Understanding Obamacare (Patient Protection and Affordable Care Act)

ObamaCare is a nickname for The Patient Protection and Affordable Care Act of 2010 (sometimes called the Affordable Care Act, ACA, or PPACA for short), a health reform law signed on March 23, 2010, by President Barack Obama.

What Does the Affordable Care Act (Obamacare) Do?

The Affordable Care Act aims to provide more Americans with access to affordable health insurance,  to improve the quality of healthcare and health insurance, to regulate the health insurance industry, and to reduce health care spending in the US.

The law attempts to accomplish the above through a number of regulations, taxes, tax breaks, mandates, and subsidies. For example, regulations that stop insurers from denying coverage to those with preexisting conditions, subsidies on health insurance premiums and out-of-pocket costs, a mandate for large employers to provide full time employees health insurance, and taxes on those who profit due to the expansion of healthcare like drug companies.

Some of the most important provisions of the Affordable Care Act do things like:

With that covered, the above is only a part of what the Affordable Care Act does. In all the law contains over 1000 provisions. You can learn more about the benefits, rights, and protections in the Affordable Care Act here.

TIP: HealthCare.Gov is the official marketplace website to use if you want to lower costs on private health insurance and qualify for Medicaid under the Affordable Care Act!  Make sure to shop during open enrollment for coverage inside or outside the marketplace. If you don’t obtain and maintain coverage each year, you could end up owing the Shared Responsibility Fee (please note the fee has been repealed 2019 forward).

UPDATE: A lot has changed under the Trump administration. Some of the changes are noted below. Despite the changes, such as the fee for not having coverage being reduced to zero starting in 2019, the Affordable Care Act is still in effect today.

FACT: The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act were both signed my President Obama in March of 2010. Together they contain many healthcare related provisions that, along with subsequent judicial decisions, statutory changes, administrative actions, and sometimes legislative actions, people refer to as the Affordable Care Act (ObamaCare, Patient Patient and Affordable Care Act, ACA, or PPACA). That said, because one thing those laws did is expand health insurance and cost assistance starting in 2014, people will often use the term “ObamaCare” to refer to health insurance under “the Affordable Care Act.” The point here is, sometimes a little accuracy is put aside for simplicity when it comes to how people use the term Affordable Care Act and especially “ObamaCare.”

ObamaCare

(President Obama Portrait Public Domain by Whitehouse.gov)

The Politics of ObamaCare

President Obama signed the Affordable Care Act into law, but the law is actually the result of decades of ideas from both political parties and the healthcare industry. The idea of an individual mandate was first presented by current opponents of the law the Heritage Foundation in 1989. ObamaCare itself was in fact modeled after “Romney Care,” which is the nickname for the health care reform law implemented in the State of Massachusetts by the Republican Governor Mitt Romney.

Despite its non-partisan roots, the Affordable Care Act has become a hot button and partisan political issue over time.

FACT: The nickname “ObamaCare” was given to the Affordable Care Act by critics of the law in an effort to associate then President Barack Obama with healthcare reform efforts. The name was used because Obama championed healthcare reform as a candidate in 2008 and then as a President before signing the ACA into law. The name stuck, and Obama embraced it over time at one point saying, “I kind of like the term ‘Obamacare.’ Because I do care. That’s why I passed the bill.” Today many people know the Affordable Care Act by its nickname, “ObamaCare.”

TIP: Republicans have presented a series of bills to replace some of the Affordable Care Act’s main provisions. One such bill was called the American Health Care Act. So far none of the repeal and replace attempts have passed, but many changes have none-the-less been made under the administration of President Trump. Learn more about the pros and cons of the Republican ObamaCare replacement plan that some have dubbed “TrumpCare.”

Why Did We Need Healthcare Reform?

The Affordable Care Act was generally passed to address different aspects of the ongoing “healthcare crisis” in the US. In other words it was meant to address the rising costs of healthcare that were leading to tens of millions of uninsured, bankruptcies, price discrimination based on gender and health status, and even denials of coverage for those with preexisting conditions.

What Does the ACA it Mean for American Healthcare?

So what is ObamaCare, the ACA, and what does it mean to you? There are some facts that you need to know about the Affordable Care Act to ensure you avoid the fee and get affordable coverage.

• Every year during an annual open enrollment period people can obtain coverage through the health insurance marketplace, or shop outside of the marketplace.

• Many Americans making under 400% of the federal poverty level (FPL) qualify for cost assistance subsidies through the marketplace.  Cost assistance comes in three forms: Premium Tax Credits (PTCs) for reduced premium costs, Cost-sharing Reduction Subsidies (CRSs) for reduced out-of-pocket costs, and both Medicaid and CHIP.

