Your quick guide to Obamacare
Obamacare. ACA. The Affordable Care Act. HealthCare.gov. The Marketplace. Healthcare exchanges.
Just deciphering the language alone can be confusing, and that’s before you even try to sign-up for health insurance. Then comes determining what kind of coverage you’re eligible for. What it will cost. And which plan is best for you.
Though it can seem like there are a lot of words to learn, the Affordable Care Act (ACA) is pretty straightforward. The ACA, also known as Obamacare, is here to help Americans get better quality healthcare at a lower cost.
What is Obamacare?
Have you ever wondered what the difference is between the Affordable Care Act and Obamacare? Good news: They’re one in the same. And here's more good news. It’s all just shorthand for a law that guarantees that your health insurance has certain built-in consumer protections.
Obamacare is another name for the Affordable Care Act (ACA), the landmark healthcare reform legislation. Known in full as the Patient Protection and Affordable Care Act. The ACA became the law of the land after being signed by President Barack Obama in March of 2010.
What does Obamacare do?
The ACA, commonly referred to as Obamacare, has done a number of things since it became law under President Obama. Primarily it ensures that more people have access to more affordable and more comprehensive health insurance. Let’s take a closer look...
- The healthcare law worked to expand health insurance coverage to more people by making health insurance more affordable (hence the law’s name) and creating a way for people to shop for their own, high-quality health plans through something known as the Health Insurance Marketplace.
- It created the opportunity for more states to choose to expand their state Medicaid programs. Medicaid expansion widened the net of who qualifies for low- to no-cost health insurance.
- It makes sure that more people are able to get the healthcare they need, without worrying about costs associated with certain preventive services. Or worrying if they can get coverage at all as a result of pre-existing conditions.
What is the Health Insurance Marketplace?
One key part of the Affordable Care Act was the creation of the Health Insurance Marketplace. Some states runs their own online Marketplace while others use HealthCare.gov. Through the Marketplace, you can compare and shop to find an affordable health insurance plan that best works for you.
The Health Insurance Marketplace lets anyone looking to buy their own health insurance see what options are available to them. With the Health Insurance Marketplace, you can compare various plans and their costs, from premiums to deductibles, to out-of-pocket maximums. You’ll also be able to find out if you qualify for Medicaid. If you have dependent children, you can find out if they qualify for the Children’s Health Insurance Program (CHIP). By shopping the Health Insurance Marketplace, you’ll also find out if you qualify for any subsidies to reduce your costs.
Another option is to shop for Marketplace plans through HealthSherpa, a partner of HealthCare.gov. You can easily see your most affordable option. Find out which plans your doctors and hospitals accept. See how much each plan pays towards your prescription drugs. And then easily sign up online or call a Consumer Advocate who can walk you through the enrollment process.
Pro Tip: If you are 65 or older, Medicare is usually your best option. Learn more about Medicare and the Marketplace here.
When can I apply for Obamacare?
Generally speaking, if you are someone who buys their own health insurance — versus someone who gets their health insurance through their employer — you’ll be able to review your options and renew or purchase your plan for the upcoming year during the annual Open Enrollment Period (OEP). The Open Enrollment Period takes place each year from November 1 to January 15, in most states. If you’re looking to purchase and enroll in a new plan, this six-week period is your chance. This is the window when you can sign up for the coverage you want for the upcoming calendar year. Missed this window to buy health insurance? You’ll likely have to wait until the following year to choose, pay for, and start a new health insurance plan.
Special Enrollment Periods
However, there is an exception to the Open Enrollment Period, and that’s when a person experiences what’s known as a Qualifying Life Event (QLE).
Qualifying Life Events fall into three general categories:
- Losing your health insurance coverage
- Changes in your household size
- Changes in your residence
A QLE qualifies a person to enter into what’s known as a Special Enrollment Period (SEP). An SEP lets you shop on the Health Insurance Marketplace like you would during the annual Open Enrollment Period. However, your time-frame to shop and enroll in coverage is triggered by your Qualifying Life Event. SEPs typically last 60 days.
You can use HealthSherpa's screener tool to find out if you're eligible for an SEP.
How do I apply for Obamacare?
There are several ways you can apply for a Marketplace health insurance plan. During Open Enrollment, you can shop, compare, and apply directly through HealthCare.gov. However, some states have created their own “State Based Marketplace” or “exchange.” For example, California residents use Covered California and New York Residents use NY State of Health. If you live in a state that runs their own Marketplace, you can enroll directly through their site.
You can also enroll through HealthSherpa, a secure and trusted partner of HealthCare.gov. HealthSherpa offers the same plans and prices with no extra costs. The HealthSherpa Consumer Advocate team can walk you through the entire enrollment process over the phone. They know the ins and outs of Obamacare, and are here to help you. You can call the Consumer Advocate team directly at (855) 772-2663 or get a free quote online.
