What is considered a grandfathered policy?

A grandfathered policy refers to health insurance plans that were in effect before the Affordable Care Act (ACA) was enacted on March 23, 2010, and have not had significant changes that would cause them to lose this status. The concept of grandfathering is important because it allows these pre-existing plans to avoid certain requirements of the ACA, such as the mandates for essential health benefits, preventive services without cost-sharing, and limits on out-of-pocket expenses.

Grandfathered plans can continue to operate under the guidelines that existed before the ACA, giving them flexibility and potentially lower costs compared to plans that must comply fully with the ACA regulations. However, to maintain their grandfathered status, the plans must not undergo major modifications that would alter the coverage or benefits provided, making them different from the original plan. This distinction is critical in understanding the ongoing regulatory landscape surrounding health insurance in the United States.