What is a grandfathered plan under ACA?

What is a grandfathered plan under ACA?

• A. A plan exempt from all ACA rules if no changes are made.
• B. A plan that always remains grandfathered regardless of changes.
• C. A plan that is grandfathered only for retirees.
• D. A plan exempt from some ACA rules if no major benefit or contribution changes are made; most plans are no longer grandfathered.

Answer: (D)

Grandfathered status means a plan existed before the ACA and has not made major changes to benefits or employer contributions. Because of that, it’s exempt from some ACA requirements for as long as those conditions hold. If the plan later changes benefits or how much employees pay in, it loses that status and must comply with the full ACA rules. Over time, many plans have altered their terms, so only a subset remains grandfathered. That’s why the best description is that a grandfathered plan is exempt from some ACA rules if no major benefit or contribution changes are made; most plans are no longer grandfathered.

Grandfathered status means a plan existed before the ACA and has not made major changes to benefits or employer contributions. Because of that, it’s exempt from some ACA requirements for as long as those conditions hold. If the plan later changes benefits or how much employees pay in, it loses that status and must comply with the full ACA rules. Over time, many plans have altered their terms, so only a subset remains grandfathered. That’s why the best description is that a grandfathered plan is exempt from some ACA rules if no major benefit or contribution changes are made; most plans are no longer grandfathered.