas (plans can remain in force through December 2017)
• Florida (plans can remain in force through December 2017)
• Georgia (plans can remain in force through December 2017; the state did not issue any official guidance on the extension through December 2017, but communicated the information directly to the health insurance carriers)
• Hawaii
• Idaho (plans can remain in force through December 2017. All grandmothered plan renewals on or after August 1, 2016 will have policy periods that extend through December 2017, with a consistent premium. So a plan that renews on August 1, 2016 will be renewed for a period of 17 months, with no rate changes during that time. Idaho has also addressed how accumulation periods for out-of-pocket costs will work on renewed grandmothered plans)
• Illinois (plans can remain in force through December 2017. Health plans cannot impose additional cost-sharing or premium increases in the final months of 2017; the renewal rates and out-of-pocket amounts that apply to the final renewal must be extended through the end of 2017 if the plan remains in force through the end of 2017)
• Indiana (plans can remain in force through December 2017)
• Iowa (plans can remain in force through December 2017)
• Kansas (plans can remain in force through December 2017. The Kansas Insurance Department confirmed by phone that they are going along with the most recent guidance from CMS)
• Kentucky (plans can remain in force through December 2017, per an email confirmation that was sent to carriers; some carriers had previously indicated that they would not allow grandmothered plans to extend beyond their 2014 renewal date).
• Louisiana (plans can remain in force through December 2017)
• Maine (Anthem is the only individual market carrier in Maine carrier with grandmothered plans, and has filed a request to discontinue and replace all grandmothered and grandfathered plans as of January 2017).
• Michigan (plans can remain in force through December 2017)
• Mississippi (plans can remain in force through December 2017; the Mississippi Insurance Department confirmed that the state is going along with the CMS guidance).
• Missouri (as of late May, 2016, the Missouri Department of Insurance had not yet issued further guidance on transitional plans)
• Nebraska (plans can remain in force through December 2017)
• New Hampshire (plans can remain in force through December 2017, but only if they’re renewed on or before January 1, 2017; no transitional plan renewals will be allowed after January 1, 2017 – plans will have to terminate and be replaced with ACA-compliant coverage as of their first renewal after January 1, 2017).
• New Jersey (plans can remain in force through December 2017)
• North Carolina (plans can remain in force through December 2017)
• North Dakota (plans can remain in force through December 2017; no additional bulletins were issued, but the ND Insurance Department confirmed that the state will follow the latest guidance from CMS).
• Ohio (plans can remain in force through December 2017)
• Oklahoma (plans can remain in force through December 2017)
• Pennsylvania
• South Carolina (plans can remain in force through December 2017; 11 carriers opted to go along with the initial transitional relief, seven in the individual market, and six in the small group market).
• South Dakota (plans can remain in force through December 2017)
• Tennessee (Department of Commerce and Insurance confirmed that plans can remain in force through December 2017. However BCBS, which insured 42% of the individual market in 2013, only renewed grandmothered plans through 2014).
• Texas According to the Texas Department of Insurance, “there is nothing in Texas law prohibiting a carrier from renewing policies that are compliant with Texas requirements.” The state has not put out any official guidance on the latest extension rules from CMS, but they confirmed that carriers are free to follow the CMS guidance if they wish.
• Utah (plans can remain in force through December 2017; Utah code 31A-30-117(3) allows non-grandfathered health plans to remain in force “to the extent permitted by the Centers for Medicare and Medicaid Services, so the extension issued by CMS in February 2016 is applicable in Utah).
• Virginia (plans can remain in force through December 2017. Legislation was passed in November 2014 that allowed for the renewal of non-ACA-compliant plans, but as it was very late in the year by that point, most carriers did not reverse course and allow those plans to renew for 2015.Golden Rule did, although the Bureau of Insurance noted that they were the only individual carrier to do so, and their enrollment is small; the Bureau of Insurance did say that some small group carriers may have extended transitional plans in the state, but they don’t track that).
• West Virginia (the WV Office of the Insurance Commissioner confirmed by phone that West Virginia is allowing small group transitional plans to remain in force until as late as December 31, 2017, but only if they’re renewed by January 2017. Renewals will not be permitted after January 2017. There are no longer any transitional individual market plans in West Virginia, as carriers have terminated those plans and replaced them with ACA-compliant plans instead. The state also filed a lawsuitagainst HHS over the extension of transitional plans in 2014).
• Wisconsin (plans can remain in force through December 2017)
• Wyoming (Plans can remain in force through December 2017; Wyoming did not issue a written statement either way, which means they defaulted to the final extension issued by CMS).

States not permitting renewals of grandmothered plans

Fifteen states and the District of Columbia have not extended renewals of non-ACA-compliant plans. In most cases, this was effective as of 2014, although Oregon and Colorado allowed grandmothered plans to remain in force through the end of 2015).

• California (grandmothered small group plans were allowed to remain in force through the end of 2015).
• Colorado (The state allowed renewal through 2015, but not into 2016.)
• Connecticut (CT’s insurance commissioner confirmed the state made no changes after the March 2014 announcement from HHS.)
• Delaware
• District of Columbia
• Maryland
• Massachusetts
• Minnesota (Non-grandfathered plans were required to be updated in order to become compliant with the ACA as of January 1, 2014. Carriers in Minnesota were not permitted to cancel coverage unless they left the market entirely.)
• Montana (state regulators didn’t prohibit renewal of grandmothered plans, although they did encourage carriers to switch to ACA-compliant plans instead of renewing grandmothered plans.  Ultimately, all individual market carriers decided to switch to ACA-compliant plans, so there are no grandmothered plans in Montana)
• Nevada
• New Mexico (plans cannot be renewed after the end of 2014, but may continue to exist until their 2015 renewal date.  At that point, they must be replaced with an ACA-compliant plan)
• New York
• Oregon (Grandmothered plans can only remain in force through December 31, 2015.)
• Rhode Island
• Washington
• Vermont (The state allowed 2013 plans to be extended only briefly, until March 31, 2014.)