Once you enroll, it's important to get the most out of your new health insurance plan. One way to manage your coverage is through a FREE HealthSherpa account. Inside your account, you can access information about your health insurance, find out how much your prescriptions cost, search for a new doctor, report life changes to the Marketplace, download tax forms, plus more. You can click here to sign up.
Who can sign up for Obamacare?
One of the most amazing things about the Affordable Care Act is that practically everyone is eligible to sign up for Obamacare through the online Marketplace. To sign up, you just have to live in the United States, be a United States citizen or national, and you can’t be eligible for Medicaid or incarcerated. Sound like you? Then you are someone who can get health insurance thanks to Obamacare.
If you're eligible for health insurance coverage through your employer, you may choose to get your insurance that way. If so, you don't need to enroll through the Marketplace. But, if you don't want to sign-up for the health insurance provided through your employee benefits package, the Marketplace would still be an option for you, too. However, you may end up paying full price.
Generally Americans over the age of 65 who are on Medicare, the federal health insurance program available to seniors, are not eligible for Marketplace health insurance. You can keep your Marketplace plan until your Medicare plan begins, and cancel your Marketplace plan at that time without any penalty. You are also welcome to keep your Marketplace plan past when you would be eligible for Medicare — or, when you turn 65 — but once you begin Medicare, you can no longer go back to a Marketplace plan.
How much does Obamacare cost?
So you’re buying your own Obamacare plan through the online Marketplace. The cost of what you’ll pay for your monthly premium will be calculated based on a few factors:
- Your age.
- Your income.
- The number of people in your family being insured.
- Whether or not you are a smoker.
- The metal level of plan you choose.
Obamacare plans are all tiered according to the following categories: catastrophic, Bronze, Silver, Gold, and Platinum. The higher-tiered plans have higher monthly premiums, but come with lower associated out-of-pocket costs when you use your coverage. A lower-tiered plan will have lower premiums. But with these plans, you run the risk of incurring more out-of-pocket costs should an unplanned medical event occur.
According to the Department of Health and Human Services (HHS), in 2018, the average monthly premium for an Obamacare plan was $411, before any subsidies. That said, a HealthSherpa study found that due to Marketplace subsidies, 18 percent of ACA enrollees paid $0 in monthly premiums for the Obamacare plans they enrolled in through the Marketplace. Over half of all Obamacare enrollees ended up paying less than $50 per month in premiums for their coverage in 2018.
These low-costs are a result of another key part of the Affordable Care Act. Through various subsidies, Americans can access major savings that lower costs for Marketplace coverage. And again, this translates into more affordable, higher-quality care — and healthier Americans.
What is a health insurance subsidy?
One of the ways that the Affordable Care Act makes health insurance literally more affordable is through the use of health insurance subsidies.
Through something known as the Premium Tax Credit, people at 1-4x the Federal Poverty Level (FPL) are eligible for a subsidy. This subsidy reduces the amount they pay for their premiums each month for Marketplace plans. In other words, in 2019, if an individual makes between $12,140 to $48,560 or a family of four’s combined household income is between $25,100 and $100,400, these people are likely to be eligible for a subsidy through the Premium Tax Credit which would then lower the cost of their health insurance premium each month.
Silver-level Marketplace plans are also often eligible for what’s known as Cost Sharing Reductions. These are extra savings that lower the amount you have to pay for copayments, deductibles, and coinsurance. It’s important to note that only Silver-tier Marketplace plans are eligible for these extra savings, which also lower the out-of-pocket maximum you will pay for your healthcare services before your insurance plan starts to pay 100% of your costs. You can use this online tool on HealthSherpa to find out if you qualify for a Cost Sharing Reduction if you select a Silver plan
Using a Health Insurance Marketplace calculator, you can enter basic information about yourself, your family and your income to see what kind of subsidies you might qualify for, and what your monthly premium costs might look like as a result.
What is the individual mandate?
When first signed into law, one critical component of the Affordable Care Act was something known as the individual mandate. The individual mandate meant that everyone must buy health insurance or pay a tax penalty. That meant if you didn’t have insurance for at least 10 months out of the year, you paid a penalty fee. This penalty applied whether you didn't opt-in to insurance through your employer, didn’t qualify for Medicare or Medicaid, or didn't enroll through the Marketplace.
The idea was to incentivize people to get health insurance. And having health insurance protects you from staggering medical costs should you be hit with a serious and unexpected medical situation. And more people enrolling in health insurance means a wider pool of people insured by the insurance companies, reducing the insurance companies risks and potential losses. This was especially important since the Affordable Care Act also made it so that insurance companies could no longer deny coverage to people with pre-existing conditions. Having more people enroll, generally, helps lessen the costs to the insurance companies. This happens by making sure there are enough healthy people with few healthcare costs to help balance out the costs associated with those with pre-existing conditions who know they will need a greater amount of medical care.
