Why Some Health Insurers Don't Cover Preventive Care

As soon as the provisions of the new health care laws were introduced, my health insurance company sent me a letter stating that my plan’s preventive-care coverage will not change because it has been grandfathered by the health care law. My insurer hasn’t covered preventive care and is using this “grandfather” excuse to avoid paying for preventive-care visits and tests. Can my insurer keep doing that?

The health care law did exclude “grandfathered” policies from certain provisions, including the preventive-care requirements. Grandfathered policies are group or individual policies that have not changed their coverage or out-of-pocket costs substantially since the health care law was passed on March 23, 2010. To qualify for this status, the policies cannot have significantly raised co-payment rates or the percentage of expenses the employee has to cover or lowered the employer contributions to premiums, and they cannot have raised deductibles significantly or tightened the annual limit on the insurer’s coverage. Plans that make any of those changes lose their grandfathered status and must provide some additional coverage. For more information about the definition of a grandfathered plan, see the Keeping the Health Plan You Have factsheet.

It’s a good idea to ask your employer or insurer whether your plan continues to be grandfathered when you get your information about next year’s changes during open-enrollment season this fall. Each year, more plans lose their grandfathered status. According to the Kaiser Family Foundation’s 2012 Employer Health Benefits study, 58% of firms offering health benefits reported that at least one of the plans they offered in 2012 was a grandfathered plan (down from 72% of firms offering a grandfathered plan in 2011). Overall, 48% of covered workers are enrolled in a grandfathered health plan in 2012, down from 56% in 2011.

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And the number of grandfathered plans is continuing to shrink. In a survey of large employers’ health plans for 2013 conducted by the National Business Group on Health, 57% of the employers said that none of their health plans kept grandfathered status in 2012; 7% said they will drop grandfathered status in 2013; and only 27% said they plan to keep grandfathered-plan status for existing benefit options in 2013 (9% of employers said they didn’t know yet whether their plans will keep their grandfathered status in 2013).

As you noticed, the biggest difference between grandfathered and nongrandfathered plans is the coverage for preventive care. All health plans, except for grandfathered plans, must now provide certain preventive-care benefits without any co-payments or deductibles. See Take Advantage of Expanded Preventive Care Coverage for details.

Grandfathered plans are also exempt from the new rules for appeals and are not subject to the rule that insurers must provide emergency care without requiring prior approval, even at an out-of-network hospital (although you may need to pay out-of-network costs). They are also exempt from new rules letting you see an obstetrician-gynecologist or pediatrician without a referral from a primary-care provider.

The requirements for grandfathered plans offered by an employer are a bit different than they are for grandfathered individual plans. No health plans, whether they are grandfathered or not, can apply lifetime dollar limits to essential health benefits. And most plans, except for grandfathered individual plans, must gradually phase out annual limits in coverage, resulting in an annual coverage cap of no less than $1.25 million for plan years starting after Sept. 23, 2011; $2 million for plan years starting after Sept. 23, 2012; and no annual limits on benefits after January 1, 2014. Grandfathered individual plans are not subject to these annual-cap requirements.

Grandfathered individual plans also are not subject to the rules requiring insurers to eliminate preexisting-condition exclusions for children under 19 years old.

All plans offering dependent coverage must permit children up to age 26 to remain on their parents’ policy -- a key provision of the health care law. Until 2014, however, grandfathered group plans do not have to offer dependent coverage up to age 26 if the young adult is eligible for group coverage outside their parents’ plan -- even if their new employer’s plan offers limited coverage at high prices. See Health Insurance for Adult Children for details.

For more information on the rules, see the Grandfathered Health Plans factsheet at Healthcare.gov. For more information about health insurance changes for 2013 -- and tips for picking the best plan during open-enrollment this fall -- see Make the Most of Health Insurance Changes for 2013.