According to reported statistics, more than a half million people have used the healthcare exchange/marketplace created by The Patient Protection and Affordable Care Act (ACA) to obtain health insurance under the Biden administration. This is possible due to the expanded open enrollment in 2021 which continues until August 15, 2021.
With the ACA often misunderstood/maligned and the coronavirus pandemic has resulted in millions of people losing their health insurance, especially vulnerable minority communities, we wanted to review what the ACA is really all about.
The ACA was enacted in 2010 to ensure access to adequate/minimum value affordable healthcare, protect consumers from insurance companies, and attempt to distribute medical costs more evenly. It is commonly referred to as Obamacare after it was championed and signed into law by President Barack Obama.
In 2021, employee-based healthcare is considered to be affordable if your insurance premiums are less than 9.83% of your household income. Unfortunately, this percentage does not include the additional premium costs for any family members added to your policy (the Family Glitch). If you are obtaining health insurance through the exchange, you will pay no more than 8.5% of your household income.
Features of the ACA
The ACA created federal and state health insurance exchanges/marketplaces. Insurance companies compete with each other to sell health insurance on these exchanges to small businesses or individuals who either don’t have access to group insurance through their workplace or prefer their own policy. This helps patients obtain health insurance at competitive costs.
To be eligible, you must:
- Be a United States citizen or national;
- Live in the U.S. or its territories;
- Not be covered by Medicare;
- Not be eligible for Medicaid or the Children’s Health Insurance Program (CHIP);
- Not have employer-sponsored group health insurance;
- Not have a catastrophic/high deductible health insurance plan; and/or
- Not have an off-exchange private health insurance plan.
Although there is an extended enrollment period in 2021, there are usually only two opportunities to enroll. There is an open enrollment period from November 1 to December 15 for the following year’s coverage. There is also a special enrollment period if a qualifying event happens, such as the birth of a child, marriage, or the loss of another insurance plan. Your coverage starts the first of the month after you apply.
The ACA mandated that marketplace health insurance plans limit out-of-pocket expenses and that all deductibles and authorized copayments/coinsurance count toward this maximum. The 2021 out-of-pocket maximums are $8,550 for individuals and $17,100 for families.
Lower income individuals and families buying health insurance on the Marketplace may be eligible for two subsidies called “premium tax credits” and cost-sharing reductions that are available to those in need to purchase insurance if they are below the income cut-off for the program. These exchanges continue to be monitored by the federal government to ensure adherence to the ACA.
The ACA increased the availability and affordability of healthcare coverage for poor and low-income adults and children. Eligibility for Medicaid was expanded in 36 states and DC to cover those up to 138% over the poverty line — see Status of State Medicaid Expansion Decisions: Interactive Map.
The ACA allowed children to join or remain on their parent’s insurance plan until they are 26 years old, even if they get married, have or adopt a child, start or leave school, live in or out of their parent’s home, aren’t claimed as a tax dependent, and/or turn down an offer of job-based coverage. If covered by parent’s insurance through their employer, the coverage usually ends the date they turn 26. Many states and plans have different rules. If covered by the parent’s Marketplace plan, they may remain covered until the age permitted in that state, sometimes as long as through December 31 of the year they turn 26.
The ACA mandated that consumers be offered a variety of choices for each type of insurance. Each type of plan in the marketplace has to offer four levels or tiers of insurance based on the percentage of your total healthcare costs you will pay. The most you will pay is 40%, while the least is 10%. Employers do not have to offer the same range of options, but most do offer a choice. Sometimes this is different insurance companies, different types of plans, or different metal tiers.
Although the 2017 Tax Cuts and Jobs Act did not repeal the ACA’s individual mandate to have health insurance, it removed any tax penalty for not having coverage.
How the ACA Protects You
While the primary role of the current Affordable Care Act is to help more people — especially young adults — get health insurance, it also seeks to improve the quality of healthcare by mandating that all health insurance offered after March 23, 2010 provide at least a certain level of healthcare coverage and value.
The minimum coverage includes proven preventive healthcare measures including screening, vaccinations, and other necessary medical care listed in the next two sections. These measures are based on recommendations from the U.S. Preventive Services Task Force (USPTF), Advisory Committee on Immunization Practices (ACIP), Health Resources and Service Administration’s (HRSA’s) Bright Futures Project, and HRSA and the Institute of Medicine (IOM) committee on women’s clinical preventive services.
The minimum value needs to cover at least 60% of average costs for a standard population (actuarial value of 60 or above) and includes “substantial coverage” for inpatient care and physician services. The Employer Coverage Tool (PDF) can help assess the coverage and value of your policy. Many states offer more comprehensive coverage, but no plan in any state may offer less.