• The Affordable Care Act contains over a thousand pages of reforms to the insurance and health care industries to combat rising health care costs and to provide affordable health insurance to more Americans. Despite its overall length and complexity, most of the important reforms are contained within the first 140 pages of the law. Look at our summary of the many titles and sections of the Affordable Care Act.

• Before the ACA passed you could be denied coverage or treatment because you had been sick in the past (had a pre-existing condition), be charged more because you were a woman, or be dropped mid-treatment for making a simple mistake on your application. You had little or no way to appeal insurance company rulings effectively. Today all Americans have access to a large number of unprecedented new benefits, rights, and protections.

• As of 2013, there were around 44 million Americans who went without health insurance (about 16% of the population). The majority of uninsured were working families and others who simply could not afford health insurance. One of the major aims of ObamaCare is to help these individuals to get health insurance through expanding Medicaid eligibility and offering cost assistance through health insurance marketplaces. By the end of open enrollment 2014, less than 13% of Americans were uninsured. By 2015 the uninsured rate had fallen below 10%. Under the Affordable Care Act, the uninsured rate fell to the lowest level in recent history.

• The Affordable Care Act reforms Medicare. This includes offering Medicare recipients the same new benefits, rights, and protections as everyone else, as well reforming many aspects of the Medicare system including cuts to aspects of the program that weren’t working. Medicare isn’t part of the marketplace if you have Part A or Part C you are considered covered.

• Small businesses with less than 25 full-time equivalent employees making less than $25,000 in average annual wages are now eligible for subsidized health insurance for their employees. Learn more about ObamaCare’s subsidies.

• As of 2016 large employers had to provide health coverage to full-time workers. This helps to provide coverage to those who aren’t covered by subsidized private insurance or the expansion of Medicaid. Learn more about the employer mandate.

 Starting in 2014 most non-exempt Americans had to maintain minimum essential coverage throughout each year, get an exemption, or pay a per month fee on their year-end federal income taxes for every month they go without coverage or an exemption. Learn more about the “individual mandate” that requires you to obtain coverage or pay a fee. It’s worth noting that the law in this country often forces people to have insurance for their cars, homes, businesses, etc. or be liable for fees and fines.

• The type of coverage you need to avoid the fee is called minimum essential coverage. This can only be obtained during each insurance kind of insurance’s open enrollment period.

• There are many exemptions to the individual mandate to obtain insurance, including a “short coverage gap” exemption which allows anyone to go without coverage for less than three months in a row without being responsible for the fee. Make sure to sign up during open enrollment and to have no more than a “one day shy of three full months” coverage gap per year to avoid the fee.

IMPORTANT: Please note that there have been a number of changes to the law, for example both the individual and employer mandates won’t be in effect from 2019 forward due to changes to the law under the Trump administration. This in turn effects the need for exemptions and the requirement to obtain minimum essential coverage.

Obamacare health insurance

In 2014 6 in 10 without health insurance could get a plan for $100 or less. In 2016, 7 out of 10 Marketplace customers were able to get a plan for less than $75, and 8 out of 10 less than $100 (after cost assistance). This sort of fact has been true each year. Each year many customers who shop at the marketplace can get low rates after cost assistance.

What is the ObamaCare Health Insurance Marketplace?

The health insurance marketplace (also known as an exchange) is an online price comparison website where Americans can shop for affordable quality insurance and receive cost assistance for lower premiums, reduced out-of-pocket costs, or even qualify for Medicaid and CHIP. Each State has their own health insurance marketplace, find your state’s Health Insurance Marketplace now.

Cost Assistance

Those making under 400% of the federal poverty level (FPL) may qualify for cost assistance through the marketplace (but not below 100% of the poverty level). 400% of the federal poverty level is $48,240 for individuals and $98,400 for a family of 4 buying 2018 coverage (this changes each year).

100% of the poverty level is between $12,140 for an individual and$25,100 for a family of 4 in 2019 (for those using Medicaid, this number adjusts every year in late January).

Cost assistance is only available through your State’s marketplace.

Find out more about what ObamaCare will cost you. Many Americans will be eligible for subsidized health insurance of anywhere from 2% – 9.5% of their Modified Gross Adjusted Income (or even free coverage via Medicaid and CHIP).

TIP: The poverty levels adjust every year. Make sure to check out the most recent poverty levels.

Open Enrollment

Health insurance must be obtained during open enrollment. Open enrollment for 2018 health plans sold on the Health Insurance Marketplace ran from November 1st, 2017 to December 15th, 2017 (in most states). Each year open enrollment may have different and end dates, check our site for the latest open enrollment information.

