What Is Obamacare?
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.
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
At the beginning of 2019, 9.3 million Americans were covered through ACA’s premium subsidies, 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. In 2019, 52% of exchange enrollees were benefiting from cost-sharing reductions.
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, 36 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 2020, there are:
- 13 state-based exchanges
- 5 federally supported exchanges
- 6 state-partnership exchanges
- 27 federally facilitated exchanges
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 2020, there are still four Co-ops available in five states:
- Community Health Options in Maine
- Mountain Health CO-OP (Montana Health CO-OP) in Montana and Idaho
- New Mexico Health Connections in New Mexico
- 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.
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:
- Ambulatory services
- Emergency services
- Maternity and newborn care
- Assistance for those suffering from a mental health disorder
- Support for problems with substance abuse
- Prescription drugs (brand-name and specialty)
- Lab tests
- Chronic disease management
- “Well” services
- Preventive services (some preventive services covered at no cost)
- Pediatric services for children, which include dental and vision
- 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:
- 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.
- 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
- 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 2021 health plans begins November 1, 2020, and ends December 15, 2020. Policies bought through Open Enrollment can start as early as January 1, 2021.
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
Enrollment dates for 2021 have not been officially announced. However, unless otherwise stated, open enrollment dates are the same each year. In most states, the Open Enrollment period for 2021 health plans begins November 1, 2020, and ends December 15, 2020.
Affordable Care Act Subsidies for Individuals and Companies
Obamacare Insurance Varieties
Health insurance is not a one-size-fits-all type of business. Due to this, the marketplace offers insurance coverage from several different companies. To find the plan that is right for you and your family, you must evaluate your own health care needs, as well as medications, conditions, etc., as well as consider the premium amounts to see if they fit into your budget. Look at the quality as far as customer service is concerned as well. Search for reviews and then put in the name(s) of the companies that you are considering, seeing how they stack up against each other. All of these considerations should be taken to allow you to find the proper coverage for you and your family.
When Obamacare was first enacted, it included an individual mandate. If you did not purchase insurance, whether from your employer, on your own, or through the Affordable Care Act website, you were penalized. The individual mandate was in effect through the year 2018. People who had to pay the penalty did so when filing their federal taxes.
The mandate was removed from the law, starting with the 2019 plan year. That means that people without insurance will not have to pay the penalty to the federal government when they file their taxes in 2020.
However, some states do charge a penalty to those who do not have health insurance. It is expected that additional states will add an individual mandate in the near future as well. These mandates will be paid when filing state tax returns. States set their own penalties, so the amount you will have to pay depends on where you live.
Tax Penalty Update
While President Donald Trump repealed the affordable care act, there still are some taxes related to Obamacare:
- If you make more than $200,000 a year
- If you are a business owner
Obamacare Insurance Requirements
If you currently have an insurance plan via your employer, it has to meet specific insurance requirements that have been laid out in the Affordable Care Act. Here are the main requirements:
Coverage cannot be denied due to pre-existing conditions, while premium variations can only be due to age, tobacco use, family size, and geography. This removes the changes due to pre-existing conditions, health status, claims history, etc.
Guaranteed Renewability of Coverage means that an insurance company cannot refuse to renew coverage due to illness or pre-existing conditions. Catastrophic Plan changes include making sure they have lower premiums, protecting against high-pocket costs, and covering preventative services without cost-sharing.
Obamacare and the Affordable Care Act have many benefits for those who do not currently have insurance, work at a company that does not offer it, or simply cannot afford it. When you go to the health insurance marketplace, you will find that there are many different options for you and your family.
By evaluating each of the plans and the companies that issue them, you can ensure that you make the right choice for you and your family.
The Obama Administration
Leading up to the 2008 Presidential election, health insurance was widely debated by both Republican and Democratic candidates who spoke openly about reforming the current system through various means. For example, Presidential candidate John McCain proposed a series of tax cuts to those who purchased a plan through the individual market, which was hypothesized to reduce the number of uninsured individuals in the country.
Once Barack Obama won the election, he tasked his administration to come up with a solution that would make healthcare more affordable and accessible. This would ultimately lead to the creation of the Affordable Care Act, which was signed into effect in 2010. Often you’ll hear the word Obamacare being thrown around, which is synonymous with the ACA.
The Affordable Care Act has continuously faced a lot of opposition. The Republican Party voiced their discontent toward the bill and created various legal battles in an attempt to nullify the effects.
The main argument surrounding the ACA is that it would increase the country’s deficit and raise the price of new insurance standards, according to the Kaiser Family Foundation.
In 2013, a fierce Congressional debate raged over this bill, which resulted in a stalemate and forced a temporary government shutdown for 13 days. The reason the shutdown occurred was that the Republicans refused to raise the debt ceiling unless Obama made concessions to the bill.
President Donald Trump has campaigned heavily on the promise to “repeal and replace” the bill. However, since he assumed office in January 2017, he and the Republican Party have failed to do so. This is mainly because all the replacement proposals were deemed too harsh by politicians, and are thought to be devastating for the American people. Many people ask, “Has Obamacare been repealed?” and so far, the answer is “no.”
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:
- Family size
- Plan type
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.
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.
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.
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.
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.
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.
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.