How to Get Health Insurance Under the Affordable Care Act

The House passes the ACA, 3/21/10. | Official White House Photo by Pete Souza

Key takeaways

Obamacare – aka the Patient Protection and Affordable Care Act (or Affordable Care Act) – was signed into law by President Barack Obama in 2010.
The law included major provisions intended to make health coverage on the individual market more affordable – including subsidies (which have been enhanced by the American Rescue Plan) and expanded Medicaid eligibility.
Obamacare included shopping options to improve coverage selection, including online health insurance marketplaces, CO-OPs and the Basic Health Program.
ACA put coverage standards in place to prevent insurers from discriminating against applicants based on an individual's pre-existing medical conditions or their gender.
ACA-compliant plans come with a long list of improved plan benefits – embodied in Obamacare's essential health benefits (EHB).
Health reform advocates hailed Obamacare for its many provisions designed to expand coverage and to prohibit discrimination.
The law includes numerous provisions designed to reduce Medicare spending, drive down costs and improve coverage for Medicare beneficiaries.
Enrollment in Obamacare's ACA-compliant plans is limited to an annual open enrollment period and special enrollment periods.
Republicans have opposed – and attempted to repeal – the law's provisions.

What is Obamacare?

The Patient Protection and Affordable Care Act – commonly referred to as the Affordable Care Act and also known as Obamacare – is a sweeping piece of legislation passed by the 111th Congress and signed into law by President Barack Obama in 2010.

The law was intended to improve the affordability – and quality – of health insurance in the United States.

Read more: 50 populations whose lives are better as a result of the ACA.

The law included more than 1,000 pages of provisions intended to make coverage affordable for and accessible to millions of Americans who struggled to pay for individual coverage – many of whom could not buy individual coverage at any price due to pre-existing medical conditions.

The law sharply reduced the number of uninsured Americans. And although the uninsured rate increased under the Trump administration's watch, enrollment in exchange/marketplace plans has reached an all-time high in 2021, and so has Medicaid/CHIP enrollment.

Affordable Care Act's key provisions

The ACA's affordability provisions

The Affordable Care Act included major provisions designed to make comprehensive health coverage affordable to Americans who struggled to pay for coverage prior to the ACA. Chief among those provisions:

Premium subsidies (premium tax credits)

As of early 2021, more than 9.7 million Americans were receiving Obamacare's premium subsidies. And the subsidies have been made larger and more widely available since then, thanks to the American Rescue Plan.

The premium subsidies – which are actually tax credits – offset the cost of premiums for any metal-level ACA-compliant health plan available through an ACA marketplace.

Subsidy eligibility is largely based on income, but there are a handful of other factors, including immigration status, age, and access to government-sponsored or employer-sponsored coverage. Here's a full explanation of premium subsidy eligibility. Here's how to calculate your subsidy.

Americans not eligible for premium subsidies include individuals whose employer offers comprehensive "affordable" coverage, those who are eligible for Medicaid, Medicare, or another government program, and individuals who are incarcerated or not legally present in the US.

ACA cost-sharing reductions

In addition to the premium subsidies, the ACA also provides cost-sharing reductions (CSR) – also known as cost-sharing subsidies – which reduce out-of-pocket spending for eligible enrollees. In 2021, 48% of exchange enrollees – more than 5.4 million Americans – were receiving CSR. Here's an explanation of eligibility for cost-sharing subsidies.

The Affordable Care Act's Medicaid eligibility expansion

Millions of Americans have been able to enroll in Medicaid since 2014 through the ACA's expansion of Medicaid eligibility. The Supreme Court made the expansion optional for states, but as of mid-2021, 37 states and the District of Columbia had accepted federal funding to expand Medicaid – providing coverage for nearly 20 million Americans.

ACA's '80/20 Rule' – Medical Loss Ratio

Obamacare established the Medical Loss Ratio – the 80/20 Rule – which forced health insurance companies to devote more premium dollars to medical care for policyholders, as opposed to administrative costs. When insurers don't meet these requirements, they have to issue refunds to policyholders. In 2020, nearly $2.5 billion in rebate checks were sent to American consumers.

The ACA also requires Medicare Advantage plans to spend at least 85% of revenue on medical costs and quality improvements, although rebates in the case of non-compliance are issued to the federal government instead of enrollees.

An escape from crushing COBRA premiums

The Affordable Care Act added a new alternative to COBRA. COBRA gives employees the option of continuing their group coverage after leaving a job or otherwise losing access to their employer-sponsored coverage. (State continuation provides this option in many states for people who work for smaller employers.)

2022 Guide to ACA Open Enrollment Since the mid-1980s, COBRA provided a realistic way for people to maintain coverage while between jobs if they had pre-existing conditions and were unable to qualify for medically underwritten individual health coverage. COBRA allowed these individuals to keep the same coverage they had at their job, but the coverage was expensive, since the employee assumed the full price of the plan – including the portion the employer had been paying.

