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All About Obamacare or the Affordable Care Act (ACA)

A step-by-step guide on Obamacare that can save you time and money during Open Enrollment

Written by: Aaron Garcia.

Young woman sitting with elderly female relative on the couch.

Key Takeaways

  • The Affordable Care Act (ACA), also called Obamacare, aims to improve the healthcare system by making health insurance more affordable and available.

  • For individuals that qualify based on income and resources, the U.S. Government will pay a portion of health insurance costs through subsidies or cost-saving reductions.

  • Health insurance exchanges make it easy for uninsured people to qualify for tax credits and get a health insurance policy.

  • The ACA expands coverage to individuals in need of services and protects them from rising costs based on age or health conditions.

Passed in 2010, the Affordable Care Act (ACA) brought sweeping changes to the American healthcare system. The law combined the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA), and is commonly known as “Obamacare.”

Obamacare is the Affordable Care Act (ACA)

The ACA is a healthcare policy that aims to make insurance more accessible and affordable. An essential piece of the ACA is health insurance marketplaces, also called “Exchanges.” Health insurance companies provide plans and prices on the state and federal Exchanges. Productive insurance Exchanges increase the number of people with health insurance and adjust the health risk in the insurance pool, which reduces costs.

Another affordability measure of the ACA is MedicaidMedicaid is a state-based health insurance program based on an individual's financial needs. expansion and tax credits and subsidies to reduce the cost of premiumsA premium is a fee you pay to your insurance company for a health plan coverage. This is usually a monthly cost. and deductiblesA deductible is the amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself.. The reform policy also expands access to care by eliminating exclusions for pre-existing conditions and ensuring free preventive care.

For individuals shopping health insurance for the first time or that lost employer-based insurance and need an individual plan, Obamacare may be the right choice for affordable health insurance. Choosing health insurance can sound complicated, but we’ve got answers to questions about coverage, costs, enrollment, and any changes to the Marketplace.

Pros and Cons of the Affordable Care Act (Obamacare)

The ACA is a significant health care reform initiative that aims to help millions of Americans purchase health insurance. For the millions, from the unemployed to those with low-income jobs to individuals battling pre-existing conditions and chronic disease, the ACA provides access to care and protection from rising costs. On the other side of the ACA, many Americans see only higher premiums and tax increases. We provide a snapshot of the pros and cons of the ACA (Obamacare) below.

The Pros of the ACA

  • Insurance companies cannot deny coverage for people with pre-existing conditions: Before the ACA, health insurance companies could deny you coverage if you had chronic or multi-chronic conditions or cancer.
  • No limits on your care: Before the ACA, people with high-demand care, like chronic diseases, would be required to pay out of pocket after reaching a specific dollar amount (limit) in a calendar year.
  • Access to preventive screenings without a cost: Before the ACA, patients were responsible for preventive service copays and deductibles. The ACA doubles down on preventive care and population health by eliminating these costs as a means to reduce system costs for the long-term.
  • Drugs are more affordable: Before the ACA, many people could not afford prescription drugs. The amount of prescription drugs covered by the ACA increases every year. For seniors, Medicare beneficiary savings on medications under the ACA [1] is over $26 billion.
  • Less uninsured people: More than 20 million people [2] gained health coverage. About half is private coverage, due to subsidies and ACA policies. The other half comes from ACA expanded Medicaid coverage.

 

The Cons of the ACA

  • Some pay higher premiums: After the ACA, insurance companies expanded coverage to high-risk customers. Insurance companies balance their rising cost with premium increases for individuals already enrolled in private insurance policies.
  • Some ACA funding comes from tax increases: After the ACA, taxes increased for the high-income 1% earners; individual medical companies started to pay new taxes specific to paying for ACA costs.
  • The Individual Mandate still exists in some states: After the ACA, an Individual Mandate required Americans to be insured or pay a tax penalty. A repeal of the mandate took effect in 2019. However, some states maintain insurance requirements to avoid tax penalties. More on that below.

How Does Obamacare / ACA Work?

