Affordable Care Act (ACA) Explained
Discover how the Affordable Care Act (ACA), also known as Obamacare, aims to reform the healthcare system in the United States. Gain insights into the key provisions of the ACA, including coverage for preexisting conditions, abolishment of dollar limits on essential healthcare, and extended coverage for young adults.
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Angie Watts
Licensed Real Estate Agent
Angie Watts is a licensed real estate agent with Florida Executive Realty. Specializing in residential properties since 2015, Angie is a real estate writer who published a book educating homeowners on how to make the most money when they sell their homes. Her goal is to educate and empower both home buyers and sellers so they can have a stress-free shopping and/or selling process. She has studi...
Licensed Real Estate Agent
UPDATED: Nov 28, 2023
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UPDATED: Nov 28, 2023
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
The Affordable Care Act (ACA), also known as Obamacare, has revolutionized healthcare in the United States by introducing crucial reforms and making coverage more accessible. In this article, we delve into the key topics surrounding the ACA, including coverage for preexisting conditions, the elimination of dollar limits on essential healthcare, extended coverage for young adults, and the goal of making healthcare affordable for all.
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Your Rights Under the ACA
Approximately 1 out of every 12 Americans, including children, have a preexisting condition which has been excluded by major health insurance plans. One of the most popular aspects of the healthcare overhaul is that health insurance companies will not be allowed to exclude people from coverage based on preexisting conditions. This portion of the law will be mandatory on January 1, 2014, but some insurance companies are already taking it to heart, so you may be able to get coverage even sooner.
Another aspect of the law which will be mandatory in 2014 is the abolishment of dollar limits on essential health care. Currently, approximately 105 million Americans, or more than 1 in 4 people, have either reached the treatment limits of the policies or have policies with such limits in place.
Under traditional health insurance, your coverage could be terminated due to a minor mistake on your application, such as entering an incorrect age or birth date. The ACA will prevent insurance companies from canceling your policy due to such errors. Deliberately entering false information is still considered fraud and could be prosecuted.
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Making Health Care Affordable
The Affordable Care Act includes what is referred to as the 80/20 rule, which is intended to reduce health insurance costs, and may even result in refunds for some currently insured people. Insurance companies will be required to invest at least 80% of the premiums they collect into healthcare, leaving 20% of premiums to be used for overhead. Refunds will begin in mid-2012.
Until the ACA was passed, there has never been any regulations which required insurance companies to provide justification before raising your rates. Under the law, rates cannot be increased by 10% or more without providing policyholders with justification for the increase.
Traditionally, a small business might pay as much as 18% more for a health insurance plan than a large corporation. By offering tax credits to small businesses who provide health insurance plans to employees, the ACA should be able to make health insurance available to millions of workers. This aspect of the law has already gone into effect.
Increased Access to Health Care
Along with requiring insurers to provide coverage for preexisting conditions, the new laws also require insurers to allow young adults to remain on the policy of their parents for a longer period of time. The new law extends the age to 26. This change has already gone into effect, and has increased coverage for more than 3 million young adults.
Under the ACA, preventive services for many things are now covered, including screening for cancer and diabetes. This portion of the law also eliminates copays and coinsurance on covered preventive procedures, and has already affected about 1 in 6 Americans.
To make health insurance easier to get, the ACA includes the formation of health insurance exchanges in each state, either sponsored by the state or by the federal government. These exchanges are described as a one stop place to find insurance, information or customer assistance. The law is not mandatory until 2014, but more than half of the states have already begun setting up health insurance exchanges.
Improving Government Programs
Government programs such as Medicare and Medicaid will also see some improvements under the ACA. This portion of the law first went into effect in 2010, but the full extent of it will not be effective until 2020. Reducing the cost of prescription drugs for seniors was the first priority, first by issuing refunds and implementing discounts for seniors who were in the group affected by what is known as the “donut hole.”
Read more: Government Mandated Car Insurance Discount for Seniors
Additionally, preventive services for those receiving Medicare and Medicaid will be free, as described above. An annual wellness visit is included in the plan to allow seniors to be examined for continuing health status each year. And to increase the quality of care available, a new office is being established, called the Center for Medicare and Medicaid Innovation. This office will use advances in technology and processing to reduce fraud, increase patient reach, and improve the level of care available to seniors and others.
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Case Studies: Affordable Care Act (ACA) Explained
Case Study 1: Sarah’s Story: Access to Affordable Coverage
Sarah, a self-employed artist, faced difficulties in finding affordable health insurance due to a pre-existing condition. The implementation of the ACA prevented insurance companies from denying coverage based on pre-existing conditions. Sarah was able to find an affordable plan through the health insurance marketplace, granting her peace of mind and access to necessary healthcare services.
