Understanding the Affordable Care Act

When was this health-insurance-related law enacted, why was it enacted, what does it do, and what does all of this mean for you and your family? Read on to find out…

insurance plans under magnifying glass

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act.

This piece of legislation—which also is known as the Affordable Care Act or “Obamacare,” and which basically overhauled the US health-care system in one fell swoop--was a long time coming, especially for Democrats, who previously had pushed for the creation of a nationwide insurance system for the better part of 75 years.

President Obama wasted little time in continuing that tradition by bringing up the subject of health-care reform in early 2009, shortly after beginning his first term. “Let there be no doubt: health-care reform cannot wait, it must not wait, and it will not wait another year," he said during a joint session to Congress that February.

Key Components of the Affordable Care Act

The gist of the Affordable Care Act (well, aside from “it overhauls the US health-care system”), for those who are curious: it aims to increase the quality and affordability of health insurance in the United States as well as decrease the number of uninsured citizens.

More specifically, it maintains the job-based health plans that have been in place for decades as well as the Medicare program that was created in 1966. It also expands Medicaid and makes federal subsidies available to lower- and middle-income Americans so they can better afford private health insurance, should the need arise.

Another key component of the Affordable Care Act is that it provides those who aren’t covered by any of the above with a new way to obtain, shop for, and pay for health insurance—mostly via what is known as the “health insurance marketplace” --and also offers them (and everyone else, for that matter) greater protections when it comes to such coverage.

Among the protections and rights introduced as a result of the Affordable Care Act’s passage into law are that it:

  • Requires insurance companies to cover people with pre-existing conditions (or, it prevents them from denying coverage to those with pre-existing conditions)
  • Prohibits insurance providers from arbitrarily rescinding coverage (such as when someone is found to have made an honest mistake or minor omission on their application)
  • Makes insurance companies publicly justify any rate increases that are considered unreasonable
  • Allows people to dispute coverage decisions
  • Ends lifetime and annual dollar limits on benefits
  • Extends coverage for young adults (up to age 26) and expands coverage for early retirees
  • Provides free preventive care for children (including certain vaccinations), adults (such as blood pressure and cholesterol screenings, colonoscopies, mammograms, and some services specifically aimed at pregnant women), and seniors (who also are given discounts on drugs when they find themselves in the coverage gap known as the “donut hole”)
  • Protects “doctor choice” by allowing consumers to choose the primary care doctor they want from their plan’s network
  • Removes barriers to emergency services by letting people seek such care at hospitals that are outside of their health plan’s network

The Affordable Care Act also works to:

  • Encourage the integration of health-care systems
  • Make sure consumers get the most from their premium dollars (by requiring that they’re primarily spent on health care, rather than administrative and other costs)
  • Increase the small business tax credit

The Health Insurance Marketplace (or Exchanges) Explained

As mentioned earlier, if you don’t have health insurance through an employer, or if you aren’t covered by Medicaid, Medicare, or some other public program, the steps you need to take in order to obtain private insurance are now slightly different than they were before the passage of the Affordable Care Act.

For instance, if you’ve found yourself in one of the above-mentioned situations and you need to obtain an approved health policy, you’ll likely have to go through one of the federal or state-based insurance marketplaces that were set up as a result of this law.

These exchanges, as they’re also known, are regulated websites that allow people and small businesses to compare, purchase, and even switch private health insurance plans. (They also allow people to receive federal subsidies—if they qualify for them based on their income level--and be granted exemptions.)

Although some states have implemented their own exchanges, the majority of them either have partnered with another state to offer these services or they’ve let the federal government handle things for them—which means that people in the latter category use HealthCare.gov if they need to compare, purchase, or switch plans.

Open and Special Enrollment Periods

Another way in which obtaining private health insurance now differs from how it was obtained prior to the Affordable Care Act’s passage is that eligible individuals—which generally includes anyone who doesn’t make use of Medicaid or Medicare, or doesn’t have an employer-sponsored plan or an individual policy that meets certain government standards—have to sign up for coverage, or switch to a different plan, or apply for subsidies from the government, via their state’s health exchange (or through the federal site, if their state is one of the many that decided against implementing its own marketplace) during certain, specific times of year known as the “open enrollment” period. For 2015, this meant enrolling between Nov. 15, 2014, and Feb. 15, 2015. (That said, at the last minute, the federal government extended its deadline by a week due to long wait times and website glitches, and a number of states quickly followed suit for similar reasons.)

If you fail to adequately insure yourself during that window, you still may be able to do so if you qualify for a “special enrollment” period—although to qualify, you’ll need for one of the following “life events” to have prevented you from buying coverage during open enrollment:

  • Getting married
  • Having or adopting a baby (or putting up a child for adoption or foster care)
  • Losing existing health coverage for various reasons (such as leaving a job, divorce, or “aging off” of a parent’s plan)
  • Moving to a new state (or otherwise moving out of your current plan’s coverage area)

What if you don’t qualify for special enrollment? You’ll have to find short-term health insurance outside of the exchange or marketplace and wait for the next open enrollment period to come around.

Note: if you purchase short-term insurance outside of the exchange and it doesn’t meet the government’s “minimum essential coverage” standards, you’ll pay a per-month fee for as long as you remain inadequately covered.

Subhead: Results So Far

Whether or not the Accountable Care Act can or should be considered a “success” at this point, nearly five years after it was signed into law, is a topic for another article on another website.

Still, there’s little denying that some pretty dramatic statistics can be tied to what its provisions and protections have brought to the American public so far.

For example, since the first open enrollment period kicked off in October of 2013, more than 8 million people have signed up for coverage through the health insurance marketplace. (That number would be even higher if it included the millions of young adults who now can get coverage through their parents’ health plans, or the millions of adults who now are eligible to make use of Medicaid.)

In addition, according to the US Department of Health & Human Services, thanks to the Affordable Care Act:

  • More than 100 million Americans no longer have lifetime limits attached to their health benefits
  • Approximately 76 million people—which includes nearly 30 million women and over 18 million children--in the United States with private health insurance now have access to a slew of preventive services, like shots and screening tests
  • Three million young adults who otherwise would have been uninsured have been allowed to stay on their parents’ health insurance plans until they turn 26
  • Just over 8 million people on Medicare who reached the gap in drug coverage commonly referred to as the "donut hole” since the law was enacted have saved a total of $11.5 billion on prescription drugs (an average of $1,407 per person)
  • Eighty-seven percent of people who, in the first two months of open enrollment, used HealthCare.gov to buy a plan for 2015 received some sort of financial assistance to help lower the cost of their premiums

Finally, American consumers as a whole have saved $9 billion since 2011 thanks to the Affordable Care Act requirement that providers spend at least 80 cents of every dollar on an insured’s health care and the provision that tasks states with reviewing and negotiating premium increases.

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