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OBAMACARE / ACA

 All information was written before 2023 Health Insurance amounts were released and will be updated while estimates roll out. All amounts from 2022 are purely for informational purposes.

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Obamacare At a Glance

  • Obamacare was signed into law by President Barack Obama in 2010.
  • The law included significant terms dedicated to making health coverage on the individual market affordable – including subsidies and expanded Medicaid eligibility.
  • Obamacare included alternatives to improve how Americans chose their coverage with the online health insurance marketplace, CO-OPs, and the Basic Health Program.
  • The Affordable Care Act established coverage measures to prevent insurers from being selective with accepting applicants based on a person’s pre-existing medical condition or gender.
  • ACA-compliant plans come with improved plan benefits – included in Obamacare’s essential health benefits (EHB).
  • Health reform advocates praised Obamacare for its numerous stipulations intended to extend coverage and to prevent discrimination regarding policyholders.
  • Obamacare introduces various terms meant to decrease Medicare spending, lower costs, and better coverage for Medicare recipients.
  • You can only enroll in ACA-compliant plants within an annual open enrollment period or special enrollment periods. 
  • As of 2020, Republicans still oppose and attempt to repeal the law’s terms.

Why Does ACA / Obamacare Exist? 

The goal of Obamacare is to:

  • Increase the amount of Americans with health insurance. 
  • Ease the control of health care services. 
  • Reduce the overall costs of health care by restricting certain insurance company practices 
  • providing tax credits and subsidies for individuals and businesses.

When Did Obamacare Start?

While President Obama officially signed the Affordable Care Act into law in 2010, the first Open Enrollment Period wasn’t until October 1, 2013. The initial enrollment period ended on March 31, 2014. Many people are surprised that it took so long to get Obamacare off the ground, but various aspects of the law had to be ironed out before opening the marketplace.

How Does Obamacare Work?

Under Obamacare, insurance companies are required to offer healthcare to all Americans. The act made it illegal for insurers to reject individuals based on pre-existing conditions or their current health status. The main reason Obamacare plans are affordable is that the federal government siphons money every month to major insurance companies. This money (which was formerly called cost-sharing-reduction payments) collectively reduced insurance premiums for millions of Americans, therefore making health care plans affordable.

Affordability Provisions

The ACA introduced significant terms intended to deliver comprehensive health coverage affordable to those who found it difficult to pay for coverage. Significant changes to the American Healthcare system included:

1) Premium Subsidies

Roughly 13 Million Americans received through some sort of ACA’s subsidy, which helped offset the pricey premiums. This helped ease the cost of any metal-level health plan that was compliant with the terms of Obamacare available through the ACA marketplace. 

Premium subsidies are not available to:

  • Those whose employer offers comprehensive “affordable” coverage
  • Medicaid eligible 
  • Those receiving Medicare or other government programs 
  • The incarcerated 

Obamacare also provides cost-sharing reductions, also referred to as cost-sharing subsidies. This helped lower the out of pocket spending for those who are eligible. 

2) Medicaid Expansion

Millions of Americans have enrolled in Medicaid thanks to Obamacare’s extension of Medicaid eligibility. While the supreme court made the expansion optional for states, 39 states have accepted this federal funding. 

3) An Escape From Crushing COBRA Premiums

The Affordable Care Act introduced a new alternative to COBRA, a policy that gives employees the chance to continue group coverage after leaving a job or losing access to coverage. This was especially beneficial for those who had pre-existing conditions and could not qualify for medically underwritten individual health coverage. 

Obamacare also guaranteed that their new, individual-market coverage would be as comprehensive as their group plan, including the inclusion of maternity coverage.

COBRA was expensive as the beneficiary had to pay the full price of the plan. For most enrollees, this coverage was now more affordable thanks to premium subsidies. This law freed Americans from “job lock,” as it ensured comprehensive, affordable coverage on the individual market.

4) Effective Rate Review

Before the Affordable Care Act, various states tried to ensure that premiums were actuarially warranted, but many did not. Without any policing on these premiums, Americans were gouged by insurers. 

Obamacare implemented a policy that requires an actuarial review of any rate increase of 10% or more. As of 2020, the threshold has increased to 15%. 

5) More Affordable Coverage for Small Businesses

Under Obamacare, small businesses that provide employees health insurance may qualify for an ACA-created tax credit, allowing for coverage to be more obtainable.

