The Affordable Care Act (ACA) is a set of consumer rights and reforms designed to increase access to health insurance for Americans. Additionally, it shields customers from abusive insurance company practices.
The Affordable Care Act (ACA) has enabled millions of Americans to obtain health coverage and reduce their costs. It also safeguarded those with preexisting conditions by requiring insurers to offer preventive services without copays or deductibles.
Subsidies
Subsidies are financial assistance provided by the federal government to assist people in paying for their health insurance plans. They come in two forms: cost-sharing reductions (CSR) and premium tax credits, which can reduce monthly premiums enrolledees must pay when choosing plans through exchanges.
The CSR can reduce an enrollee’s out-of-pocket costs for health care services, such as deductibles, coinsurance and copays. Furthermore, the premium tax credit may lower premiums across any of the four metal levels offered in the marketplace.
Under the Affordable Care Act (ACA), premiums for a benchmark marketplace plan are limited to a certain percentage of income. Enrollees receive subsidies for every dollar their premium exceeds this cap – an innovative approach which limits annual premium increases while encouraging insurers to offer more generous plans, potentially leading to overuse of health care services.
Tax Credits
Premium tax credits (APTC), also referred to as advance premium tax credits (APTC) remain in effect under Obamacare. They were created with the purpose of making health insurance more accessible by decreasing your out-of-pocket expenses for coverage.
Premium credit eligibility is determined by your income. Individuals whose earnings fall between 100% and 400% of the federal poverty level (FPL) may qualify for this credit, helping reduce health insurance premiums.
Each month, your insurance company usually sends a credit directly to you which helps reduce out-of-pocket expenses. You don’t have to repay it until its amount is reconciled on your tax return the following year; however, if any changes occur to your income or family size, you may need to report them.
Individual Mandate
The individual mandate requires people to have health insurance or face a tax penalty. This requirement was an integral component of the Affordable Care Act (ACA).
A recent study by Hackmann, Kolstad and Kowalski6 examined data from Massachusetts which implemented a major health reform in 2007 that expanded Medicaid, offered tax subsidies to individuals below 150 percent of poverty without access to employer coverage, required insurers to offer plans to all applicants, and instituted an individual mandate.
They found that full implementation of the mandate resulted in a 23 percent decline in premiums and an impressive 26.5 percentage-point boost to individual market enrollment for those with incomes above 300 percent of poverty.
Consumer, insurer and employer reactions to a policy that repeals the individual mandate are complex and uncertain. CBO and JCT’s baseline projections also remain uncertain due to interactions with tax credits and CSRs.
Exchanges
The Affordable Care Act (ACA) created a number of exchanges that allow individuals and small businesses to easily compare insurance plans from various companies. Furthermore, they provided tax credits for lower income individuals to cover the cost of their plans.
State exchanges were granted the freedom to operate independently or rely on federal assistance. To guarantee their success, these exchanges must be well-funded and run efficiently in accordance with the law’s specifications.
State exchanges must avoid adverse selection by ensuring that those purchasing plans through them include both healthy and less healthy individuals. They can do this by requiring insurers to offer a minimum set of plans, eliminating those that don’t, using community rating as a selection process, or taking other necessary actions as needed.
Under the Affordable Care Act (ACA), Exchanges must assess applicants for eligibility to all available health coverage options such as advance premium tax subsidies offered through the Exchange, Medicaid and CHIP. Successful Exchanges will collaborate with state agencies to expedite processing so eligible individuals can quickly switch between sources of coverage.
