How Obamacare Works

How Obamacare Works

how obamacare works

The Patient Protection and Affordable Care Act, also known as Obamacare, makes affordable health insurance accessible to more people. It also safeguards you against being declined coverage based on your health history and encourages medical care delivery that reduces costs.

If you meet the qualifications, you may be eligible for premium tax credits or special subsidies that reduce your costs on a health plan. These subsidies are based on your family income and which health plan you select.


The Affordable Care Act (ACA) offers subsidies to help people afford health insurance. These subsidies can be obtained through the ACA marketplace, which enables individuals and families to shop for affordable plans offered by private insurers.

ACA subsidies work through two distinct financial assistance mechanisms: premium tax credits and cost sharing reductions. The premium tax credit lowers enrollees’ monthly health insurance coverage payments, while the cost sharing reduction reduces out-of-pocket expenses such as deductibles, copayments, and coinsurance.

Furthermore, the Affordable Care Act (ACA) caps premiums for benchmark marketplace plans at 8.5% of an enrollee’s income. This approach limits premium increases while still enabling higher-income enrollees to receive larger subsidies.

Under the Affordable Care Act (ACA), family members who meet certain conditions can stay on employer-sponsored health coverage if their incomes fall below the marketplace subsidy threshold and they pay more than 9.12 percent of their earnings for health insurance. Starting in 2023, people and dependents who cannot afford employer-sponsored premiums will have access to subsidized exchange coverage through employers.


The Affordable Care Act (ACA) created health insurance exchanges, which will become operational in 2014. States that choose to develop and host their own exchanges must make decisions regarding governance, design, marketing strategy, administration technology, and other elements.

An exchange should be responsive to market conditions and take actions that foster competition among plans on price and quality. Furthermore, it must consider the interests of consumers, employers and the federal government in maximizing the value of coverage it offers.

Establishing the organizational form of an exchange, it may be either a government agency or non-profit entity. It must have public accountability and transparent leadership, as well as having the capacity and authority to meet federal standards.


Medicaid remains a crucial source of coverage for low-income individuals despite an increasing number of low-income people enrolling in private health insurance plans through the Affordable Care Act (ACA). It offers benefits to children, adults, pregnant women and seniors who cannot afford their own coverage or qualify for other assistance programs.

States pay a fixed percentage of the costs to provide services under Medicaid, including essential hospital and physician care, home health/nursing facility care, laboratory/X-ray services and prescription drugs. Most states also cover other optional benefits like dental and vision care, hearing aids or personal care items.

Under the Affordable Care Act (ACA), Medicaid is being expanded to reach more low-income people and reduce disparities. At present, 35 states plus D.C. have implemented this expansion; if all remaining states follow suit, an estimated 4 million more people could be covered by Medicaid, according to Kaiser Family Foundation estimates.

Young Adults

Young adults have several health insurance choices to choose from. They may remain on their parent’s plan or purchase private coverage through the marketplace or Medicaid.

Coverage is essential for all adults, but especially for young people who have never had to worry about the cost of healthcare before. Coverage shields them from expensive medical bills, gives access to preventive care and helps them steer clear of major illness.

The Affordable Care Act offers young adults many opportunities to obtain cost-effective, high-quality health care. They can remain on their parents’ plans or shop the marketplace for coverage options; additionally, many states have extended Medicaid eligibility.

Though age rating and market reforms under the law may raise premium costs for some young adults, those majority will find their premiums are lower than without them due to financial assistance such as premium tax credits and cost sharing subsidies which help offset increases.

You May Also Like

About the Author: Raymond Donovan