What is Affordable Care Act (ACA)?
The 2010 law, which reformed health care, is known as the “Affordable Care Act” (ACA) and its revisions. The law covers preventative care, health insurance coverage, and medical expenses.
The Affordable Care Act encompasses extensive reforms in health insurance and incorporates tax regulations impacting individuals, families, businesses, insurers, tax-exempt entities, and government bodies. These tax regulations encompass significant alterations, including adjustments in tax filing procedures for individuals and families. Moreover, the law entails benefits and obligations for various organizations and employers.
There are three main objectives of the ACA law:
- Enable more people to obtain inexpensive health insurance. Under the law, households with incomes between 100% and 400% of the federal poverty level (FPL) can receive subsidies from the government (known as the “premium tax credit”), which lowers costs.
- You can still be eligible for the premium tax credit even if your income is higher than 400% FPL.
- You might be able to modify or enroll in Marketplace coverage during a Special Enrollment Period if your income is at or below 150% FPL.
- Include all adults with incomes under 138% of the federal poverty level under Medicaid. (Not every state has made Medicaid program expansions.)
- Support cutting-edge approaches to the delivery of healthcare that aim to reduce overall healthcare expenditures.
Major Provisions of ACA
The ACA equips individuals with the resources to make well-informed decisions regarding their healthcare coverage. It offers:
- Choices for individuals, families, and small businesses and their staff to sign up for health insurance.
- Legal safeguards that assist consumers in obtaining coverage, even if they have pre-existing conditions.
Marketplaces of ACA
The Affordable Care Act created the Health Insurance Marketplaces. People who qualify and don’t have health insurance from an employer, Medicare, Medicaid, CHIP, or another qualifying source can get coverage from the Marketplaces. They might also be eligible for financial help to pay for it. The Marketplaces assist individuals in acquiring health insurance.
Lower Costs of ACA
The ACA introduced programs to make insurance more affordable, reducing costs for eligible individuals enrolling via a Marketplace. Unlike Medicaid and CHIP, when assessing eligibility for the premium tax credit (PTC) and cost-sharing reductions (CSRs), Marketplaces assess income differently. You’ll need to clarify how consumers’ modified adjusted gross income (MAGI) decides their eligibility for these programs under the ACA.
Consumer Protections & Health Insurance Company Responsibilities
Health insurance companies are mandated to simplify health coverage for consumers in various ways under the ACA.
The majority of health insurance providers and the policies they provide are required by major ACA features to:
- Issue a standardized Summary of Benefits and Coverage (SBC) for consumers to easily comprehend their coverage and compare it with other available options.
- Provide coverage for consumers irrespective of pre-existing conditions.
- Avoid terminating coverage after agreeing to cover consumers, except in specific circumstances.
- Deliver a fundamental comprehensive package of benefits, referred to as essential health benefits (EHB), when providing coverage to individual consumers and small employers.
- Prohibit annual and lifetime dollar limits on coverage of essential health benefits.
The table below outlines the modifications to consumer protections and the responsibilities of health insurance companies as stipulated by the ACA.
PROVISIONS | BEFORE THE ACA | UNDER THE ACA |
Preventative care services | Typically, individuals with health coverage would incur a copayment or similar out-of-pocket expense for routine preventive healthcare services. | The majority of health plans, regardless of whether they are offered within or outside the Marketplaces, are required to include specific recommended preventive services (such as yearly check-ups, vaccinations, and mammograms) without requiring consumers to share the costs. |
Dollar limits on EHB | Previously, federal law didn’t restrict health insurance companies from establishing lifetime or yearly monetary limits on the benefits they provided within their plans. Once an individual reached the annual or lifetime monetary cap, the plans would cease covering the included services. | Health insurance providers usually cannot impose financial restrictions on the expenses they allocate for essential health benefits, either throughout the plan year or for the duration of consumers’ enrollment in the plan. Nonetheless, these providers retain the ability to establish lifetime or yearly monetary limits on the expenses for covered benefits that do not fall under essential health benefits. |
Pre-existing conditions (Pre-existing conditions refer to health issues, such as diabetes or cancer, that existed before an individual’s health insurance became effective.) | Previously, federal law typically didn’t prevent health insurance companies from refusing health coverage to individuals in the individual market due to pre-existing conditions. | The ACA ensures that individuals with pre-existing conditions can apply for and buy health insurance if they meet other eligibility criteria. Generally, consumers can renew their existing policy regardless of their health condition. Health insurance companies are now prohibited from denying coverage or charging higher rates to consumers with pre-existing conditions. |
Coverage cancellation | Previously, federal law didn’t prevent health insurance companies from retroactively canceling consumers’ coverage due to errors in their applications. | Insurers are only allowed to retroactively cancel a consumer’s coverage if the consumer engaged in fraud or intentionally misrepresented important facts. In most cases, health insurance companies cannot cancel consumers’ coverage as long as they continue to pay their premiums unless there are specific exceptions. |
Coverage for young adults | States had the authority to impose restrictions on the duration that young adults could stay enrolled in their parent’s health insurance plan. | The ACA typically mandates insurers in all states to permit dependent children and young adults up to the age of 26 to remain on their parent’s health insurance plans, provided that the plans offer coverage for dependent children. |
Explanation of benefits and coverage | Federal law did not mandate health insurance companies to provide clear and easily understandable explanations of coverage benefits and costs to consumers. | Health insurance companies must now furnish clear, consistent, and comparable details regarding consumers’ health benefits and coverage. They accomplish this by supplying a standard Summary of Benefits and Coverage (SBC) for each plan at no cost. The SBC for each plan should be presented in a standardized format and utilize simple language. Additionally, health insurance companies are obligated to offer consumers a standardized glossary containing commonly used terms. |
- Lifetime Dollar Limits: Lifetime dollar limits refer to the maximum amount that plans will pay for covered benefits throughout the entire duration of consumers’ enrollment in a plan.
- Annual Dollar Limits: Annual dollar limits denote the maximum amount that plans will pay for covered benefits over a single plan year.
- Parents’ Health Insurance Plan:
- For plans acquired through the Marketplace, insurers are required to extend coverage to dependent children until the conclusion of the plan year in which they reach 26 years of age (or the maximum age as stipulated by state law). If a household qualifies for a Special Enrollment Period (SEP) after the dependent child turns 26, their coverage under the parent’s plan will be terminated, and they will be enrolled in their policy.
- For plans obtained outside the Marketplace, coverage generally ceases when the dependent child turns 26. Consumers should verify their plans for specific details as some states and plans may have different regulations.
In Summary:
The Affordable Care Act (ACA) brought significant changes to healthcare in the United States. It aimed to make healthcare more affordable and accessible to everyone. The ACA introduced subsidies for those with lower incomes to help them afford health insurance. It also expanded Medicaid to cover more people and allowed young adults to stay on their parent’s insurance plans until age 26.
Moreover, the ACA introduced important consumer protections. Health insurance companies are now required to provide clear and easy-to-understand information about coverage benefits and costs. They cannot deny coverage or charge higher rates to people with pre-existing conditions. Lifetime and annual dollar limits on essential health benefits are also prohibited, ensuring that people can access the care they need without worrying about exceeding limits.
Overall, the ACA has made healthcare more transparent and equitable for all Americans, ensuring that everyone has access to quality health insurance coverage.
DISCLAIMER: Please verify the information provided here with the primary source to ensure accuracy. We strive to present information correctly. It is advisable to confirm details directly from the primary source for accuracy and reliability.
