An ACA grandfathered health plan is any individual or group health plan that was in continuous existence on March 23, 2010, the day the Affordable Care Act was signed, and has not since made changes large enough to forfeit that status under . Grandfathered plans are exempt from several ACA consumer protections that apply to all Marketplace plans and other non-grandfathered coverage.
Key Takeaways
- An ACA grandfathered plan is any individual or group health plan that existed on March 23, 2010 and has not made disqualifying changes. The regulatory basis is 45 CFR 147.140.
- Grandfathered plans are exempt from zero-cost preventive care coverage, which is one of the most visible ACA consumer protections for clients enrolling in non-grandfathered Marketplace plans.
- Plans lose grandfathered status permanently once they make changes that cross specific thresholds: significant benefit cuts, cost-sharing increases beyond the formula in 45 CFR 147.140, or changes to annual dollar limits.
- By 2023, roughly 13 percent of covered workers were in grandfathered plans, compared to 56 percent in 2011. The Marketplace exclusively offers non-grandfathered plans.
- For clients moving from a grandfathered employer plan to the Marketplace, a benefit comparison covering preventive care, appeals rights, and annual limit protections belongs in the enrollment conversation.
What grandfathered status actually means
The ACA grandfathered plan designation was a legislative accommodation. When the ACA passed in 2010, Congress allowed plans already in existence to keep running without immediately adopting every new consumer protection, on the theory that disrupting coverage people already had would be more harmful than phasing in protections over time. The regulatory implementation is 45 CFR 147.140, which specifies exactly which changes cause a plan to lose grandfathered status.
The share of workers in grandfathered plans has declined steadily. In 2011, about 56 percent of covered workers were in grandfathered plans, according to the KFF Employer Health Benefits Survey. By 2023, that figure had dropped to roughly 13 percent. Individual grandfathered plans are functionally extinct. For most brokers, grandfathered status is a large self-funded employer plan question, not a Marketplace question. All Marketplace plans are non-grandfathered by definition.
Which ACA protections grandfathered plans skip
The exemptions are specific and some are significant for clients. The most practically important is preventive care. Non-grandfathered plans must cover USPSTF A and B preventive services with no cost-sharing. Grandfathered plans are not required to do this and may charge whatever their pre-2010 cost-sharing structure specified. A client on a grandfathered employer plan may be paying a $40 copay for an annual physical that would cost nothing on any Marketplace plan.
| ACA protection | Grandfathered plans | Non-grandfathered plans |
|---|---|---|
| Preventive care at zero cost-sharing | Not required. Plan may charge copays, deductibles, or coinsurance for preventive services. | Required. All USPSTF A/B services and ACIP immunizations must be covered with no cost-sharing. |
| Annual dollar limits on Essential Health Benefits | Group grandfathered plans may maintain annual dollar limits. Individual grandfathered plans may also maintain limits that predate 2010. | Prohibited. No annual dollar limits on any EHB. |
| Internal and external appeals | Not required for individual grandfathered plans. Group grandfathered plans have reduced requirements. | Required. Full internal appeals and independent external review rights apply. |
| Guaranteed issue and renewability | Individual grandfathered plans are not subject to guaranteed issue. Carriers could decline applicants. | Required. Carriers must accept all applicants regardless of health status during OEP or SEP. |
| Age rating limits (3:1 ratio) | Not required. Plans may rate older enrollees more than 3x the youngest adult rate. | Required. Oldest enrollee can be charged no more than 3x the youngest adult rate. |
| Lifetime limits on EHB | Prohibited. Lifetime limits were banned for all plans, including grandfathered plans, under ACA. | Prohibited for all plans. |
| Coverage of adult children to age 26 | Required. This protection applies to all plans, including grandfathered group plans. | Required for all plans. |
| Preexisting condition exclusions | Prohibited for all plan years after 2014. Applies to all plans including grandfathered. | Prohibited for all plans. |
Note that some ACA protections apply to all plans regardless of grandfathered status. Lifetime limits on essential health benefits are prohibited across the board. Coverage of adult children to age 26 applies to all plans. Preexisting condition exclusions are prohibited for all plan years after 2014. Grandfathered plans are not a full exemption from the ACA; they are a partial exemption from a specific list of provisions.
