The Affordable Care Act (ACA) makes health insurance easier to acquire and maintain. Firms must now cover employees and state-run exchanges offer subsidies that assist lower and middle income individuals to buy coverage.
Insurance policies cannot charge women more for coverage that’s equal, or exclude preexisting conditions like pregnancy from being covered.
Health Insurance
The Affordable Care Act offers many Americans new opportunities to obtain affordable, high-quality health insurance for the first time at an affordable cost. Furthermore, consumer protections provided include no longer dropping or declining to cover preexisting conditions, as well as allowing young adults up until age 26 remain on their parents’ plans.
The law also mandates that insurance companies allocate at least 80% of premium dollars directly to medical care, rather than on advertising, overhead, and executive bonuses – leading to reduced premiums while expanding access for millions through marketplaces and Medicaid.
The Affordable Care Act (ACA) also mandates that firms with over 50 employees provide coverage that meets specific ACA specifications or face a penalty, or offer their workers insurance that does so. RAND research suggests this requirement has only had a modest effect on individual market enrollment, and is unlikely to cause major shifts in premium stability. Furthermore, the ACA has expanded access to maternity coverage and other women’s health benefits by mandating coverage by all insurers.
Taxes
The Affordable Care Act or Obamacare contains various new taxes and fees to offset the rising cost of health insurance coverage, such as an excise tax on high-cost “Cadillac” plans, medical device fees, surcharges on individuals earning over $200,000 annually and penalties for individuals remaining uninsured. Furthermore, spending cuts have also been made across existing programs in order to offset these costs.
The Affordable Care Act mandates all individual and small group health plans to cover essential benefits such as prescription drug coverage, preventive care services, mental health services, maternity care services and pregnancy-related care for their members. Furthermore, it prohibits lifetime and annual dollar limits, preexisting condition exclusions, excessive waiting periods as well as establishes a review process to ensure Medicare payments for clinical services do not become overvalued or undervalued.
The Affordable Care Act contains many provisions that affect individuals and families as well as employers, insurers, and tax-exempt organizations. Find out how it works, what it means for you, and your responsibilities under it.
Exchanges
The Affordable Care Act mandates the creation of insurance exchanges – marketplaces where individuals can purchase health plans compliant with the ACA – in each state. Many plans include state-based exchanges while others will use a federally facilitated or partnership model (Exhibit 1).
Exchanges will serve an integral role in setting insurance affordability and administering cost-sharing subsidies as well as being gateways into other public programs. They must manage a wide array of complex activities to be effective.
ACA also adds further complexity to health insurance markets by creating additional rules and regulations governing their operation, such as new premium calculation rules and capping the amount insurers can charge preexisting conditions while simultaneously being required to sell all policies to all applicants – which may prove challenging in the short-term for insurers, though RAND research indicates its high-risk pool may only have minimal effects on premiums and market stability.
Employers
The Affordable Care Act has rules regarding employers’ participation in health insurance marketplaces. Large employers (those with 50 or more full-time equivalent employees or their equivalent) must offer health coverage that satisfies certain standards; otherwise, employees can receive financial assistance to purchase individual health plans in either exchanges or individual markets.
Small employers cannot use exchanges, but can participate in individual markets in states that have expanded them and purchase group insurance from traditional markets. Under the Affordable Care Act (ACA), low and moderate-income families are eligible for premium tax credits applied directly against an annual tax return when purchasing health coverage through marketplaces; similarly, employers must also report health coverage details to the IRS so as to ascertain whether they must make shared responsibility payments or comply with employee mandate requirements.