Obamacare's guaranteed issue provision assured coverage eligibility for these individuals – and also ensured that their new individual-market coverage is as comprehensive as group coverage (for example, the inclusion of maternity coverage – which wasn't part of most individual market plans prior to 2014). For most enrollees, coverage under the ACA is also affordable, thanks to premium subsidies. And – depending on income levels after leaving a job – some of these individuals now qualify for expanded Medicaid with free or very low-cost premiums.

As a result, the law freed Americans from "job lock" allowing them to pursue self-employment and entrepreneurship, confident that they have access to comprehensive, affordable coverage on the individual market.

(For those who prefer COBRA, the American Rescue Plan included a six-month COBRA subsidy, running from April to September 2021, that provides premium-free COBRA coverage for people who have involuntarily lost their jobs.)

Effective rate review

Before the Affordable Care Act was implemented, some states tried to ensure that premiums on state-regulated health plans were actuarially justified, but others did very little – and residents in some states were getting fleeced by some insurers. Obamacare implemented a system that requires an actuarial review of any proposed rate increase of 10% or more (this threshold has since increased to 15%), and details are published so consumers can see them.

Caps on out-of-pocket costs.

Under Obamacare, health plans have to cap enrollees' out-of-pocket exposure for in-network care at a level that's set each year by the federal government. (Plans can have out-of-pocket caps that are lower than the federally determined amount, but not higher.) Prior to the ACA, individual-market plans sometimes had out-of-pocket limits of $20,000 or more, or no limits at all.

More affordable coverage for small businesses

Under Obamacare, small businesses that provide employees with health insurance may be eligible for an ACA-created tax credit to make offering coverage more affordable.

Health plan shopping options

ACA's health insurance marketplaces

Health insurance marketplaces – also referred to as health insurance exchanges – were established to help American consumers easily compare coverage details and costs across a wide range of qualified health plans. These policies – deemed ACA-compliant – must meet standards established and enforced by the federal government and state governments.

The ACA called for the creation of an exchange – or marketplace – in each state, but marketplace implementation (including the type of marketplace) varies by state. As of 2021, there are 15 state-based exchanges, six federally supported exchanges, six state-partnership exchanges and 24 federally facilitated exchanges. See information about your state's health insurance marketplace.

A key goal of the marketplaces was to provide coverage explanations in easy-to-understand, standardized formats, along with uniform definitions of health insurance terminology. Plans are categorized under metal level classifications based on their actuarial value, and catastrophic plans are also available to eligible enrollees.

Included in the exchange options is an enrollment platform called SHOP (Small Business Health Options Program) – a tool that allows small businesses to compare plans and enroll in coverage for their employees. But SHOP plans proved to be much less popular than individual market plans, and most states no longer have SHOP plans available. In some states, however, there are still thriving SHOP markets.

CO-OPs and Basic Health Program

The ACA also created nonprofit health insurance co-ops – private, nonprofit, state-licensed health insurance carriers – that offer ACA-compliant plans in individual and small-business markets. But only three CO-OPs are still operational in five states.

Two states – New York and Minnesota – offer the ACA's Basic Health Program option for people with incomes too high for Medicaid eligibility and for legal immigrants not eligible for Medicaid because of the five-year waiting period.

ACA coverage standards

The ACA put coverage standards in place to prevent insurers from discriminating against applicants – or charging them higher plan premiums – based on an individual's pre-existing medical conditions or gender. Before the implementation of the ACA, Americans with pre-existing conditions could find it expensive – or impossible – to buy health coverage in the individual market. The law also eliminated waiting periods that employer-sponsored plans would impose before starting coverage of pre-existing conditions, and allows employers to impose waiting periods of no more than three months before full-time employees must be offered health coverage.

Under the ACA, all policies are guaranteed issue – which means that health coverage is guaranteed to be issued to applicants regardless of their health status, age or income. Prior to 2014, coverage on the individual market in most states was not guaranteed issue. Instead, insurers based eligibility for coverage on an applicant's medical history.

Obamacare also mandated minimum value standards for employer-sponsored plans offered by large employers (in most states, that means 50+ employees). Large employers are required to offer affordable coverage that provides minimum value, which means it can't be a "mini-med" or type of plan with gaping holes in the coverage. Employers that don't comply face potential penalties under the employer mandate.

The standards also rescued ACA-compliant plan buyers from lifetime benefit limits and annual benefit limits. Before Obamacare took effect, plan buyers who needed expensive care could exhaust their health insurance benefits, and have nowhere else to turn. These rules apply to student health insurance as well, and those plans commonly had very low lifetime limits pre-ACA.

