How Much Does Obamacare Cover?

How Much Does Obamacare Cover?

how much does obamacare cover

The Patient Protection and Affordable Care Act (ACA) seeks to reduce the number of Americans without health insurance by making coverage more accessible for all. It does this through various mechanisms.

For instance, the law makes it possible for low-income individuals and families to receive tax credits that help cover their health insurance costs. These subsidies are based on estimated income and may be adjusted throughout the year.

Tax Credits

The Affordable Care Act (ACA) offers tax credits to help people afford coverage on health insurance marketplaces. These credits are based on income and the cost of coverage, and families can claim them immediately upon enrollment or wait until they file their taxes to claim them.

Tax credits work similarly to deductions in that they reduce your owed amount; however, instead of deducting from taxable income, they actually decrease your final tax bill by a fixed dollar amount. This is an effective way of guaranteeing you don’t leave money on the table when it comes to filing taxes.

Premium tax credits are available to low- and moderate-income Americans as well as lawfully residing immigrants with incomes below the poverty level. They will remain available through 2025 due to ACA enhancements under the American Rescue Plan Act (ARPA) of 2021 and Inflation Reduction Act of 2022.

Premium Subsidies

Premium subsidies, also referred to as advance premium tax credits (APTC), help those without health insurance purchase coverage through either the federal exchange or state marketplace.

The amount of these subsidies depends on the cost of benchmark plans in your area, so as costs increase for benchmark plans, subsidies increase accordingly.

However, if the benchmark plan costs less in 2023 than it did in 2021, your subsidy might decrease. This has become increasingly common recently, especially where new insurers have joined the exchange.

The Affordable Care Act (ACA) seeks to address these disparities, and premium subsidies help achieve that. Unfortunately, full-price coverage remains out of reach for households below the income eligibility cap. That is why the ACA offers premium tax credits for those with incomes up to 400% of the poverty line and states like Massachusetts provide generous supplemental assistance that significantly reduces benchmark plan premiums for low-income enrollees.

Minimum Essential Coverage

Minimum essential coverage (MEC) is a term introduced by the Affordable Care Act to describe health insurance that meets the law’s shared responsibility provision and is in place prior to most qualifying events that trigger special enrollment periods. This is especially essential for people with health reimbursement accounts (HRAs) or employer-sponsored health plans.

MEC can be obtained through a variety of sources, such as employer-sponsored plans, ACA-compliant individual major medical plans (and some grandfathered ones), Medicare, Medicaid, TRICARE, CHIP and marketplace coverage. Please note that certain government plans such as Medicaid or TRICARE do not qualify as Medical Emergency Coverage (MEC).

Though there is no longer a federal penalty for not maintaining minimum essential coverage (MEC), some states still enforce their own individual mandates and may charge fees if you don’t meet MEC. This could affect how much you pay for health insurance and is reported on your federal tax return annually. If living in one of those states that still requires MEC, having MEC is essential if you want to receive tax credits or premium subsidies for your insurance plan.

Open Enrollment

Open enrollment is the time each year when you can sign up for health insurance or make changes to your current plan (if provided by your employer). This period also includes dental and vision plans if they are offered through your employer.

Open enrollment presents insurers with the opportunity to offer a wider selection of choices, which helps mitigate their risk by giving members more choices. Unfortunately, those with high-deductible health plans may notice that premiums increase during open enrollment.

Despite these obstacles, open enrollment is essential for finding health insurance coverage that meets both your requirements and budget. Plus, it’s the ideal opportunity to compare your current plan with new options which could save money in the long run.

At open enrollment, people may qualify for special enrollment periods that occur if a qualifying life event occurs such as losing coverage, moving to another state or having a baby. With one of these events, you could get almost free health care coverage throughout the entire year!

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About the Author: Raymond Donovan