Merged Senate Bill Removes 5-Year Grace Period For Grandfathered Policies

The Senate Finance Committee’s health care reform bill and the House legislation require insurance issuers to meet certain basic benefit standards, but grandfather all existing insurance plans for a period of 5 years (the House bill only applies this restriction to current employment-based health plans) . If insurers do not comply with the new federal requirements after the 5-year grace period, they would no longer be able to offer health care coverage.

The merged Senate bill takes a different approach. Section 1251 eliminates the 5-year period and allows enrollees to remain in their insurance plans for as long as the coverage remains available:


By 2017, most Americans will have the option of purchasing comprehensive insurance coverage within the Exchange and would theoretically abandon plans that offer sub-prime benefits and high-deductibles. Insurers that want to minimize their administrative overhead and standardize their plans, may also modify all existing policies to meet the new federal guidelines.

Under the Senate bill, individuals under 30 years of age or those who are exempt from the individual mandate, could still chose to enroll in a catastrophic plan that covers essential health benefits.