Improved plan benefits with ACA-compliant plans

ACA-compliant plans come with a long list of benefits – embodied in Obamacare's essential health benefits (EHB). Under the Affordable Care Act, all individual and small-group major medical plans must include coverage of the following EHBs:

hospitalization
ambulatory services
emergency services
maternity and newborn care
services for those suffering from mental health disorders and problems with substance abuse
prescription drugs (including brand-name drugs and specialty drugs)
lab tests
chronic disease management, "well" services and preventive services, including vaccinations (certain preventive services are covered at no cost to the enrollee)
pediatric dental and vision care for children
rehabilitative and "habilitative" services which include helping a person keep, learn or improve functioning for daily living.

Free services
While that list alone may seem impressive, it's even more impressive when you look at the long list of preventive healthcare services that are covered FREE under ACA-compliant plans:

FREE colonoscopies
FREE route cholesterol and blood pressure checks
FREE birth control
FREE routine vaccinations
FREE breastfeeding supplies
FREE screening for gestational diabetes
FREE pap smears and HPV tests
FREE screenings for HIV, Gonorrhea, and Hepatitis
FREE tobacco cessation
FREE Rh incompatibility screening for pregnant women

Although large group plans are not required to cover the ACA's essential health benefits, the requirement that health plans fully cover a wide range of preventive care does apply to large group plans as well as small group plans and individual market plans (including student health plans, which are regulated under individual market rules).

Coverage on your plan for adult children

Thanks to the ACA, young adults can stay on their parents' health insurance plans until age 26.

Improved plans for college students

And thanks to Obamacare, health plans offered to college students are just as comprehensive as the ACA-compliant plans offered to everyone else.

ACA's consumer protections/ anti-discrimination

Health reform advocates hailed Obamacare for its many provisions designed to expand coverage – and to prohibit discrimination.

Protection from discrimination

Section 1557 prohibits discrimination in health plans – including discrimination based on gender identity or sexual orientation. That has been a boon to the LGBT community. The Trump administration rolled back those consumer protections with a new rule that was issued in 2020, but the Biden administration announced in May 2021 that Section 1557 requirements would once again include a prohibition on discrimination by health care entities based on sexual orientation or gender identity.

A level playing field for women

Because Obamacare prohibits discrimination because of a pre-existing or newly diagnosed condition, it also means women can't be denied coverage if they're pregnant or be forced to pay a higher premium just because they're women (health plans in the individual market used to routinely reject applications from expectant parents — both male and female — before the ACA's reforms were implemented).

Another major improvement under the ACA is birth control access – with plans required fully cover (ie, with no cost-sharing) at least one version of every FDA-approved method of birth control for women.

Ease of claim appeals

Under Obamacare, there's an internal appeals process, and if that doesn't work, consumers have the right to an external review by an independent organization.

Protection from rescission

Under the ACA, recission (retroactive cancellation of your coverage) by a health insurance company is prohibited – unless your application was fraudulent or included intentional misrepresentation.

Medicare improvement provisions of the Affordable Care Act

The law includes numerous provisions designed to reduce Medicare spending, drive down costs, and improve coverage for Medicare beneficiaries. Among them:

Cost savings through Medicare Advantage

The ACA is gradually cutting Medicare costs by restructuring payments to Medicare Advantage, based on the fact that the government was spending more money per enrollee for Medicare Advantage than for Original Medicare. (Medicare Advantage enrollment has continued to increase; the ACA has not dampened that market at all.)

Focus on prescription drugs

Medicare's prescription drug "donut hole" issue was addressed by the ACA, which began phasing in coverage adjustments to ensure that enrollees would pay only 25% of "donut hole" expenses by 2020, compared to 100% in 2010 and before. The 'donut hole' closed a year earlier than expected for brand-name drugs, with enrollees' out-of-pocket costs in 2019 capped at 25% of the cost of the drugs (after the deductible is met). By 2020, enrollees' out-of-pocket costs were capped at 25% of the cost of both brand name and generic drugs while in the donut hole, and it will remain at that level going forward.

Free preventive services

Since 2011, Medicare beneficiaries have had access to free preventive care, with free "Welcome to Medicare" visits, annual wellness visits, personalized prevention plans, and some screenings, including mammograms – all thanks to the ACA.

New funding for Medicare

The ACA changed the tax code to increase revenue for the Medicare program. Starting in 2013, the Medicare payroll tax increased by 0.9% for the wealthiest fraction of the country – less than three percent of couples earn $250,000 or more.

Expanding access to care in underserved areas

The Medicare Modernization Act of 2003 included a provision to pay 10 percent bonuses to Medicare physicians who work in health professional shortage areas (HPSAs). The ACA expanded this program to include general surgeons, from 2011 to the end of 2015.