Health Plan Shopping Options

One of the most notorious Obamacare changes to the American healthcare system was the introduction of Marketplaces. These sites provide easy to understand coverage descriptions written with a consistent clarity of sometimes tricky health insurance terminology.

1) Health Insurance Marketplaces

Health insurance marketplaces were established to help Americans compare coverage details and costs across a wide range of qualified, ACA-compliant health plans. All plans are categorized under metal level classes based on their actuarial value. 

While the marketplace was enforced in each state, the implementation varies. As of 2022, there are:

  •  18 State-based Marketplaces
  • 3 State-based Marketplace using the Federal Platform
  • 30 Federally-facilitated Marketplaces

(source)

2) CO-OPs and Basic Health Program

The Affordable Care Act also formed non-profit health insurance co-ops, made up of private, non-profit, and state-licensed insurance providers that offered ACA compliant plans for individuals and small businesses. As of 2021, there are still three Co-ops available in five states:

  • Community Health Options in Maine
  • Mountain Health CO-OP (Montana Health CO-OP) in Montana, Idaho, and Wyoming
  • Common Ground Healthcare Cooperative in Wisconsin

New York and Minnesota – offer Obamacare’s Basic Health Program option for Americans with incomes too high for Medicaid and legal immigrants not eligible for Medicaid because of the five-year waiting period.

Coverage Standards

The Affordable Care Act also put standards in place, which prevents insurance companies from discriminating against those with pre-existing medical conditions or their gender. 

Before ACA, insurers were allowed to charge higher plan premiums, which proved impossible for some to buy health coverage on the individual market. This law also abolished waiting periods that employer-sponsored plans would require before starting coverage of pre-existing conditions.

Once Obamacare came into play, all policies are guaranteed issue. Before 2014, most coverage on the individual market in most states was not. This allowed for all health coverage to be issued to applicants regardless of their health status, age, or income.

ACA also mandated minimum value standards for employer-sponsored plans offered by large employers. This means that the health plan can’t be a “mini-med” or a policy with holes in coverage. Large employers who do not comply can face penalties under the employer mandate.

These standards also saved ACA-compliant plan buyers from lifetime benefit limits or annual benefit limits. The plan buyers who once required expensive care could deplete their health insurance benefits, even including student health insurance, as those plans generally had low lifetime limits pre-Obamacare.

Improved Plan Benefits

Those plans compliant with Obamacare come with a lengthy list of advantages – embodied in the essential health benefits (EHB) mandate. 

What Are The Essential Health Benefits (EHB) 

Under the Affordable Care Act, all individual and small-group major medical plans must include: 

  1. Hospitalization
  2. Ambulatory services
  3. Emergency services
  4. Maternity and newborn care
  5. Assistance for those suffering from a mental health disorder
  6. Support for problems with substance abuse
  7. Prescription drugs (brand-name and specialty)
  8. Lab tests
  9. Chronic disease management
  10. “Well” services 
  11.  Preventive services (some preventive services covered at no cost)
  12. Pediatric services for children, which include dental and vision
  13. Rehabilitative services

1) Free Services

Under the Affordable Care Act, all individual and small-group major medical plans must also include the following free services: 

  • Colonoscopies
  • Route cholesterol and blood pressure checks
  • Birth control
  • Routine vaccinations
  • Breastfeeding supplies
  • Screening for gestational diabetes
  • Pap smears and HPV tests
  • Screenings for HIV, Gonorrhea, and Hepatitis
  • Tobacco cessation
  • Rh incompatibility screening for pregnant women

2) Coverage on Your Plan for Adult Children

Thanks to the Affordable Care Act, adult children can continue receiving the benefits of their parent’s health care plan until the age of 26. 

3) Improved Programs for College Students

Health plans for college students are just as extensive as the ACA-compliant plans offered to all other Americans.

Consumer Protections / Anti-Discrimination

Obamacare has been widely celebrated for its protections and anti-discrimination legislature set in place. 

Protection from Discrimination

For example, Section 1557 outlaws bias in health plans – including prejudice based on gender identity or sexual orientation. 

1) A Level Playing Field for Women

Before the Affordable Care Act reforms were implemented, it was normal for women to be forced to pay a higher premium or be denied coverage due to pregnancy. This was huge for women, as it gave them access to the same health care coverage available to men. Birth control access also became easier to obtain as all ACA-compliant plans are required to cover at least one FDA-approved method of birth control. 

