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ACA Compliant Plans Not More Expensive

Grandfathered health plans had higher premiums than ACA-compliant ones (Volume 9, Issue 41)

A recent study from the National Opinion Research Center examined premium costs of health plans that were non-compliant with the Affordable Care Act (ACA) under exemptions for small-group and individual-market plans.

Amidst concerns prior to open enrollment in plans after passage of the ACA that individuals and small employers would find transition to ACA-compliant plans disruptive and costly, policymakers announced in 2013 that states would have the option to allow insurers to enroll people in small-group and individual-market plans that did not comply with ACA requirements such as coverage of most essential health benefits.

These plans, known as “grandmothered” plans, took effect between ACA enactment in 2010 and open enrollment in 2013. The ACA also provided exemptions for so-called “grandfathered” plans, which had been in effect at the time of ACA enactment and remained largely unchanged. Grandfathered and grandmothered plans accounted for approximately 65% of enrollment in small-group plans in 2014.

Benefit managers at small employers across the country were interviewed from June through November 2014 on health plan coverage and benefits. In the 40 states where grandmothered plans were allowed, a greater proportion of small employers offered those plans vs. grandfathered or ACA-compliant plans.

Monthly premiums for single coverage for all plans in all states were statistically equivalent. Controlling for region, industry, size, deductibles, and income of the workforce, grandfathered plans had significantly higher premiums than ACA-compliant plans. The majority of covered workers in all plan types were required to meet a deductible before most benefits were covered, and average deductible amounts were similar across categories.

Despite continuing efforts to control healthcare costs and rising health plan premiums, this study suggests that the transition to ACA-compliant plans might not be as disruptive as many small employers may have originally thought. This is especially important considering diminishing prevalence of grandfathered plans in the small-group market and the current date set for phasing out grandmothered plans at the end of 2017.

This Policy Prescriptions® review is written by Chloe Slocum, MD, a 2016-2017 Commonwealth Fund Mongan Fellow in Minority Health Policy at Harvard Medical School and a spinal cord injury physician in Boston, MA.


Many small employers offer employees health plans that are not fully compliant with Affordable Care Act (ACA) provisions such as covering preventive services without cost sharing. These “grandfathered” and “grandmothered” plans accounted for about 65 percent of enrollment in the small-group market in 2014. Premium costs for these and ACA-compliant plans were equivalent. PMID: 28167720

Whitmore, H, et al. Health Affairs. 2017; 36 (2): 306-10.