Comparing Texas Grandfathered Plans versus Obamacare

 

It's very frustrating to us. We speak with Texans every day who are still on grandfathered plans and paying through the teeth to have them.

They are sometimes told by their old agents "Never give up this plan".

We'll go through the basis for that but also look at the cost involved.

It's not uncommon to see monthly costs come down 80% when we run quotes!

We just ran a quote for a couple in their 60's insuring just the wife and her coverage was going to drop from $1200 (grandfathered) to $200!

First, our credentials are here:

This is what we'll cover:

• What's the difference between grandfathered and Obamacare (ACA, exchange) plans in Texas?
• Are the networks different between grandfathered plans and Obamacare?
• Are benefits different between grandfathered and Obamacare plans?
• Pricing differences between grandfathered and Obamacare plans
• When can I change to an Obamacare plan from grandfathered options?
• How to quote and apply for Obamacare plans

Let's get started but reach out to us with any questions:

What's the difference between grandfathered and Obamacare (ACA, exchange) plans in Texas?

So in 2014, we had a massive law pass which changed everything in health care. 

It goes by different names but they're all the same thing: ACA (Affordable Care Act), Obamacare, Exchange, etc.

 

In the law, there was a clause that said essentially "If you like your plan, you can keep it".

That wasn't entirely genuine as we'll discuss below, but it meant that the plans existing before 2014, when the new market started, could continue on.

Voila...Grandfathered plans.

 

Some carriers continued to offer these in Texas and we still see about 5% of insured people (individual family plans) on them today.

That number continues to dwindle as we go forward, but we're constantly amazed at people who are paying 3-5 times the rates to be on them.

So...what are the big differences?

 

We look at on versus off-exchange Texas plans and what is Texas Obamacare but it really boils down to networks.

Meaning, the grandfathered plans are definitely not richer than ACA plans.

 

In fact, the ACA law dictated a whole range of increases in benefits:

• Mental health
• No waiting period for pre-existing conditions
• No increases in premium based on health
• No annual or lifetime max benefit

The list goes on and on.

Really, the big differences between grandfathered plans and Obamacare plans revolve around two issues:

• Networks available - the doctors you can see
• Monthly costs - the advent of the subsidy with ACA plans

Let's dive into both of these in more detail since this is the crux of the decision.

Are the networks different between grandfathered plans and Obamacare?

This is usually what agents hang their hat on when pushing people to keep their grandfathered plan.

What's the real deal?

The networks have changed since 2014. Generally, the market has moved towards HMOs and, at best, EPOs.

Learn more about the Texas exchange doctor networks but it's been smaller networks with less flexibility since 2014.

 

Why? The plans are now guaranteed issue, which means that you can't be declined based on health.

 

To offset this increase in cost, the carriers went stricter on plan design, which means...HMOs!

The reimbursement to doctors also reflects this cost-control push, so the networks are smaller, but as the ACA grows, this will likely be less of an issue.

In fact, from 2022 to 2023, on-exchange enrollment grew over 40% in Texas! The most of any State out there.

Doctors can't wait on the sideline as more and more people join the pool. That's insurance 101.

Grandfathered plans may have PPOs still available. What's the benefit there?

PPOs allow you to see any doctor, although you'll pay quite a bit more if out-of-network in a true emergency.

 

The networks are also bigger and you can see BCBS providers in other States, which can be a big deal if you live right on a border with another State and your providers are across the border.

Really, it's the PPO control over health care choices.

If this is an issue, we recommend comparing the EPO's on the market.

EPOs work like PPOs except you don't have benefits out-of-network other than a true emergency.

We've been on EPOs and PPOs and they feel pretty similar. Why?

The carriers have really cut down PPO out-of-network benefits, meaning....you're going to pay quite a bit more if you're not in-network these days!

 

It's almost not worth having in many cases. In today's world, you want to stay in-network for anything you can "schedule". Non-emergency.

There are EPOs available on the new exchange plan market so that's one piece of the pie. One note...we won't be able to get out-of-state benefits other than true emergencies with the new ACA plans.

 

Some family businesses will set up employer plans to get access to PPOs in the new market.

We're happy to walk through how this all works.

What about benefit differences?

Are benefits different between grandfathered and Obamacare plans?

Before 2014, we had all kinds of different plans. Carriers could really do whatever they wanted (within bounds).

Hospital-only plans. No maternity or mental health. Reduced medication coverage.

 

After 2014, all ACA plans must cover a set of essential benefits which is much broader along with many other rules.

The new plans are standardized along 4 main levels:

 

Silver is by far the most popular and there can even be much richer versions of the silver (called silver 87 and 94) depending on income.

Here are the benchmark plans:

 

Generally speaking, ACA or Obamacare benefits are richer and more comprehensive than the old grandfathered plans.

Of course, this came at a price but there's a silver lining there.

Pricing differences between grandfathered and Obamacare plans

The biggest addition with the ACA law revolves around subsidies that bring down the monthly cost of coverage based on income.

 

This is where existing grandfathered plan members in Texas are really missing out.

Apples to apples (no subsidies), the new ACA plans are more expensive than grandfathered plans...or they were!

We've seen it countless times. When a given plan or block of members is "locked" meaning no new people can join (like the grandfathered plans), you have a death spiral of sorts.

Healthy people leave for the new ACA plans and you're left with a less healthy pool of people spreading costs among fewer people.

 

This drives the cost of the plan which just causes more healthy people to jump off!

Then there's the subsidy!

We have a big review on how to get the most health subsidy or what income is used but it can mean $1000's of savings per year.

 

Even with higher income!

We had a 30-year-old yesterday in Travis paying $330/month. The exact equivalent plan for him was going to $50 with BCBS. His income was $40K annually.

The subsidy goes even higher as we get older and for people in their 50's or 60's, income can be pretty high and we still get a subsidy.

Here's the income chart for reference:

 

 

You have to compare your grandfathered plan against the subsidized ACA plans as we see people way overpaying every day in Texas!

The subsidy is based on income estimate for this year and how many people file together on a 1040 tax form.

Check out the reviews above or better yet, reach out to us here:

Half of what we do these days is fine-tune the income estimate and subsidy amount.

There's zero cost for our assistance.

Let's say you can't turn away from $100's in monthly savings and want to change. When can we?

When can I change to an Obamacare plan from grandfathered options?

This was another big change with the 2014 ACA updates.

Since the plans are guaranteed issue now (can't be declined based on health), there was an offset.

Essentially, we can only enroll during certain times:

• Open enrollment - Nov 1st - Dec 15th for a Jan 1st effective date every year
• Special Enrollment Periods - big life changes: loss of coverage, moves, family make-up changes, etc.

We have a whole guide on when can I change Texas health insurance but reach out to us on this.

There can be special triggers that come out during the year and we can really go through all the quirks in the rules.

Worse case, we carry out the grandfathered plan till open enrollment and switch then! Email us for a reminder and new quotes when Open Enrollment comes around again here:

We just need zip code, dates of birth, and best estimate for the year you're enrolling.

Let's see what the rates might look like first!

How to quote and apply for Obamacare plans

We make this fast, free, and easy here:

A few notes to run the best quote:

• Income is best estimate for the AGI on the 1040 tax form; Next April's filing
• Household is everyone on that 1040 even if not enrolling

We're happy to handle this as many people make errors when self-enrolling.

Plus, there's zero cost for our assistance! Check out the reviews.

Get free assistance with the income estimate and Texas health subsidy!.

How can we help?