How Does Obamacare Work?

How Does Obamacare Work?

In 2010, President Barack Obama signed the Affordable Care Act into law, revolutionizing how Americans obtain healthcare coverage.

Health reform mandates that most individuals obtain health insurance and provides tax credits to make it more affordable. Furthermore, it protects people from discrimination and provides access to preventive care.


The government provides subsidies to moderate and low-income families that don’t have access to affordable health insurance through employers, Medicaid or Medicare. These assistance comes in two forms: premium tax credits and cost sharing reductions.

A premium tax credit helps reduce the amount you pay for health insurance by decreasing your monthly premium. You can claim this subsidy on your taxes; simply fill out Form 8962 when filing your return.

People with incomes up to 250% of the federal poverty level may qualify for cost sharing reductions, which lower their deductibles and copayments when visiting a doctor or hospital. Unfortunately, this help is only available through silver plans; making out-of-pocket costs more comparable to gold or platinum plans’.

Tax Credits

Under Obamacare, millions of Americans receive assistance with paying for health insurance through premium tax credits. These refundable credits lower premiums for qualified plans and can be refunded as a refund on federal income taxes when filing your tax return.

The amount of the credit depends on your family’s estimated income and household size. People up to 400% of the federal poverty level (FPL) may qualify for premium tax credits if they do not have other affordable coverage through employment or government programs.

Premium tax credits are calculated based on your estimated income and household size, so it’s critical to report changes in these details as soon as possible to the marketplace. Doing this can help avoid receiving either an excessively high or low credit amount.


The Affordable Care Act (ACA) created a marketplace where individuals and families can shop for health insurance. They can compare plans and apply for subsidies that reduce monthly premium costs.

The federal and state exchanges provide a wide selection of plans for people to select from. They also assist individuals in applying for government programs like Medicaid or subsidized coverage.

States have the option to establish state-based marketplaces, giving their residents more control over consumer outreach and oversight of participating health insurance plans. Furthermore, these marketplaces must offer assistance and education to consumers as they search for coverage.


Medicaid is a federally funded program that offers free health insurance to people with low incomes. It can help you stay healthy, cover doctor visits and some prescription drugs.

There are various ways to qualify for Medicaid coverage. Your income, family size, disability status, and other factors may all play a role.

The Affordable Care Act (ACA) expanded Medicaid eligibility to adults with incomes up to 138% of the federal poverty level. Furthermore, states can disregard 5% of a person’s earnings when calculating their eligibility.

Studies demonstrate that Medicaid expansion has improved the health of participants and reduced out-of-pocket medical expenses. Unfortunately, it’s an imperfect program with lower reimbursement rates to providers and gaps in access to preventive services.

Young Adults

Young adults are particularly at-risk groups for finding it difficult to obtain or afford health insurance. They typically have lower incomes than other age groups, and may not always have access to employer-sponsored coverage.

The Affordable Care Act seeks to address this problem through both a new private insurance market and expansion of Medicaid in certain states. These provisions can provide health coverage for millions of young adults who previously did not have it.

Another way Obamacare benefits young adults is through tax credits that reduce the cost of their health insurance policy. This makes law’s marketplace plans much more budget friendly than employer-sponsored coverage.

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About the Author: Raymond Donovan