Hold ‘em or Fold ‘em?

Posted by Phil Dougherty
October 15, 2013

Remember during the healthcare debate when President Obama was under pressure to allow people to keep their existing plan if they wanted to?  Well, in the healthcare bill there is a provision for that but it does not apply to everyone. If you are covered under a policy that was in effect prior to the healthcare bill passing (March 23, 2010), then your plan is considered “grandfathered” and you can keep it and not have to turn it in for an ACA-compliant plan. Plan members will be notified by their carrier if they have a grandfathered plan they can keep. The question is, do you hold it or fold it?

Continuing with the poker analogy, we suggest for the time being you “check” until we learn more.  Here’s why.

Cost.  Those who have stayed with grandfathered plans have suffered many a rate increase over the years.  Could it still be a better value than what’s coming? Possibly. We’ve talked with many people during the first weeks of Obamacare and found those, who don’t qualify for a premium subsidy, have received notices of higher rates, some substantially higher. Your grandfathered plan could be lower in premium than an ACA-compliant plan.

Providers.  Perhaps as important is the “trimming” of provider networks. In an effort to be more price-competitive, carriers have negotiated lower fees for services, which resulted in fewer contracted doctors and hospitals. Many existing Blue Shield, Anthem Blue Cross, or HealthNet members may get a shock when they learn their preferred doctor or hospital are no longer participating next year. Seeing non-network providers will result in reduced coverage and in some cases, no coverage at all. Grandfathered PPO plans will maintain their large statewide provider networks. 

Coverage. We know reform plans are comprehensive and must include coverage for a list of essential benefits. (See my August 12 blog posting, Health Care Reform. Making good choices.) But when comparing grandfathered plans with comparable ACA-compliant plans, we’ve seen many cases where the out-of-pocket limit is higher in the reform plan. The out-of-pocket limit is the maximum amount one has to spend in a calendar year. A grandfathered plan may offer better coverage in the event of a catastrophic claim than an ACA-compliant plan.  

So, your grandfathered plan has value and it’s important to understand what you would be giving up if you decided to move to a reform plan. You could be paying more money for less coverage and with fewer providers. Until you have researched and are comfortable with the differences in cost, provider network, and plan benefits, we recommend you “hold ‘em”. 

We’ll be happy to help you review your options to make careful decisions.

Phil Dougherty