The ACA protects patients from health insurance companies by ensuring that quality health insurance is available to everyone, including those with existing medical conditions. The “Pre-existing Condition Clause” prevents health insurance companies from denying medical coverage or charging higher premiums if you are pregnant, have a chronic illness, or have other existing health conditions.
- No insurance plan can reject you, charge you more, or refuse to pay for essential health benefits for any condition you had before your coverage started.
- Once you’re enrolled, the plan can’t cancel your policy, deny you specific coverage, or raise your rates based only on your health.
The ACA prevents insurance companies from placing maximum limits on the annual or lifetime cost of the covered essential benefits. This includes all individual and group major medical plans regardless of whether the plan is sold through the exchange or off-exchange.
There are mandated medical care delivery and payment methods that attempt to control medical costs. These measures include:
- Reducing the annual increases in payments to hospitals under the traditional Medicare program;
- Making payments for hospitals value-based rather than volume based;
- Holding providers broadly accountable for the cost and quality of patients’ care;
- Creating accountable care organizations responsible for the quality and costs of care;
- Mandating bundled payments;
- Protecting against unreasonable (15%) rate increases in premiums; and
- Requiring health insurance companies to spend at least 80% of insurance premiums on medical care and improvements.
The ACA protects employees from being fired or retaliated against by your employer for any actions concerning your health insurance such as reporting them for ACA violations, choosing an individual Marketplace plan rather than what your employer offers you, or receiving premium tax credits when you bought a health plan in the Marketplace.
Other protections include being able to choose any available primary care provider in your insurance plan’s network, not needing referrals for OB-GYN services, and the ability to access out-of-network emergency room services without prior approval and higher copayments/coinsurance.
Some parts of the ACA do not apply to “grandfathered” health plans that have been active since before the ACA was passed into law on March 23, 2010. The grandfather rule enables businesses and families to keep the plan they have if they wish to. These plans are exempt from some requirements of the ACA, such as being able to adjust premiums based on health and pre-existing conditions.
An unexpected benefit of the ACA was to slow the growth rate of medical costs. One contributor was the increased amount of preventive care, both by mandating no out-of-pocket costs for these visits and the increased number of insured who now had access to preventive care.
Essential Health Benefits Covered
The Affordable Care Act has mandated ten provisions or benefits that every primary care healthcare provider must offer and every health insurance plan must pay at least part of the cost for:
- Preventive/wellness services and chronic disease management;
- Ambulatory patient services (outpatient care);
- Pediatric services (including dental and vision);
- Emergency services (including ambulance transport — even out-of-network);
- Hospitalizations (inpatient care);
- Maternity services (prenatal care, delivery, and aftercare for mother and newborn);
- Mental health care and substance abuse services;
- Prescription drugs;
- Rehabilitative and habilitative services and devices; and
- Laboratory services.
The individual services required within these categories is called the benchmark plan. The benchmark varies from state to state and could include more than listed above, but not less. Check your state, federal, and private exchanges for which services each plan covers before you apply.
Private health insurance is not required to cover durable medical equipment (DME) such as wheelchairs, CPAP machines, or nebulizers. Be sure to get a health insurance plan that offers coverage for DME if you require any of this equipment.
Covered Preventive Care
Using the best evidence available, the Affordable Care Act determined the most effective preventive care services and mandated that they must all be offered and are covered 100% by your health insurance policy.
All health insurance plans on government-run marketplaces offer adults a set of preventative health care services, such as shots and screening tests, at no extra cost (even if you haven’t reached your deductible). Services that must be 100% covered include:
- Medications (aspirin use to prevent cardiovascular disease and statin preventive medication for adults age 40-75 who are at high risk due to elevated cholesterol);
- Screenings for alcohol misuse, abdominal aortic aneurysm (one-time), blood pressure, cholesterol, colorectal cancer (if over 50 years old), depression, obesity/diet, type 2 diabetes, hepatitis B (if high risk), hepatitis C (one-time screening if born between 1945-1965 and anytime you are at at increased risk), HIV (if between ages 15-65 years or at increased risk), lung cancer, Tuberculosis (high risk), and syphilis (if necessary);
- Counseling for alcohol abuse, diet/obesity, sexually transmitted infection (STI) prevention, and smoking/tobacco cessation; and
- Immunization/vaccines for diphtheria/tetanus/pertussis, hepatitis A and B, human papillomavirus (HPV), and influenza.
