Should I keep my grandmothered individual health policy or switch to an ACA-compliant plan?

Q. I purchased my individual health insurance policy in 2012. My carrier has said I’ll have the option to renew my policy again in December 2016 and keep it until December 2017. Is this a good idea?

A. There’s no one answer to this question. Your plan is considered “transitional,” or “grandmothered,” which means many aspects of it are not ACA-compliant. But it’s up to you in terms of whether you want to keep it for another year or switch now to an ACA-compliant plan.

Transitional plans ending at the end of 2017

Either way, you’ll have to switch at the end of 2017. The most recent federal guidelines for transitional plans (issued in February 2016) allow for renewal as late as October 1, 2017, but all transitional plans must end no later than December 31, 2107.

Transitional plans and the ACA-compliant risk pool

Transitional plans have been partially blamed for the fact that enrollees in the new ACA-compliant risk pool have been sicker than expected. People covered by transitional plans tend to be reasonably healthy, since they were able to obtain medically-underwritten coverage before the ACA’s guaranteed-issue provision went into effect in 2014. Originally, these policy-holders were expected to switch to the ACA-compliant market in 2014 (either at the start of the year, or when their plan ended that year). But instead, the transitional relief that HHS provided has inadvertently harmed the ACA-compliant risk pool by allowing those healthy individuals to remain in a separate risk pool until as late as 2017.

Because of this concern, not all states permitted renewal of transitional plans, even in 2014. Colorado and Oregon allowed grandmothered plans to remain in force in 2014 and 2015, but those plans were not allowed to continue into 2016. In states that did permit transitional plans to renew, some carriers have already opted to terminate their non-ACA-compliant plans and replace them with new plans.

No one-size-fits-all solution

But assuming that you do have the option to keep your grandmothered plan for 2017, the choice is yours. If you’re happy with your current plan and you know that you aren’t eligible for subsidies in the exchange, keeping your plan may be in your best interest. But don’t assume that’s the case even if keeping your plan was the best choice for 2014 through 2016.

Open enrollment for 2017 coverage begins on November 1, 2016. Make sure that you get quotes for new policies during open enrollment so you can compare the plan design and price with what you have now. You might find that you prefer the improved coverage of an ACA-compliant plan, particularly if your current plan experiences a significant rate increase for 2017. If you’ll qualify for income-based premium subsidies or cost-sharing subsidies in the exchange, it’s almost certainly a better option to switch to an exchange plan for 2017.

If you like your current policy and your premium will be significantly lower in 2017 by keeping your existing plan, doing so may make sense. But if you’ve got skimpy coverage, pre-existing condition exclusions, or increased premiums based on medical underwriting, you may find that a new plan – even if it’s more expensive – will provide a better value. This same advice applies to people who have grandfathered plans (coverage that was already in effect when the ACA was signed on March 23, 2010). Just because you can keep your plan doesn’t necessarily mean you should.

If you have questions, a trusted broker can help you compare the plan you have now with the new options that are available in your area during open enrollment. You’ll have until January 31, 2017 to finalize your decision for 2017, although new plan enrollments made in the latter half of January won’t be effective until March 1, which means you’d still have your old plan for the first couple months of 2017.

Find affordable health plans

Since 2008, we’ve helped more than 16 million people.

(Step 1 of 2)

Related terms

cost-sharing subsidies

health insurance exchange

health insurance marketplace

premium subsidies