Individuals and families without access to employer coverage, Medicaid/CHIP, Medicare or another type of “minimum essential coverage” need to enroll during open enrollment (or qualify for a special enrollment period).

Individuals and families are well advised to apply at healthcare.gov during open enrollment, or apply for a special enrollment period, to see if they are eligible for financial assistance for lower premiums, reduced out-of-pocket costs, or even Medicaid (Medicaid eligibility has been expanded in many States).

Exemptions

As long as you enroll during open enrollment each year, you will avoid owing the per-month Shared Responsibility Payment for not having coverage for at least one day in a given month. Other exemptions can be used to extend the time during which you can avoid a fee for longer periods of time; some exemptions even extend the entire year. You can still get coverage and cost assistance, even if you qualify for an exemption.

The Health Insurance Marketplace is only open during each year’s open enrollment period unless you qualify for a special enrollment period. To avoid the penalty make sure you obtain coverage during open enrollment and maintain it throughout the year. Insurance purchased before the 15th of each month starts on the first of the next month after you have paid your premium.

Find out how you, your family, and your business can qualify for federally subsidized health insurance. Download our free ObamaCareFacts.com ebook to learn more about the Marketplace and open enrollment.

TIP: Remember, the mandate to get coverage is repealed from 2019 forward, so you won’t need to deal with exemptions moving forward.

What Else Does ObamaCare Do?

Now that we know what ObamaCare is, it’s time to find out what else health care reform under the Affordable Care Act does beyond the key aspects of the law explained above. Here are some other important aspects of the law:

• ObamaCare, the ACA, contains many cost-curbing provisions that have helped to reduce the growth of Medicare spending and healthcare spending in general. For instance, Accountable Care Organizations (which incentivize Medicare healthcare providers are to provide quality over quantity) saved over $400 million collectively in 2014. The 80 /20 rule (which requires insurers to spend at least 80 cents out of every dollar on care) lead to $9 billion in savings for consumers. Also, new regulations for hospitals led to 50,000 fewer lost lives from hospital-acquired conditions and $12 billion in savings according to a 2015 report. See more examples of how the cost controlling measures are working or learn more about the cost controlling measures.

• ObamaCare, the ACA, improves the quality of care that Americans receive by providing better preventative and wellness services and raising the standards of basic health care coverage.

• ObamaCare, the ACA, eliminates pre-existing conditions and gender discrimination. No one can be charged more or be dropped from their health insurance coverage for health or gender-related reasons.

• ObamaCare, the ACA, gives tens of millions of low-income and middle-income Americans access to quality health care by providing discounts through the Health Insurance Marketplace (also known as a Health Insurance Exchange). Find out exactly what the Health Insurance Marketplace is, and how it works.

• Although the Affordable Care Act (ObamaCare) was signed into law in 2010, the health care reforms it enacts roll out year by year until 2022. Many of the biggest reforms didn’t start until 2014. Find Out More About ObamaCare Benefits and Services.

• ObamaCare, the ACA, helps to ensure that health care coverage is available to any legal U.S. resident who cannot otherwise obtain “quality” healthcare through their employer. Your access to health care is no longer entirely in the hands of health insurance companies.

• ObamaCare, the ACA, gives American employers with over 50 full-time equivalent employees the choice between providing insurance that meets the standards of ObamaCare or paying the penalty. This penalty helps to offset the cost of employees who aren’t covered through their employer to purchase insurance through the public health insurance exchanges instead of using emergency services.

• Employers with less than the equivalent of 25 full-time equivalent employees may qualify for tax credits, tax breaks and other assistance to help them insure employees through the Health Insurance Marketplace.

• ObamaCare, the ACA, increases consumer protections. These help to protect you from being dropped while sick, denied care due to lifetime limits, or denied care for pre-existing conditions. These offers Americans more legal power against health insurance companies.

• Unless you make over $200,000 as an individual or $250,000 as a family or small business, you are exempt from almost every tax ObamaCare levies except the mandate to obtain insurance.

• ObamaCare, the ACA, requires that all Americans have health insurance either through a private provider or a state or federally assisted program. If you don’t have insurance, you must pay a tax equal to 1% of your income in 2014 and 2.5% in 2016.

• ObamaCare, the ACA, expands Medicaid to over 15 million previously uninsured low-income Americans.

• The new health care law has begun to reform the healthcare industry by cutting out waste, reallocating government funding, fixing what doesn’t work, and most of all, ensuring health care for Americans.

We hope this answers the question “What is ObamaCare?” Now it’s time to take a look at the ObamaCare Facts and find out what its many provisions do for you.