Affordable Care Act (ACA): What It Is, Key Features and Updates
The Affordable Care Act (ACA), also known as Obamacare, is a comprehensive healthcare reform law enacted in March 2010. The primary goal of the ACA is to make health insurance more affordable and accessible, while also reducing the overall costs of healthcare in the United States. Here’s an overview of what the ACA is, its key features and recent updates.
What is the Affordable Care Act?
The Affordable Care Act is a federal statute aimed at expanding health insurance coverage to millions of uninsured Americans. It introduces a variety of measures to lower healthcare costs, improve healthcare quality and increase access to preventive services.
Qualifications
If you make less than $50,000 a year and are not eligible for Medicare or Medicaid, you may qualify for significant financial assistance under the Affordable Care Act (ACA). This assistance comes in the form of premium tax credits and cost-sharing reductions, which help lower the cost of health insurance premiums and out-of-pocket expenses. These subsidies are designed to make health insurance more affordable for individuals and families earning between 100% and 400% of the federal poverty level (FPL). To benefit from these subsidies, you need to apply for coverage through the Health Insurance Marketplace, where you can compare plans and choose the one that best fits your needs and budget.
Key Features of the ACA
- Individual mandate: Originally, the ACA required most Americans to have health insurance or pay a penalty. This mandate was designed to ensure that enough healthy people would buy insurance to help cover the costs of the sick. However, the penalty for not having insurance was effectively eliminated in 2019.
- Health insurance marketplaces: The ACA established online exchanges where individuals and small businesses can compare and purchase health insurance plans. These marketplaces offer a range of plans, with subsidies available for those who qualify based on income.
- Medicaid expansion: The ACA expanded Medicaid eligibility to include more low-income individuals and families. This expansion aimed to cover adults earning up to 138% of the federal poverty level. However, not all states have adopted this expansion.
- Pre-existing conditions: One of the most popular provisions of the ACA is that insurance companies cannot deny coverage or charge higher premiums based on pre-existing conditions.
- Essential health benefits: The ACA requires all insurance plans to cover a set of essential health benefits, including preventive services, maternity and newborn care, mental health services and prescription drugs.
- Young adult coverage: Young adults can stay on their parents’ health insurance plan until they turn 26, providing them with continued coverage during a transitional period of their lives.
- Preventive services: The ACA mandates that many preventive services, such as vaccinations and screenings, be provided at no additional cost to the insured.
Recent Updates to the ACA
Since its enactment, the ACA has undergone various changes and faced numerous challenges. Here are some of the recent updates:
- Individual mandate penalty removal: In 2017, the Tax Cuts and Jobs Act reduced the individual mandate penalty to $0, effectively eliminating the requirement for most Americans to have health insurance.
- Medicaid work requirements: Some states have sought to impose work requirements for Medicaid recipients. These requirements mandate that able-bodied adults must work or engage in job-related activities to qualify for Medicaid.
- Short-term plans: The Trump administration expanded the availability of short-term health insurance plans, which are typically cheaper but offer fewer benefits and protections compared to ACA-compliant plans.
- Texas v. United States: This ongoing legal challenge questions the constitutionality of the ACA following the removal of the individual mandate penalty. The Supreme Court has upheld the ACA in previous rulings, but the outcome of this case remains significant for the future of the law.
- American rescue plan act: In 2021, this act included provisions to enhance ACA subsidies, making health insurance more affordable for many Americans. It increased the subsidies for those already eligible and extended them to higher-income individuals who previously did not qualify.
Affordable Care Act Unveiled
The Affordable Care Act has significantly transformed the healthcare landscape in the United States, providing millions with access to health insurance and introducing key protections for consumers. While it continues to face political and legal challenges, the ACA remains a crucial part of the American healthcare system. Staying informed about its features and updates is essential for understanding your healthcare options and rights.