Understanding the Affordable Care Act (ACA)

Health care choices can be overwhelming and complex…so let’s learn about Affordable Care plans together!

Many find the topic of health care confusing. We get it! Add in terms like the ACA, Obamacare and the Marketplace and you may wonder how and if they’re related or where to start. Below is a brief overview of things you need to know about the Affordable Care Act.

What is the Affordable Care Act (ACA)?

The Affordable Care Act (ACA) is a health care law that went into effect in 2010 making health insurance more accessible, affordable and fair for consumers. More than 80%1 of people get their health coverage through an employer, Medicare or Medicaid, but many people without these options need to buy their own insurance. Before the ACA, many of these individuals and families had no coverage. 

  • The ACA is also referred to as Obamacare because it was signed into law on March 23, 2010, by President Barack Obama.

  • The official name of the law is the Patient Protection and Affordable Care Act (PPACA).

  • The ACA created a central marketplace (also called “the Marketplace” or “the Exchange”) that’s run by the federal government where Americans can buy health plans based on their needs.

  • ACA plans are for Americans to become insured when previously they were unable to obtain health insurance because they are self-employed, underemployed or unemployed.

  • Any U.S. citizen or legal immigrant can enroll in an ACA health plan.

  • The ACA requires insurers to cover pre-existing conditions so no one can be turned down or charged more due to their medical history or gender.

  • Young adults are now allowed to stay on their parent’s insurance plan through the Marketplace until the age of 26.
  • By law, all marketplace plans through the ACA must cover at least 60% of health care costs.

  • Medicare is not an ACA plan.

How Does the Affordable Care Act (ACA) Work?

The ACA was formed to provide affordable health coverage for all Americans. With it came the creation of health insurance exchanges, sometimes referred to as “the Exchange” or “Marketplace,” for shoppers to compare and purchase health insurance plans. Depending on where you live, your Marketplace is organized either by the federal government or your state.

You can enroll in an ACA plan during what’s called an Open Enrollment Period (OEP) which happens at a specific time each year—typically November 1 until December 15. You may also enroll during a specific period called a Special Enrollment Period (SEP) when you’ve had a major life event like the change of a job or the birth of a child.

To make it easier for people to review plan coverage options and pricing, all plans sold through the Marketplace fit into one of four standard levels of coverage named after metals. The metals range from bronze to platinum and reflect how the cost is split between the consumer and the insurer not the quality of care you’ll receive.

    4 Levels or Tiers of ACA Plans:

  • 1
    Bronze

    Lowest monthly premium, highest out-of-pocket cost when you need care. Can be good for those who want to keep their costs low and have coverage for major medical or catastrophic illness. You will pay for most routine care. Approximately 60% of your health care costs are covered by this plan. 

  • 2
    Silver

    Moderate monthly premium, moderate out-of-pocket cost when you need care. Can be a good middle-of-the-road plan that is popular with consumers. Approximately 70% of your health care costs are covered by this plan. NOTE: If you qualify for cost-sharing reductions (a discount that lowers the amount you have to pay for deductibles, copayments and coinsurance) you must pick a Silver plan to get the extra savings. You can save hundreds or even thousands of dollars per year if you use a lot of care.

  • 3
    Gold

    Gold plans typically have higher monthly premiums, but lower out-of-pocket costs. If you are a regular user of health services, this could be a good choice. Approximately 80% of your health care costs are covered by this plan.

  • 4
    Platinum

    Highest monthly premium but you’ll pay less for care. Approximately 90% of your health care costs are covered by this plan.

Are You Eligible for ACA Subsidies and Tax Credits?

Typically, with health insurance you pay a monthly premium for your insurance but with ACA plans, there are subsidies known as tax credits for those with lower incomes to help pay for their care and monthly premium. The American Rescue Plan Act was signed into law by President Joseph Biden on March 11, 2021, which expands ACA subsidies for a two-year period limiting the amount enrollees must pay for premiums to no more than 8.5% of their income.  

  • To qualify for a subsidy or tax credit, your income must be between 100% and 400% of the federal poverty level.
  • You are not eligible for a subsidy or tax credit if you’re offered a health plan through your employer and choose instead to buy a plan on your own.
  • Check your state's Medicaid eligibility guidelines if you believe that your household income is less than the federal poverty level.

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What the Affordable Care Act (ACA) Covers

Health plans through the ACA have several coverage requirements. You cannot be denied coverage or charged more due to pre-existing health conditions or because of your gender. The following 10 essential health benefits are required for any ACA plan:

  • Outpatient treatments

  • Preventive and wellness services

  • Rehabilitative and habilitative services

  • Maternity, pregnancy and newborn care

  • Emergency services

  • Mental health and substance abuse

  • Laboratory services

  • Prescription drugs

  • Hospitalization

  • Pediatric services

In addition to the above, ACA plans must offer dental coverage for children although dental benefits for adults are optional. Specific services may vary based on your state’s requirements. Based on your location you can compare what each plan offers. 

Let's talk about Affordable Care Act plans!

Explore all of your options for health insurance with myHealthPolicy. Our licensed insurance agents can help you find a plan that provides the coverage you need for an affordable price.

Can you get Medicare through the Affordable Care Act (ACA)?

No. Medicare and the ACA and Marketplace plans are separate and it’s against the law for someone to sell you a Marketplace plan if they know you have a Medicare plan. If you already have Medicare, make certain that you’re reviewing Medicare plans not Marketplace plans.

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