Cost containment

The ACA includes numerous cost-containment provisions that have been implemented over the years since the law was passed.

An additional opportunity to disenroll from Medicare Advantage and sign up for Part D

ACA Section 3204 created an annual Medicare Advantage disenrollment period from January 1 to February 14. The Medicare Advantage disenrollment period allowed seniors drop their Medicare Advantage plan, switch back to Original Medicare, and purchase a Part D plan. As of 2019, it was replaced with the Medicare Advantage Open Enrollment Period, which is a longer window (January 1 to March 31) and allows more flexibility for enrollees, as they now also have the option to switch from one Medicare Advantage plan to another during this window.

How and when to enroll in the Affordable Care Act / Obamacare:

During open enrollment

Although coverage under the ACA is now guaranteed issue, there's a trade-off: enrollment in ACA-compliant individual market plans is limited to an annual open enrollment period (November 1 to December 15 in most states, although HHS has proposed an extension through January 15 that would apply nationwide starting with the enrollment window that began November 1, 2021).

Individuals who want to enroll in an ACA-compliant plan (including a CO-OP in areas where they're still available) have the choice of enrolling through a state health insurance marketplace or off-exchange (outside of the marketplace), although premium subsidies and cost-sharing reductions are not available outside the exchange. Learn how plan design and pricing may differ off-exchange.

Outside of ACA open enrollment

Outside of the annual OEP, individuals who have qualifying life events can enroll during a special enrollment period. These qualifying events include:

Involuntary loss of coverage
A permanent move to a new area
Divorce, death or legal separation (available in some states)
A change in subsidy eligibility
A change in immigration status – including becoming a U.S. citizen or lawfully present resident
Problems with your employer-sponsored health plan's affordability or its benefits.
Non-calendar-year health plan renewal
A change in household income that makes you subsidy-eligible
A growing family – due to marriage, birth, adoption or foster care
Various exceptional circumstances; these can apply to a single applicant or to everyone in a particular area or circumstance.

In some cases, the applicant must have had minimum essential coverage in place prior to the qualifying event in order to be eligible for a special enrollment period, so some qualifying events only allow for coverage changes (as opposed to gaining coverage after being uninsured).

Special enrollment opportunity in 2021

Due to the COVID pandemic and the additional premium subsidies provided by the American Rescue Plan, a one-time special enrollment window has been opened nationwide in 2021. It began in early 2021, and in most states, it continues through at least August 15. During this window, in nearly every state, people can newly enroll or switch plans, regardless of whether they experience a qualifying event.

Who can enroll in an ACA-compliant plan?

The intent of the Affordable Care Act was to cover as many Americans as possible with comprehensive, major medical health insurance plans. To be eligible to enroll in a plan through the ACA's health insurance exchanges, you must be lawfully present in the U.S. and you can not be currently incarcerated.

Immigrants can enroll in individual health plans during the open enrollment period, just like any other lawfully present U.S. resident – and lawfully present immigrants are eligible for ACA's premium subsidies.

Do you have to enroll in an ACA-compliant plan?

The ACA's individual mandate penalty was eliminated after the end of 2018 – meaning that a federal penalty no longer applies to people who are uninsured in 2019 and later. However, some states have implemented their own individual coverage mandates.

For the most part, coverage needs to be ACA-compliant in order to meet the requirements of an individual mandate, but if you still have a grandmothered or grandfathered health plans (neither of which are required to be fully compliant with the ACA), you can keep your plan for as long as it continues to be available.

The battle over the ACA / Obamacare

From the earliest conversations about the Affordable Care Act, the law and its provisions have been vigorously opposed by Congressional Republicans.

The opposition has included numerous legal challenges over the ACA's constitutionality (among them the Texas vs. Azar/California v. Texas lawsuit, in which the Supreme Court ruled in favor of the ACA in 2021) as well as piecemeal weakening of the law by President Donald Trump's administration. Consumer advocates note that this opposition has worsened coverage options and driven premiums upward. But the Biden administration has taken various steps to protect and strengthen the ACA, and the American Rescue Plan, enacted in March 2021, made the ACA's subsidies much stronger for 2021 and 2022 (these enhancements may be extended beyond 2022 by additional future legislation).

ACA advocates have continued to battle to preserve the law's consumer protections and coverage gains. At the same time, states have stepped up to preserve and strengthen the law's provisions.

Read more about 50 benefits we'd lose if the ACA were to be overturned, and 50 populations that are better off with the ACA in place.

Steve Anderson, healthinsurance.org's editor and content manager, has been writing about health insurance and health reform since 2008. Steve is also co-founder and editor of medicareresources.org. In previous lives, he worked as a community journalist, public relations manager and director of public affairs.

How to Get Health Insurance Under the Affordable Care Act

Source: https://www.healthinsurance.org/obamacare/