The Affordable Care Act Essentials

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President Obama signs the ACA into law

On March 23, 2010, President Obama signed the Affordable Care Act (ACA) into law. The ACA represents the most significant expansion of health coverage and regulatory overhaul since the creation of Medicare and Medicaid in 1965. At nearly 2,000 pages, the ACA touches nearly every corner of the U.S. health care system to reduce the rate of uninsured individuals and improve access to affordable, quality health care.

Oh, one more thing before highlight the most impactful provisions of the bill. The ACA is the same thing as Obamacare. They are not two separate legislative efforts that overhauled health care. We promise. Tell your parents, friends, and patients. [Watch this Jimmy Kimmel clip if you need to be reminded that people still don’t know the ACA and Obamacare are synonymous]. Ok, let’s get into it.

Individual Mandate
All individuals are required to have health insurance. Those without insurance must pay a yearly penalty of $695 per person (up to $2,085 per family) or 2.5% of household income, whichever is greater. [The Tax Cuts and Jobs Act recently passed by Congress repeals the penalty for not purchasing health insurance.]

Employer Requirements
There is no employer mandate, but employers with more than 50 employees will be assessed a $2,000 fee per full-time employee if they do not offer coverage and have at least one full-time employee utilizing a premium tax credit through the Exchange.

Expansion of Public Programs
The Medicaid expansion raised the income threshold to 138 percent of the federal poverty line (FPL) and allowed adults without dependent children to enroll in the program. The federal government provided funding for the newly eligible expansion population on a sliding scale: 100% from 2014 through 2016; 95% in 2017; 94% in 2018; 93% in 2019; and 90% from 2020 and beyond. Undocumented immigrants remain ineligible for Medicaid. [Medicaid expansion was significantly impacted by the U.S. Supreme Court ruling in NFIB v. Sebelius].

Changes to Private Insurance
Insurers are prohibited from denying coverage for any reason, from imposing lifetime limits on benefits or rescinding coverage, and must spend at least 80% of premiums on medical costs. Health plans are required to cover preventive services with no cost-sharing. Dependent coverage is extended up to age 26 (hallelujah for students!) and premiums can only be varied based on age, geographic area, tobacco use, and number of family members.

Health Insurance Exchanges
The Exchanges allow individuals and small businesses to compare plans and purchase insurance. Insurers in the Exchanges offer four levels of coverage that vary by premiums, out-of-pocket costs, and benefits beyond a minimum required standard, plus a catastrophic coverage plan. Families without access to other coverage and incomes between 100 and 400 percent FPL are eligible for premium subsidies to help them purchase insurance on an Exchange. Those with an income between 100 and 250 percent FPL are eligible for cost-sharing subsidies to assist with out-of-pocket spending.

Benefit Design
The Department of Health and Human Services (HHS) was directed to create an essential health benefits package that offers a comprehensive set of benefits and covers at least 60% of the value of the of the covered benefits. All qualified health plans are required to offer the essential benefits package, which includes: ambulatory patient services (outpatient services), emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including oral and vision care.

Disclaimer: There have been repeated attempts to repeal the Affordable Care Act. The Kaiser Family Foundation has analyzed various proposals.

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