What is the Affordable Care Act?

By HealthSherpa

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Ten years ago, before the Affordable Care Act, more than 50 million Americans lived their lives without health insurance. These were families, including children and seniors, who lived every day not knowing if one case of the flu or an accident might land them in the emergency room. There were also people who were denied healthcare coverage by private insurance companies because of their pre-existing medical conditions. Or even stripped of coverage when their medical needs became too complex. Often times, healthcare costs were too high and many people ended up going without coverage.

Then on March 23, 2010, President Barack Obama signed the Affordable Care Act (ACA) into law, with the core principle that, “everybody should have some basic security when it comes to their healthcare.” Since then, there has been a lot of political debate on the merits of the ACA (sometimes referred to as Obamacare), as well as confusion about what exactly the Affordable Care Act does, who it helps, and how it may or may not change under President Trump.

Below, we answer frequently asked questions about the ACA, dispel some of the common misunderstandings about health insurers and health insurance plans, and offer guidance so you can better understand the ins and outs of the Health Insurance Marketplace.

What is the Affordable Care Act?

Officially called the The Patient Protection and Affordable Care Act of 2010 (PPACA), the ACA has three primary goals: Expand coverage by making affordable healthcare available to more people. Expand the Medicaid services program, which provides free or low-cost health insurance to eligible low-income individuals and some people with disabilities. And reduce healthcare and health plan costs overall. Under the ACA, the previous scenarios of going without health coverage or being denied health insurance due to a pre-existing condition are no longer possible.

Who does the Affordable Care Act help?

Almost 20 million Americans have gained health insurance coverage since the Affordable Care Act was signed into law. It allows young people to stay on their parent’s health insurance plan until they’re 26. It promises if you get sick and need a lot of medical care, your insurance company cannot raise your monthly premium or cancel your coverage. And regardless of the ACA plan you choose, you will have access to free preventive services, like flu shots and well-woman visits.

Just about everyone who lives in the United States legally can enroll in health insurance through the Marketplace. However, people who are in prison and those already on Medicaid or another kind of government health coverage cannot. Along with people who have affordable health insurance through their employers, unless they pay full price without subsidies.

What is the Health Insurance Marketplace?

In order to make health insurance affordable and accessible to all Americans, the Health Insurance Marketplace was set up. This is an online exchange where people or small businesses can get information and purchase individual health insurance for themselves or their families.

Each state also had the option to establish their own health insurance exchange, also known as a State Based Marketplace, by 2014. Each State Based Marketplace could be a government entity or nonprofit, but still needed to meet certain requirements. For example, they are not allowed to use marketing messages that might discourage people with serious healthcare needs from signing up. And they can only offer health insurance plans that meet the standards of the Affordable Care Act.

What is the Open Enrollment Period for health insurance?

The annual Open Enrollment Period (OEP) is when all U.S. citizens, nationals, or legal residents living in the United States can apply for health insurance through the Marketplace. Open Enrollment typically starts on November 1st and ends on January 15th, in most states.

It’s also important to know about Special Enrollment Periods (SEP). This is when you can enroll in coverage outside of Open Enrollment but only if you experience a qualifying life event. This includes loss of coverage, getting married, adopting a child, a permanent move, a change in household size, plus more. You can find out if you qualify here.

What’s covered in a Marketplace health insurance plan?

All ACA-approved health insurance plans cover the following:

• Ordinary medical services outside of a hospital.
• Emergency services.
• Hospital services.
• Pregnancy, maternity, and newborn care.
• Mental health services, including substance abuse treatment.
• Prescription drugs.
• Services and devices for people with disabilities.
• Laboratory services.
• Birth control coverage.
• Preventive care and wellness services, including chronic disease management.
• Pediatric services, including dental and vision care.

To make things a little easier, we created a FREE guide that lists each essential health benefit included in a Marketplace plan. Grab it here and save to your computer for future reference.

What do I need to know about subsidies and tax credits?

Under the Affordable Care Act, the government helps people pay their health insurance expenses through Advanced Premium Tax Credits and Cost-Sharing Reductions. An advance premium tax credit helps to lower your monthly health insurance premium. Where as a cost-sharing reduction helps to lower the amount you have to pay towards your deductible, copayments, and coinsurance.

The amount of savings an individual will receive is calculated by the number of people in their household, their income, and the Federal Poverty Level. In general, people who earn up to four times the Federal Poverty Level will be eligible for health insurance subsidies or tax credits of some kind.

You can find out if you’re eligible for savings here.

How does the ACA impact Medicaid & Medicare?

Medicaid and Medicare are federal and state-sponsored health insurance programs for low income Americans, people with certain disabilities, or seniors. One of the aspects of the ACA is that it allows states to expand their Medicare and Medicaid programs, so more people can access coverage. To find out if you’re eligible for Medicare or Medicaid, you can visit cms.gov.

How has the ACA changed under President Trump’s Administration?

The biggest change to the ACA under the Trump administration is that more Americans support the healthcare law than ever before. While there has been a fair bit of congressional debate between Democrats and Republicans on whether the ACA should be repealed, as well as a potential supreme court case debating whether the law is or is not constitutional, according to a 2018 Fox News poll, 53 percent of Americans support the Affordable Care Act.

In fact, the only major change President Trump and congress has made to the ACA is repealing the individual mandate. This required all Americans, unless exempt, to be enrolled in a health insurance plan which we’ll go over below.

Is there still a tax penalty if I do not enroll in health insurance?

In 2017, President Donald Trump repealed the individual mandate that required all Americans, whether they’re employed full-time, self-employed, or unemployed, to be enrolled in a health insurance plan. However, this repeal does not go into effect until this year, which means you still have to prove you were covered in 2018, or else you will have to pay a fine.

Historically, the penalty for not enrolling in health insurance was 2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, up to a maximum of $2,085, or whichever was higher.

What are the cons of the Affordable Care Act?

Despite providing health insurance options and basic healthcare coverage, including essential health services, to more Americans than ever before, the ACA is not wholly perfect and there is certainly room for improvement. Before the original mandate was repealed, people complained that the health policy of being forced to purchase insurance or pay a tax penalty was an unfair financial burden. Similarly, part of the ACA requires companies with over 50 employees to provide a health insurance option as part of their benefits package. And many business owners felt this would be a heavy and potentially negative cost, as was the tax penalty for not complying.

The most important thing to know about the Affordable Care Act

There’s still an ongoing debate around the Affordable Care Act. Has it done enough to make sure as many Americans as possible have access to coverage? Or did it go too far originally, requiring Americans to have insurance and creating a tax penalty if they didn’t. The truth is, there’s always going to be political back and forth about health insurance policy within the federal government. What’s most important is that you and your loved ones have care when you need it.