2) Ease of Claim Appeals

Obamacare also implemented an internal appeal process for claims and gave consumers the right to enforce an external review by an independent organization if they believe their claim was falsely denied. 

3) Protection From Rescission

Retroactive cancellation of your coverage by a health insurance company became prohibited under the ACA. This excludes fraudulent or intentional misrepresentations within an application. 

What are the Pros & Cons of Obamacare?

With everything in life, there are pros and cons to Obamacare. Though as you can see, the benefits outweigh the adverse effects. 

Pros

  • More Americans have health insurance
  • Health insurance is more affordable 
  • Coverage for pre-existing conditions
  • No time limits on care
  • More screenings are covered at little to no cost
  • Prescription drugs cost less
  • Less bias against women and minorities
  • Children can stay on their parent’s health plans 
  • Slows the rise of healthcare costs

Cons

  • Many Americans have to pay higher premiums
  • If you don’t have insurance, you can be fined
  • Raised income tax rate
  • Businesses cut employee hours, so they don’t need to provide coverage

How and When to Enroll in Obamacare:

Signing up for Obamacare depends entirely on your state, as some have created a state-based marketplace, while the majority rely on the federally facilitated marketplace. In regards to the latter, most states use HealthCare.gov. If you are unsure of how to sign up for Obamacare, HealthCare.gov is a great place to start. The site will direct you to the appropriate spot to sign up for insurance. An insurance agent can also tell you how to sign up for Obamacare in your state. This is the easiest way to find coverage.

During Open Enrollment

In most states, the Open Enrollment Period for 2023 health plans begins November 1, 2022, and ends December 15, 2022. Policies bought through Open Enrollment can start as early as January 1, 2023.

Remember, open enrollment is the only time of year you can enroll, switch plans, or re-enroll in your current policy in the individual and family market. 

Outside of Open Enrollment

If you miss open enrollment, your options are narrowed, but you still can enroll through:

  • special enrollment
  • short term health insurance
  • employer-based coverage
  • Medicare
  • Medicaid 
  • CHIP

Affordable Care Act Subsidies for Individuals and Companies

Different Types of Plans

There are four different types of health insurance plans under the Affordable Care Act. These are the Bronze, Silver, Gold, and Platinum plans, which all offer the core benefits that adhere to the ACA. 

The plans differ in price and coverage, with the Bronze plan being the most affordable, ranging to the platinum plan being the most expensive but with the most coverage. No matter which metal category you prefer, you can save on your monthly premium based on your income.

What Does the Bronze Plan Cover?

The bronze plan is the right choice if you are looking for a low-cost way to protect yourself from severe sickness or injury. While your monthly premiums will be low, routine care will be covered by yourself. 

  • Lowest monthly premium
  • Highest expenses when care is needed
  • Bronze plan deductibles can be thousands of dollars a year.

What Does Silver Plan Cover?

The silver plan is a good fit if you are eligible for additional savings, or are willing to pay a somewhat higher monthly premium than Bronze to have more of your routine care covered.

  • Reasonable monthly premium
  • Moderate costs when care is needed
  • Silver deductibles are typically lower than those of Bronze plans
  • If you qualify for cost-sharing reductions, you must pick a silver plan to get the extra savings. 

What Does Gold Cover?

The gold plan is a good fit for you if you’re able to pay much more each month to have costs covered for your medical treatments. If you tend to depend on health care services, a gold plan can be incredibly beneficial. 

  • High monthly premium
  • Low prices when you require care
  • Deductibles are generally low.

What Does Platinum Cover?

The platinum plan is a good fit for those who need a lot of care and can pay a high monthly premium for nearly all medical costs covered.

  • Most expensive monthly premium
  • Lowest prices when you get care
  • Deductibles are very low, meaning your plan starts paying its share quicker than other programs.

How Much Does Obamacare Cost?

You will need to get a quote to determine the cost of coverage. However, various factors go into the amount you will pay. Your quote will be based on your:

  • Age
  • Income
  • Family size
  • Location
  • Plan type

Age

When asking how much does Obamacare cost, you must first consider your age. The older you are, the more you will pay for health coverage. On the other hand, you can find cheap plans when you are young.

