How the Affordable Care Act Works
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How the Affordable Care Act Works
The Affordable Care Act (ACA) was created to address a number of challenges that Americans faced over buying and keeping healthcare coverage. Many Americans were denied coverage because of pre-existing conditions, and others with chronic healthcare conditions or serious illnesses or diseases ran out of benefits due to yearly or lifetime limits. In addition, millions of Americans were uninsured. They were at risk of financial problems and healthcare difficulties due to that lack of insurance. The provisions of the Affordable Care Act continue to evolve, and there have been many challenges that have chipped away at its original form, so there will likely continue to be changes as it is implemented during the next several years. The federal health insurance exchange can be accessed at healthcare.gov.
Things To Know
- Insurance companies must include basic benefits in their policies.
- Subsidies may reduce the cost of insurance purchased through health exchanges.
Health Insurance Standards
Under Obamacare, as the ACA is also known, health insurance policies must offer certain basic benefits. These include:
- Outpatient care, including doctor’s visits
- Emergency room services
- Hospitalization, including surgery
- Maternity and newborn care
- Lab services
- Prescription drugs
- Mental health and substance abuse services, including counseling
- Rehabilitative services
- Preventative and wellness services
- Management of chronic diseases
- Children’s health services
Individual mandate
Beginning in 2014—but ending at the end of 2018 under a new tax law—under the individual mandate provision, most individuals needed to have insurance coverage or pay a penalty. That meant you and your children—and anyone else, such as a relative—whom you claim as a dependent, were required to have health insurance or pay a fine every year. The mandate was designed to ensure that the estimated 40 million Americans who didn’t have health insurance got health insurance.
The 2018 Tax Cuts and Jobs Act eliminated the penalty as of January 1, 2019. The individual mandate itself, however, still exists. In response to the elimination of the penalty, some states enacted their own penalties, and some other states are currently considering them.
Insurance Subsidies
Many individuals and families qualify for subsidies that will lower the cost of their health insurance premiums. Those subsidies depend on your family income and size. The subsidies actually take the form of a tax credit, but they are applied to your premium costs immediately so you will pay the lower costs immediately.
Although most high-earning individuals and families will not be eligible for subsidies, low income and many middle-income families and individuals will be eligible. Subsidies for a family of four in 2024 are available for an income range of $31,200 to $124,800. The lower the income, the higher the subsidy; the income ranges will adjust slightly for inflation in future years.
NOTE: Legislation in 2024 and beyond may change provisions and other features.
