Understanding the Affordable Care Act


The Affordable Care Act (ACA), also commonly referred to as ObamaCare, has a lot of benefits many people don’t know about or take advantage of. The ACA seeks to lower health care expenses by ensuring that majority of Americans engage in and receive preventive care, while forbidding some of the insurance industry’s more restrictive practices. Furthermore, the ACA requires individuals who don’t receive health insurance benefits through their employers to buy coverage or pay a penalty.

Affordable Care Act

Individual Mandate and Noncompliance Penalties 

The individual mandate requires nearly every individual in the U.S. has health care coverage. The reason is because young, relatively healthy people who pay regular insurance premiums conclusively help cover the expenses of older and less healthy individuals. And since insurance companies are no longer allowed to refuse coverage of preexisting conditions, the mandate discourages people from simply waiting until they have a health care emergency.

Declining coverage results in penalty fees. In 2014, the first year of the mandate, those without insurance were charged 1% of their income or $95, whichever is greater. Also, families were charged $47.50 per uninsured child up to $285. This fee has increased each year.

However, there are exemptions from the noncompliance penalty if you:

• Are uninsured for less than three months per year
• Have a very low income
• Would qualify for expanded Medicaid in a state that has chosen not to expand eligibility
• Are a member of a recognized American Indian tribe
• Belong to a healthcare sharing ministry
• Have religious objections to health insurance plans

5 Benefits of The Affordable Care Act Most People Don’t Know

1. Lowers healthcare costs

The ACA is able to make insurance affordable by granting tax credits to the middle class (below 400% of the federal poverty level). The premium tax credit is calculated based on income. In addition, it limits out-of-pocket costs for individual and family plans. To estimate the amount of premium tax credit you would be eligible for, ask for a free consultation from a local health insurance consultant.

2. Emphasizes preventive care

The Affordable Care Act further reduces costs by requiring all insurance plans to cover the following ten essential health benefits:

• Preventive and wellness visits, including chronic disease management
• Maternity and newborn care
• Mental and behavioral health treatments
• Services and devices to help people with injuries, disabilities, or chronic conditions
• Lab tests
• Pediatric care
• Prescription drugs
• Outpatient care
• Emergency room services
• Hospitalization

3. Improves how healthcare is rendered

The Affordable Care Act authorized Medicare to change how it pays physicians and hospitals. It used to pay for every test and procedure, but is now transitioning to a system that bases payments on how well a patient gets, which drives hospitals, doctors, and pharmacists to collaborate in a more comprehensive approach.

You may think that your primary care physician already coordinated the care you received from other hospital visits, but that’s not always the case. The ACA works with prior legislation to make sure all medical records are put on computers so they can be transferred electronically. This way, each patient will have a generalized record that doctors and hospitals could use for more effective treatments.

4. Targets deceitful doctor/supplier relationships

The government dispensed $250 million to crack down on excessive insurance rate hikes. They also now require strict background checks on nursing home staff to prevent abuse of seniors.

5. Offers consumer protection

Lowering the number uninsured Americans helps control costs for everyone, and now that the Affordable Care Act offers consumer protection, it gives individuals and families peace of mind knowing that:

• There is financial protection in case of medical emergencies and severe illness.
• Insurers can no longer drop or refuse coverage based on preexisting health conditions.
• Insurers cannot charge higher premiums for women.
• Individuals can stay on parents’ plans until age 26.
• Insurers can’t sell low-grade plans that don’t pay for essential health care benefits.

The Affordable Care Act Positively Affects Families

The ACA provides health insurance for families regardless of their employment situation. Families now have flexibility to make health insurance decisions based on their family needs and circumstances, without the worry of coverage through an employer.