The primary purpose of Obamacare is to reduce health insurance costs for eligible consumers and insurance companies. ACA policy includes:

  • Advanced Premium Tax Credits are subsidies to help individuals and families pay monthly premiums. Individual or family income within 100% to 400% of the Federal Poverty Level [3]  may qualify for a premium tax credit.
  • Cost-sharing reductions (CSR) are called “Extra Savings,” and individuals may qualify to have the government make payments to their insurance company to reduce copays and deductible costs. Extra Savings only apply to Silver plans.

You may be familiar with the “Obamacare tax,” a tax penalty for not having insurance. The ACA included this tax as part of an Individual Mandate requiring individuals to purchase insurance. A vote to eliminate the Individual Mandate was successful in 2019. However, several states have laws that include a tax penalty for uninsured residents. States with a tax penalty [4] include:

  • California
  • Massachusetts
  • New Jersey
  • Rhode Island
  • Vermont
  • Washington D.C.

What is The Marketplace, and How Do I Use It?

The ACA created health insurance Marketplaces to simplify the way you can access and compare health plans and costs side-by-side. The Marketplace provides health insurance plans and prices, including premiums, deductibles, and out-of-pocket maximums, in your state. It uses information like family size, income, and more, then displays options that may be right for you. You can purchase a plan through the Marketplace.

The Marketplace divides plans into four levels: Bronze, Silver, Gold, and Platinum. The prices and coverage begin with Bronze and increase up to Platinum, which is the most comprehensive. Here’s a quick breakdown:

Health Insurance Marketplace Plans

BRONZE

  • You pay: 40%
  • Insurance pays: 60%
  • Premium: Lowest
  • Out-of-Pocket: Highest

SILVER

  • You pay: 30%
  • Insurance pays: 70%
  • Premium: Moderate
  • Out-of-Pocket: Moderate

GOLD

  • You pay: 20%
  • Insurance pays: 80%
  • Premium: High
  • Out-of-Pocket: Low

PLATINUM

  • You pay: 10%
  • Insurance pays: 90%
  • Premium: Highest
  • Out-of-Pocket: Lowest

Before you enroll through the Marketplace, have a list of your doctors and medications at your side. You can search for providers and prescription information in the Marketplace before choosing your plan. If you’re not sure which policies may cover what you need, contact the insurance carrier directly or a GoHealth licensed insurance agent. We provide a free consultation to help you discover the plan that meets your health and budget needs.

Coverage Under Obamacare

What is Affordable Care Act coverage? How is healthcare different from Obamacare? The ACA gives consumers protections and expands required services for insurance policies. The coverage under Obamacare provides an expectation for health insurance.

 

Customer protections under Obamacare

Before the ACA, insurance companies could exclude coverage for pre-existing conditions. Lifetime limits for policies mean the insurance company can stop paying for services when you reach the limit. These practices can leave policyholders with huge bills.

Obamacare did more than end these practices. It established health insurance standards. Now, insurance companies are required to cover these 10 Essential Health Benefits.

1. Outpatient treatments

2. Rehabilitative and habilitative services

3. Emergency services

4. Laboratory services

5. Hospitalization

6. Preventive and wellness services

7. Maternity, pregnancy and newborn care

8. Mental health and substance abuse

9. Prescription Drugs

10. Pediatric services

Focused on Preventive Care

Before the Affordable Care Act, healthcare treated diseases rather than aim to prevent them. You’d get sick, then go to the doctor for treatment. To prevent illnesses, the ACA eliminated fees and copayments for preventive care to promote primary care access.

Obamacare ushered in a list of preventive services insured adults can receive [5] at no cost, including:

  • Diet counseling
  • Immunization vaccinations
  • Screenings
    • Cancer
    • HIV
    • Hepatitis
    • Cholesterol
    • Abdominal aortic aneurysm
    • and more

Women’s Health

The ACA made significant improvements in women’s health. Before the ACA, it was common for women to pay more for health insurance. For women, both access and the cost of care improved with Obamacare reform. The reforms seem to be working. From 2008 to 2018, uninsured women ages 19 to 64 dropped from 18% to 11%. [6]

The preventive services available to women span two categories: (1) all women, and (2) pregnant or may become pregnant. Under the ACA, health insurance includes these vital services at no cost.