Additional essential preventive care benefits for women include:
- Routine anemia screening;
- Breast cancer genetic test and chemoprevention counseling (BRCA);
- Breast cancer mammography and cervical cancer screening;
- Comprehensive breastfeeding support, counseling, and access to and possibly payment for breastfeeding supplies, such as breast pumps;
- Contraception, sterilization procedures, and reproductive education and counseling;
- Diabetes screening;
- Domestic and interpersonal violence screening and counseling;
- Expanded tobacco intervention and counseling if you are pregnant and using tobacco;
- Folic acid supplements if you may become pregnant;
- Prenatal checkups (including gestational diabetes and hepatitis B screening, preeclampsia prevention and screening, Rh incompatibility screening and follow-up testing);
- Human papillomavirus (HPV) DNA test with the combination of a Pap test, screening for sexually transmitted infection (chlamydia, gonorrhea, HIV); and
- Annual osteoporosis screening by bone density, and urinary tract or other infection screening.
If you are getting health insurance through the exchange, there are forms of financial assistance for those in need. The ACA provides for two subsidies called premium tax credits and cost-sharing reductions if you are below a certain income level. You could receive both subsidies if you meet the eligibility requirements for each.
If you have employer-sponsored group health insurance available but getting it would be a hardship, you will need to provide information about why in order to be eligible for any subsidies. This includes details of employee health plan and employer contact information, details and policy numbers of any health insurance other members of your household have, and your financial information.
Premium Tax Credits
Premium tax credits offset some of the cost of your premium if you meet the income qualifications. You can apply for this subsidy with any metal tier plan.
You are eligible for the premium tax credit if:
- You are not eligible for Medicaid;
- According to the American Rescue Plan Act, below an amount where the cost of the Silver benchmark plan is more than 8.5% of your modified adjusted gross income (typically 400% of the FPL) or you are receiving unemployment compensation; and
- In the month you apply, you or a family member:
- Has health insurance coverage through a Health Insurance Marketplace;
- Have been unable to get affordable coverage through an eligible employer-sponsored plan that provides minimum value;
- Are not eligible for coverage through a government program such as Medicaid, Medicare, Children’s Health Insurance Program (CHIP), or TRICARE (military insurance); and/or
- Have paid the share of premiums not covered by advance credit payments.
If there are any financial or other life circumstances changes, the amount you qualify for may change. You will need to notify those who are managing your program.
Cost-sharing reductions lower out-of-pocket costs for deductibles, copays and coinsurance, and reduce out-of-pocket maximums if your household has a modified adjusted gross income of 250% or less of the previous year’s federal poverty level.
You can only apply for these subsidies if you have or will buy an individual silver level plan, which is the second highest premium plan available on the marketplace. Bronze, gold, or platinum plans do not qualify for cost-sharing reductions. The percentage of overall healthcare costs you pay varies according to your income.
Reductions do not need to be claimed on your tax returns and will change if your financial situation changes.
While evaluating your application, you will be rejected if it is determined that you qualify for Medicaid. If this is the case, you would be encouraged to apply for Medicaid through your state’s health insurance exchange.
You can check your state to see if you qualify and how to apply.
Obamacare is not health insurance. The Affordable Care Act was enacted as a way to allow more Americans to obtain healthcare insurance at a reasonable cost, keep healthcare costs down, and assure that all patients have access to valuable medical care.
Nearly 1 million people signed up for coverage during the first 10 weeks of the Biden administration’s special enrollment period, and many more are expected to gain insurance through August 15. In addition to the special enrollment period to help Americans who have lost insurance due to the COVID-19 pandemic or otherwise lacked healthcare coverage, new subsidies make insurance more affordable for many Americans and renewed advertising and marketing (reversing Trump administration’s cuts) mean more Americans will have access to information.
If you have questions about signing up through the ACA marketplace or want to talk through your options with a trained professional, free assistance can be reached by calling 1-800-318-2596 or visiting http://localhelp.healthcare.gov.
- Affordable Care Act Estimator Tools from the IRS
- HealthCare.gov – State-specific tool to begin enrollment in a health insurance plan through the exchange.
- Healthcare.gov – Tool to find an exchange-certified broker to help you choose a health plan if your state does not use Healthcare.gov as an exchange.
- HealthCare.gov – Tool to calculate the amount of cost saving reductions through the ACA based on your income and location.
- Premium Tax Credit Change Estimator – Helps estimate how your premium tax credit will change if your income or family size change during the year.
- The ACA Cost Saving Reductions calculator.
- The ACA Premium Subsidy calculator.
- From the Department of the Treasury/Internal Revenue Service:
- Full text of:
- The 2010 Affordable Care Act (PDF)
- The 2010 Reconciliation Act (PDF)
- The 2017 American Health Care repealing the Essential Health Benefits part of the ACA
- What are premium tax credits? Tax Policy Center, Urban Institute and Brookings Institution