Obamacare is a term coined by the media and the public for the Patient Protection and Affordable Care Act of 2010 also called the Affordable Care Act or ACA. It was named Obamacare for president Barack Obama, who spearheaded the reform during his presidency.
The goal of the ACA is to make healthcare affordable for everyone by lowering costs of monthly premiums and services rendered for those who could not previously afford them. Along with the Health Care and Education Reconciliation Act of 2010 amendment, it was the largest and most comprehensive change of the United States healthcare system since the changes to Medicare and Medicaid in the 1960’s.
Even though the provision didn’t come into effect until 2014, by 2016 the uninsured population was cut in half. An estimated 20-24 million additional people were covered in 2016. There are still mixed reviews about Obamacare/ACA due to the fact the increased coverage was due to an expansion of Medicaid eligibility and equally by major changes to individual healthcare marketplace.
Signing Up for Obamacare
While you can go to Healthcare.gov and sign up for ACA plans, we recommend you speak to an agent to discuss exclusions and benefits. Some plans have deductibles to meet before any benefits are paid out and others don’t. Some have set co-pays for prescriptions and doctor visits and others don’t.
Benefits of the ACA
The main changes with the ACA for the everyday consumer are the availability of Guaranteed Issue plans, the ability to add children up until age 26 and subsidizing of the Medicare “doughnut hole”. Now consumers cannot be denied because of health conditions. Insurers cannot even change the rate you pay due to health conditions or sex. They also added a list of 10 essential health benefits that must be covered. The 10 essential health benefits are:
- ambulatory patient services
- emergency services
- maternity & newborn care
- mental health
- prescription drugs
- rehabilitative services
- laboratory services
- preventative care
- and pediatric services
The main goal again was to lower the costs of healthcare. It accomplished this by mandating that everyone buy insurance. In turn, young healthy individuals paid high premiums even though they barely used their health insurance. This was intended to offset the cost of insuring the oldest and sickest.
Obamacare stopped companies from excluding any individual. As a result, most could afford to seek a doctor’s diagnosis before their symptoms turned severe. Before the passing of the ACA many uninsured would go to the emergency room and just pay the bills later. But due to the high cost many didn’t seek out help until it was too late.
Subsidies for Middle-Income
Prior to the passing of Obamacare, the average family could only afford comprehensive coverage through corporate sponsored insurance. Therefore, many people held jobs just to provide their family with insurance. According to thebalance.com Obamacare will spend $1.039 trillion on subsidies for middle-class families between 2015-2024. A common misconception is the ACA favors poor families, when more than 56% of the subsidies will go to families with incomes between $47,100-$94,200.
The easiest way to see if you get a subsidy is to speak to an agent. All you must do is enter your location, family size and gross income to calculate your discount if any.
ACA Tax Penalty
When the statute was first enacted in 2014 there was a tax penalty made to counter the costs associated with subsidizing. The greater of 1% your household income or $95 per uninsured adult and $47.50 per uninsured child, up to a maximum of $285 per family was the penalty for 2014. For 2015 it went up to 2% of household income or $325 per uninsured adult and $162.50 per uninsured child. From 2016-2018 the penalty continued to increase and indexed for inflation but always had an overall maximum equal to the average cost for a bronze-level plan through the Marketplace. So, if that plan for the individual was $200 per month, the max penalty would be $2,400 per year. As of January 1, 2019, and the passing of the “Tax Cuts and Jobs Act of 2017” the individual mandate of the ACA was repealed, making the penalty for not having health coverage non-existent.