Obamacare has caused many individuals to switch health plans, while also leading to website issues and special enrollment periods that have caused much frustration for many others.
The Affordable Care Act ensures that health insurers cannot deny anyone coverage or charge them more based on preexisting conditions, and allows parents to keep their children on their plan until they turn 26 years old.
The Affordable Care Act
The Affordable Care Act (ACA) works in various ways to make health insurance more accessible for Americans. It offers consumer protections and enforces rules imposed upon insurers that help reduce costs while improving care quality; for example, making it illegal for insurers to deny or cancel coverage without preexisting conditions being covered, as well as creating an online marketplace where customers can compare plans with cost assistance available and choose one accordingly.
The Affordable Care Act also establishes rules to help ensure you receive value for your premium dollar by mandating that insurance companies spend at least 80% of the money collected on medical care rather than advertising, overhead expenses or bonuses for executives. In addition, taxes on wealthy Americans were increased in order to subsidize health insurance costs for lower income Americans.
The Affordable Care Act also expands Medicaid in most states and permits adults to remain on their parents’ plans until age 26. Furthermore, lifetime monetary caps on insurance coverage have been prohibited and businesses must offer health coverage or face fines.
The Individual Mandate
The Affordable Care Act mandated most American to enroll in health insurance or face penalties; this was to help cover sicker individuals more affordably by spreading out costs across a wider population. The Individual Shared Responsibility Provision set this mandate up so healthy people would sign up, thus spreading out coverage costs across more people.
The mandate also helped ensure there were enough subscribers so that insurance prices didn’t shoot skyward; that is one reason many say Obamacare has made healthcare easier to find and afford.
Some individuals can qualify for exemptions from the mandate based on affordability or religious objection, but tax legislation passed in December 2017 effectively eliminated it beginning in 2020, leading to more uninsured people in marketplaces and higher premiums as premiums may increase by up to 9% for every person who doesn’t purchase coverage. RAND analysis suggests this trend.
The Exchanges
The Affordable Care Act or Obamacare has enabled millions of Americans to obtain affordable health insurance at reasonable premiums while providing protection from insurers that might increase costs or limit coverage.
Millions have signed up for Obamacare during its annual open enrollment period or through special enrollment periods for events like having a baby, getting married or losing job-based insurance coverage. Others may have taken out short-term plans provided by eHealth to cover them until their next open enrollment period comes around.
Obamacare includes subsidies that assist lower income individuals pay for marketplace plans through subsidies based on household income, making it essential to update your marketplace profile as you experience life changes that could alter how much cost assistance you receive. It’s also key that premium payments are timely made or you risk forfeiting subsidies and incurring late fees – eHealth offers a free tool to help understand current marketplace coverage as well as assess possible changes down the line.
The Taxes
In addition to the individual mandate and health insurance marketplace, the Affordable Care Act included numerous tax changes which affected individuals, families, businesses and other entities.
For instance, the Affordable Care Act introduced premium tax credits that made health insurance plans more accessible. Unlike income-based subsidies, however, these tax credits were not considered taxable income and provided greater affordability.
The Affordable Care Act also introduced excise taxes on health insurers, pharmaceutical companies, and medical device manufacturers in order to generate the funds required for its reforms. These excise taxes served to raise additional revenue.
Some taxes created disincentives to work, especially among those earning low and middle-income wages. Employers might reduce employee hours in order to avoid paying the Affordable Care Act’s employer mandate tax; in 2019, however, President Trump signed into law the Tax Cuts and Jobs Act which repealed these federal penalties; some states still enforce them, however.