Income and Family Size

As of right now, cost-sharing subsidies are still in effect for silver-level plans. If your family has a household income of 400 percent or less of the federal poverty level, you will qualify for a subsidy. The subsidy ensures that individuals and families do not pay more than 9.6 percent of their annual income. The subsidy is subtracted from the price of the premium, making health insurance much more affordable for low-income families.

Location

Your location can also impact how much you pay for Obamacare. The cost of living is different from one area to the next, and that factors into the cost of coverage. If you live in an area with a low cost of living, you can expect to pay less than if you live in a big city with a high cost of living.

Plan Type

The type of plan you choose also determines how much you will pay for coverage. Plans that sit at the bottom of the tier system cost less than plans at the top. However, plans at the top of the tier system have lower out-of-pocket costs. That means if you have a lot of health needs, you could end up spending more overall if you get a plan with a lower premium. Consider your health care needs when choosing a plan. Make sure you select one that offers the coverage you need.

Obamacare Glossary 

ACA Costs and Benefits

ACA is the acronym for The Affordable Care Act, which mandated everyone to buy insurance. Healthier young people paid premiums even though they didn’t use their policy, thus offsetting insurance companies’ cost of insuring even the sickest. The ACA also blocked insurance companies from excluding anyone. 

Expanded Subsidies for Middle-Income Families

The Affordable Care Act extended subsidies for middle-income families, allowing for better insurance. Before the ACA, families with corporate-sponsored insurance were the only ones who could afford comprehensive plans.

Health Insurance Exchange

Health insurance exchanges are online shopping sites that allow you to compare and buy health insurance plans. While some states run their own, most allow their citizens to use one run by the federal government. Those who do not purchase a policy by the end of open enrollment cannot get insurance through the exchange. Since Trump came into power, he shortened the open enrollment period from 90 to 45 days.

Federal Poverty Level

The federal property level is the annual income level that the federal government sets, which identifies those who are under the poverty line. The poverty level rises each year with inflation. Obamacare expanded Medicaid to cover Americans who make 138% or less of the poverty level. It grants tax credits for those who make 400% or less.

Grandfathered In

This term applies to all health insurance plans that were available before March 23, 2010. These plans do not have to implement the ten essential benefits or adhere to many of the other ACA ordinances. They could, however, offer lower coverage or premiums than the policies on the Obamacare exchanges.

Health Insurance Premiums

A premium refers to the monthly cost of your health insurance. For individuals with job-based coverage, their premium is typically deducted from their paycheck. Those enrolled in an Obamacare plan have to pay a monthly premium directly out of pocket. Premiums differ in price depending on your location and the type of plan you’ve selected.

Cost-Sharing Reduction (CSR) Payments

 Recently, the White House announced it would halt cost-sharing reduction payments (also known as CSRs). This refers to federal funding that’s siphoned to insurance companies across the nation, which effectively reduces the cost of premiums for Americans who purchase an Obamacare plan.

This means insurance premiums are likely to increase, as insurers will no longer receive federal funding. Individual states like California have already incorporated price increases into their premiums to compensate for the fact that they’re going to be losing money in the long run.

Non-Obamacare Health Insurance alternatives 

Short Term Insurance

Short term health insurance is an ACA alternative for those who need coverage for a short amount of time. It will not give you the same amount of coverage, such as the ten essential benefits, and can exclude pre-existing conditions. However, these types of plans are an excellent option to ensure you’re covered.

Medical Insurance Packages

Medical insurance packages are an alternative for Americans who cannot afford Obamacare or who need insurance outside of the open enrollment period. These plans are not qualified under the ACA. 

Catastrophic Coverage

Before the ACA’s required coverage, a lot of Americans utilized catastrophic policies as an affordable health insurance option. These plans are less expensive than full health coverage, but only cover you in a specific ‘catastrophic’ event. Any regular check-ups or trips to the hospital are out of pocket. 

Healthcare Sharing Organizations

 A health sharing program is an association that aids in the sharing of health care expenses between a group of like-minded people. While many are non-profit, not all are. 

Members send in a monthly payment that is combined, and the program then pays out for any qualifying medical expenses that are incurred. Health Sharing programs are shared with people who have similar beliefs and values. It may be necessary to meet specific requirements, such as sharing the same religious beliefs. 

Ancillary Policies

If you are in good health, ancillary policies can be an affordable solution. Essentially, these policies are designed to cover specific services such as dental. You can choose a number of services you will need, though anything that is outside of your plan is out of pocket. 

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