How the Affordable Care Act (Obamacare) Changed Health Insurance Law
The Patient Protection and Affordable Care Act, also known as the Affordable Care Act (ACA), was enacted in March 2010 and provides a vast range of consumer protections related to health insurance. As one of the main achievements of the administration of President Barack H. Obama, it is often popularly known as Obamacare. The ACA was challenged in a federal lawsuit shortly after its enactment, but in 2012 the Supreme Court upheld all of the challenged provisions but one. The Supreme Court rejected other ACA challenges in 2015 and 2021. It is estimated that more than 35 million people enrolled in ACA-related coverage by early 2022.
Nearly any citizen or legal resident of the U.S. must have basic health insurance coverage under the Affordable Care Act. A few groups are excluded from mandatory coverage, such as undocumented immigrants, prison inmates, Native Americans, and certain people who have religious objections to receiving health care. Prior to 2019, individuals were subject to tax penalties for going without coverage, but these penalties were eliminated at least temporarily under the Tax Cuts and Jobs Act, which will remain in effect until 2025. However, a few states have enacted their own penalties for individuals who choose to be uninsured.
To provide health insurance more easily, state governments and non-profit organizations have created programs known as health insurance exchanges. People who have an income that is no more than four times the federal poverty level can get credits and subsidies to cover any costs that they cannot afford. Thus, your total income will dictate how much you pay for insurance.
The Health Insurance Marketplace
People who do not have qualifying health insurance through a job or another source may enroll in a plan at healthcare.gov either during an open enrollment period or a special enrollment period triggered by certain life events, such as losing coverage, getting married, or having a child. Some states, such as California and New York, run their own marketplace platforms.
Implications for Employers
An employer with 50 or more full-time employees must provide health insurance to its employees or face a substantial fine. If the federal government needs to subsidize coverage for any employee, that employer will be fined at least $2,750 for each full-time employee. (The penalties are adjusted each year.) If an employer has between one and 50 employees, it can set up health insurance for its employees through the Small Business Health Options Program. If an employer has 25 or fewer employees, it may be eligible for a tax credit by making contributions to the health insurance costs of its employees.
Protections for Pre-Existing Conditions
The Affordable Care Act goes beyond HIPAA to prevent insurers from denying coverage to anyone based on a pre-existing medical condition. HIPAA previously allowed insurers to create exclusions based on pre-existing conditions within a certain lookback period.
If your household income is 133 percent of the federal poverty level or less, and your state has expanded Medicaid coverage, you will be covered by Medicaid under the Affordable Care Act. This marks the first time that adults with no children can receive coverage through Medicaid.
Coverage for Adult Children
A child who is under the age of 26 can get coverage through the health insurance plan of a parent, even if they are not a full-time student or a dependent of the parent for tax purposes. The Act does not impose restrictions on the amount that the parent must pay to cover an adult child, so they may need to bear these costs instead of their employer.
HIPAA also provides some protections, such as protections for individuals with pre-existing conditions and those changing jobs.