President Barack Obama signed the Patient Protection and Affordable Care Act, commonly referred to as Obamacare, into law in 2010. This landmark piece of legislation contains many significant provisions.
Tens of millions of Americans now have access to affordable health insurance thanks to this legislation, which expands Medicaid and the Children’s Health Insurance Program, enhances Medicare, and creates state-run exchanges that facilitate purchasing insurance policies.
1. The Individual Mandate
Under the Individual Mandate, most Americans must purchase health insurance or face a penalty. However, some people qualify for an exemption to this requirement.
The individual mandate is part of the Affordable Care Act, commonly referred to as Obamacare. This law seeks to control healthcare costs and expand access to affordable health insurance options for Americans.
Unless you qualify for an exemption, you must purchase a plan that meets certain standards or pay the “shared responsibility payment” at tax time. The penalty is calculated based on your personal exemption amount and standard deduction; it cannot exceed 50%.
The Affordable Care Act (ACA) also offers subsidies to help people purchase coverage through the Marketplace. These payments are intended to offset the cost of meeting individual mandate requirements.
2. The Exchanges
The exchanges are a new way for health insurance shoppers to shop. They may be managed by either the state or federal government and provide assistance to people with low incomes in purchasing plans.
Exchanges provide people who cannot afford health insurance with federal subsidies, known as tax credits, that can help cover deductibles, copayments and other out-of-pocket expenses. These subsidies remain available until a person or family earns enough money to purchase their own coverage.
The Affordable Care Act (ACA) contains several rules designed to make obtaining and maintaining health insurance easier for people, such as prohibiting insurers from denying plan participation based on health status, medical history or condition, prior claims experience, genetic information, disability status or evidence of insurability. Furthermore, it prohibits excessive waiting periods and pre-existing condition exclusions. Furthermore, children can stay on their parent’s plan until age 26; and lifetime limits on coverage dollar values cannot be imposed by health plans.
3. The Subsidies
Subsidies are financial assistance provided by the government to cover health insurance expenses. They come in two primary forms: premium tax credits and cost-sharing reduction subsidies.
Subsidies are an integral part of Obamacare, helping millions of Americans afford their health insurance premiums and reduce out-of-pocket expenses.
Each person’s subsidy amount is determined by their income and is tied to the benchmark Silver plan they may purchase on the Marketplace. The amount of this subsidy changes annually.
The premium tax credit is available to individuals earning up to 400% of the Federal Poverty Level (FPL) who are uninsured or underinsured, protecting them from rising premiums and maintaining a healthy insurance market.
4. The Taxes
To finance the ACA, lawmakers enacted a variety of new taxes and cuts to existing programs in order to finance it. These include an excise tax on high-cost plans, annual fees on health care providers and medical devices, surcharges on individuals with income over $200,000, and penalties for those who remain uninsured.
These taxes are used to offset the costs of the Affordable Care Act’s (ACA) new insurance requirements and exchanges, as well as new Medicaid expenditures. They are primarily funded through savings in Medicare payments and increases in taxes on medical devices and pharmaceuticals.
Taxes are mandatory payments or charges levied by local, state and national governments from individuals or businesses to cover the expenses associated with providing general government services, goods or activities. Common types of taxes include sales/excise taxes as well as user fees.