How a plan loses grandfathered status
The thresholds are in 45 CFR 147.140 and they are precise. A plan that crosses any one of them loses grandfathered status permanently, even if the change is later reversed. The five categories that matter most for employer plans are benefit cuts, cost-sharing increases, contribution changes, annual limit changes, and insurer changes.
| Change type | Disqualifying threshold | Result |
|---|---|---|
| Raise coinsurance percentage | Any increase above the coinsurance rate in effect on March 23, 2010 | Grandfathered status lost immediately |
| Raise fixed-amount cost-sharing (copays, deductibles) | More than medical inflation plus 15 percentage points above the March 2010 level | Grandfathered status lost when the threshold is crossed |
| Cut benefits for a specific condition | Any elimination of benefits for diagnosing or treating a specific condition | Grandfathered status lost immediately |
| Reduce employer contribution to premiums | Drop below the March 2010 contribution rate by more than 5 percentage points | Grandfathered status lost immediately |
| Add or lower an annual dollar limit | Any annual limit changes stricter than what existed on March 23, 2010 | Grandfathered status lost immediately |
The practical implication for large employer plan administrators is that the plan's benefit and cost-sharing history from 2010 forward must be documented and auditable. Many plan sponsors have quietly lost grandfathered status after routine plan design changes and did not update their SPD or notice requirements accordingly. For brokers who service group accounts with grandfathered status, this is a compliance risk worth reviewing annually.
What brokers encounter in practice
Grandfathered status surfaces in two primary broker contexts: a client who has been on a large employer plan for years and is now moving to the Marketplace, and a group account where the plan administrator is confused about which ACA requirements apply.
For the individual transitioning to the Marketplace, the conversation often goes like this: the client has been on the same employer plan since before 2010, has been paying copays for annual physicals, and assumes that is normal. When the broker shows them a Marketplace Silver plan with zero-cost preventive care, the client sometimes asks why the employer plan was not doing the same thing. The answer is grandfathered status. This is also the direction the surprise usually goes: clients moving from grandfathered to Marketplace coverage typically gain benefits, not lose them, assuming APTC is in range.
Quotit and other quoting platforms surface only Marketplace-eligible plans, which are all non-grandfathered. The grandfathered vs. non-grandfathered comparison is not a Marketplace quoting question; it is a group plan consulting question that occasionally precedes a Marketplace enrollment conversation. For the guaranteed issue rules that apply once a client is ready to enroll on the Marketplace, read ACA guaranteed issue and preexisting conditions.
The notice requirement employers often miss
Under 45 CFR 147.140(b)(2), a plan maintaining grandfathered status must include a notice in plan materials stating that the plan believes it is a grandfathered health plan and describing the effect of grandfathered status. This notice must appear in plan enrollment materials and in any summary plan description. Employers who have stopped issuing the grandfathered notice while still operating under the belief that the plan is grandfathered have a compliance problem independent of the benefit structure question.
Brokers servicing group accounts should verify two things: whether the plan administrator has confirmed grandfathered status with a current analysis under 45 CFR 147.140, and whether the grandfathered notice is included in current enrollment materials. If neither has been reviewed since the 2010 regulation took effect, the analysis is overdue.
For clients on non-grandfathered employer plans or Marketplace plans who want to understand what zero-cost preventive care covers, read ACA preventive care and zero cost-sharing.
FAQ
Common questions about ACA grandfathered plan status for brokers and clients.
What is an ACA grandfathered health plan?
An ACA grandfathered health plan is any individual or group health plan that was in existence on March 23, 2010 and has not made changes significant enough to lose that status under 45 CFR 147.140. Grandfathered plans are exempt from several ACA consumer protections that apply to all non-grandfathered plans, including the requirement to cover preventive services at zero cost-sharing and the prohibition on annual dollar limits for essential health benefits in certain plan types.
Can a client on a grandfathered plan be charged for preventive care?
Yes. Grandfathered plans are not required to cover preventive care at zero cost-sharing. A client on a grandfathered employer plan may face copays, deductibles, or coinsurance for routine physicals, colonoscopies, mammograms, and other services that would be covered at zero cost on any Marketplace plan. This is one of the most common surprises for clients transitioning from an old employer plan to a Marketplace plan, where the direction of surprise is usually favorable.
Are any individual market grandfathered plans still active?
Very few. Individual grandfathered plans have declined to near-zero market share. Most were small-pool plans from individual insurers that either changed their benefits over time (losing grandfathered status) or were discontinued when the issuer exited the market. Clients asking about individual grandfathered plan status are almost certainly not on one. Broker encounters with grandfathered status today are almost exclusively in large self-funded employer plans.
Does grandfathered status protect a plan forever?
No. Grandfathered status is conditional on the plan not making changes that cross the thresholds in 45 CFR 147.140. Once a plan makes a disqualifying change, it permanently loses grandfathered status and must comply with all ACA requirements from that point forward. The plan cannot revert to grandfathered status even if the change is reversed. In practice, most employer plans that have maintained grandfathered status for 15 years have been very careful about benefit and cost-sharing changes.
If a client leaves a grandfathered employer plan for the Marketplace, what changes?
Several things change in the client's favor. Marketplace plans cover preventive care at zero cost-sharing, prohibit annual dollar limits on essential health benefits, and provide full internal and external appeals rights. The client also gains access to APTC if their income is in range, which a grandfathered employer plan does not provide. The main potential downside is provider network continuity: the client's current specialist may not be in-network on available Marketplace plans in their area.