Case Study 2: John’s Journey: Expansion of Medicaid
John, a low-income worker, faced challenges in accessing healthcare before the implementation of the Affordable Care Act (ACA). Due to financial constraints, he couldn’t afford private insurance, and his state’s strict Medicaid eligibility criteria further limited his options. However, the ACA brought about significant changes by expanding Medicaid to include individuals with incomes up to 138% of the federal poverty level.
This expansion made John eligible for Medicaid, granting him access to essential preventive care and treatment for chronic conditions that were previously out of his reach due to financial barriers.
Case Study 3: Maria’s Relief: Closing the Medicare Part D “Donut Hole”
Maria, a senior citizen, experienced financial strain caused by the Medicare Part D coverage gap, also known as the “donut hole.” However, the Affordable Care Act (ACA) aimed to alleviate this burden by implementing a gradual closure of the coverage gap. This closure effectively reduced the out-of-pocket expenses for prescription drugs for seniors like Maria.
Consequently, she no longer had to make difficult choices between purchasing vital medications and meeting other essential needs, leading to a notable improvement in her overall quality of life.
Case Study 4: Roberto’s Options: Young Adults’ Coverage
Before the ACA, many young adults struggled to maintain health insurance coverage after aging out of their parents’ plans. Roberto, a recent college graduate, faced this dilemma. However, the ACA allowed young adults to remain on their parents’ insurance plans until the age of 26. This provision gave Roberto the freedom to explore career opportunities and pursue further education without worrying about losing access to healthcare.
Case Study 5: Community Impact: Reducing Uninsured Rates
The ACA aimed to reduce the number of uninsured individuals across the country. Communities with higher uninsured rates experienced significant benefits through the law’s provisions. For example, a study conducted in a low-income community found that the ACA’s Medicaid expansion led to a substantial decrease in the number of uninsured residents. This resulted in improved healthcare access and better health outcomes for the community as a whole.
Frequently Asked Questions
What is the Affordable Care Act (ACA)?
The Affordable Care Act (ACA) is a comprehensive healthcare reform law that was passed by Congress and signed into law by President Barack Obama in March 2010. The goal of the ACA is to provide affordable and accessible health insurance coverage for all Americans.
What are the key provisions of the ACA?
Some of the key provisions of the ACA include:
- Requiring individuals to have health insurance or pay a penalty
- Prohibiting insurance companies from denying coverage based on pre-existing conditions
- Allowing young adults to stay on their parents’ insurance until age 26
- Expanding Medicaid eligibility to more low-income individuals and families
- Establishing healthcare marketplaces where individuals and small businesses can compare and purchase insurance plans
- Offering subsidies to help lower-income individuals afford insurance premiums
- Requiring certain employers to offer health insurance to their employees or pay a penalty
How does the ACA impact insurance premiums?
The impact of the ACA on insurance premiums can vary depending on a number of factors, including a person’s age, income, and location. While some individuals have seen their premiums increase, others have seen their premiums decrease or stay the same. The ACA includes provisions to help lower-income individuals afford insurance premiums, such as subsidies and cost-sharing reductions.
Can I still purchase insurance through the ACA marketplaces?
Yes, individuals can still purchase insurance through the ACA marketplaces during the annual open enrollment period or during a special enrollment period if they experience a qualifying life event, such as getting married or having a baby.
What happens if I don’t have health insurance?
Under the ACA, most individuals are required to have health insurance or pay a penalty. The penalty for not having insurance varies depending on a person’s income and the number of months they go without insurance. However, the individual mandate penalty was eliminated in 2019 through the Tax Cuts and Jobs Act.
What is Medicaid expansion under the ACA?
Medicaid expansion under the ACA refers to the provision that allows states to expand Medicaid eligibility to individuals and families with incomes up to 138% of the federal poverty level. Medicaid is a joint federal and state program that provides healthcare coverage for low-income individuals and families. As of 2021, 39 states and the District of Columbia have expanded Medicaid under the ACA.
Is the ACA still in effect?
Yes, the ACA is still in effect as of 2023. While there have been some changes made to the law over the years, the core provisions of the ACA remain in place.
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Angie Watts
Licensed Real Estate Agent
Angie Watts is a licensed real estate agent with Florida Executive Realty. Specializing in residential properties since 2015, Angie is a real estate writer who published a book educating homeowners on how to make the most money when they sell their homes. Her goal is to educate and empower both home buyers and sellers so they can have a stress-free shopping and/or selling process. She has studi...
Licensed Real Estate Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.