Women's Health Services Through Obamacare

All womenPregnant, or may become pregnant
Well-woman visitsFolic acid supplements
Breast cancer mammogramsGestational diabetes screening
Osteoporosis screeningBreastfeeding support and breast pumps
Diabetes screeningPreeclampsia prevention
and moreand more

FDA approved contraception and birth control, along with contraceptive counseling, are available to women without cost. Preventive services like cervical cancer and HPV screenings without copays also are included. NOTE: employers are not required to cover birth control as of 2020.

 

Children’s Health

All Marketplace and Medicaid plans cover 100% of kids’ preventive services [7] without cost, whether you’ve ticked your deductible or not. Here are a few examples:

  • Developmental screening
  • Hypothyroidism screening
  • Autism screening
  • Iron supplements
  • Behavioral assessments
  • Vision screening
  • Immunization vaccinations
  • Hearing screening
  • and much more

Obamacare allows young adults to remain insured on their parents’ policy until the age of 26. For parents, your children’s eligibility does not change whether they are married, live outside of the home, or eligible for employer-based insurance.

Cost Sharing Reductions and Premium Tax Credits that reduce your health insurance prices rely on factors such as household size. By accounting for all your children under the age of 26, you may be eligible for more savings on your coverage.

Is the Quality of Care Less for ACA Plans?

A crucial focus of the ACA is improving the cost and quality of care. The ACA reformed readmissions introduced bundled payment options and Accountable Care Organization (ACOs).

  • Readmissions: The ACA introduced policies to advance the use of electronic medical records and improve coordinated care.
  • Bundled Payments: Aimed to shift from the fee-for-service model, they create a single fee for an episode of care, rather than separate payments to providers. For example, some heart procedures might require the patient to see three to four different doctors before they have surgery. Then see more doctors during their recovery period. A bundled payment includes all of these visits and the procedure in a single amount. The government pays bonuses to incentivize the care teams for meeting established quality goals.
  • Accountable Care Organizations (ACOs): ACOs are groups of doctors, hospitals, and other providers committed to coordinated care for Medicare patients. ACOs use fee-for-service billing, but the government pays bonuses when the care teams meet quality goals aimed at preventive care. ACOs save money in the long run by preventing disease and reducing strain on the system. ACOs pay penalties when care teams do not meet the quality goals set for their patient populations.

How Do I Enroll in Obamacare?

Marketplaces sell plans only during a specific time of year, known as the Open Enrollment Period (OEP). The OEP runs from Nov. 1 to Dec. 15. All plans purchased during this time will go into effect on Jan. 1 of the following year. The same is true if you’re looking to re-enroll.

Exceptions, known as Qualified Life Events (QLEs), will make you eligible for a Special Enrollment Period, including:

  • Marriage
  • Birth or adoption of a child
  • Permanent relocation and your current plan is no longer available
  • Change in income or employment
  • Loss of health insurance (involuntary)

 

Where to Enroll

If you’re looking to sign up for ACA coverage yourself, there are several ways to enroll during the Open Enrollment Period.

  • Apply online at The Marketplace at www.Healthcare.gov or enroll by phone through The Marketplace call center at 855-318-2596.
  • Contact a GoHealth licensed insurance agent.

FAQs

Where do I send my monthly payments?

If you sign up for an Obamacare plan–not Medicare or Medicaid–you will pay the health insurance company. Even though you may have signed up through the government’s Marketplace website, private health insurance companies provide your policy.

Can I enroll for the upcoming 2021 plan year?

Open Enrollment for the 2021 plan year will run from Nov. 1, 2020, to Dec. 15, 2020.

Does Obamacare use coverage networks?

Yes. Obamacare streamlined the enrollment process to improve affordability. The plans are not different from health insurance purchased outside of the Marketplace. Insurance companies form provider networks to keep costs low by negotiating special rates for participating doctors and hospitals. Obamacare coverage does often include provider networks because it helps the insurance companies keep costs down.

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