In 2017, though, under the directive of President Donald Trump, Congress passed a new tax plan that eliminated the individual mandate. This means that there is no longer any penalty fee associated with not signing up for health insurance as of 2019. (So, in effect, when people pay taxes in April of 2020). Many public policy experts feel that doing away with the individual mandate is harmful for public health outcomes and the economy both. Doing away with the individual mandate means, of course, that more people are uninsured. But research shows that specifically more young and healthy people are uninsured. This situation raises the costs of monthly premiums for everyone else. And as more people become uninsured, their health costs are deferred onto American taxpayers.
Is Obamacare available in every state?
Every state has its own health insurance exchange where you can shop for and enroll in ACA-compliant healthcare plans. These Marketplace plans have consumer protections built in when it comes to both savings in terms of guaranteed no-cost preventive services, tax subsidies, and caps on out-of-pocket costs.
Another part of Obamacare when the law was originally passed was Medicaid expansion. This made publicly subsidized health insurance available to more low-income people. By raising the cut-off for what a person has to make to qualify for Medicaid, more people are now eligible. At this time, however, only 37 states have opted-in to expanding Medicaid for its residents.
Can I get Obamacare with a pre-existing condition?
One of the most significant things about the Affordable Care Act was that it made sure that no one can be denied health insurance coverage because of a pre-existing condition. All Marketplace plans cover pre-existing conditions, too. And once you’re signed up for a plan, your health insurance company can’t deny you coverage or change your premium rates as a result of a pre-existing condition.
Another Obamacare win? Pregnancy, which is a pre-existing condition in the world of health insurance, also can’t stop you from getting covered. If you’re pregnant, you likewise can’t be denied coverage or subject to changing rates as a result of your pregnancy. And best of all, the care associated with your pregnancy and delivery are covered by your health insurance plan from the day you sign-up for coverage.
How does Obamacare affect small businesses?
The signing of the Affordable Care Act created what’s known as the Small Business Health Options Program (SHOP). This tool helps businesses, with a full-time staff of fifty or less, provide health insurance to their employees. By enrolling in SHOP, these kinds of small businesses become eligible for certain tax credits that lower premium costs. These tax credits then save the company money on how much they are spending on employee health benefits. The end of the individual mandate, though, meant that small business owners no longer receive a penalty for not providing their employees with health insurance coverage.
Before the ACA, more than 60 percent of the working uninsured were self-employed or people employed by a small business with less than 100 employees. Since the ACA, those numbers have dropped significantly. What else has dropped? The premium costs paid by entrepreneurs, the self-employed, and small business employees. Obamacare is seen as having radically reduced the uninsured rate among those who work for small businesses, while also resulting in real cost savings to them.
What are the pros and cons of Obamacare?
Some conservatives and libertarians don’t like Obamacare out of ideology. Those who are against “big government" don’t like the idea of dictating how the American health insurance market works. Even when that means introducing no-cost preventive care and consumer financial protections.
Others who may not like Obamacare are healthy people who were able to purchase their own insurance before the ACA. Since the implementation of Obamacare, many of these same people have seen their monthly premium rates increase. Among these folks are those who earn just a little too much to qualify for any cost-reducing subsidies. And others don't like giving up a health insurance plan they may have had and liked before the Affordable Care Act. After the ACA, though, many plans were no longer compliant with the law in terms of consumer protections and costs.
That said, there have been massive public health gains since the implementation of the Affordable Care Act. The law ensured that Americans will not be denied health insurance as a result of a pre-existing condition. And health insurance companies cannot charge more because of a pre-existing condition. It also lets young adults stay insured through their parents’ health insurance until the age of 26. Now, more young, healthy adults can be insured who otherwise might not have been. More Americans are also able to qualify for Medicaid in their state. The ACA gave governors the financial support to do this with the help of federal subsidies to help defer costs.
Obamacare also notably guaranteed that all Americans could access a core set of preventive healthcare services at no-cost. A critical move to ensure that people go to the doctor for these kinds of procedures without worrying about the cost of them. More things caught earlier on keeps more Americans healthy. And even helps protect their finances at the same time.
Will Obamacare get repealed?
President Trump campaigned on the promise of repealing Obamacare. Yet all attempts that Congress has made to do so have so far failed. Why? Because there's been massive public outcry. The ACA is hugely popular with American voters. Nonetheless, Republicans still have found ways to chip away at the ACA without a full-out repeal. From not investing the federal budget in promoting Open Enrollment to individual states not opting into Medicaid expansion. Even now, the Trump administration continues to insist that the Affordable Care Act should be repealed and struck down by the Supreme Court.
But the 2018 midterm elections resulted in Democrats taking back control of the House of Representatives. This means Republicans' road to ACA repeal in Congress is that much harder. And now, Democrats are actively campaigning for 2020 on protecting, and enhancing, the Affordable Care Act. Democrats say they don't want to just stop Republican repeal efforts. Now, many Democrats want to expand the scope of the ACA, and are introducing new ideas for no- and low-cost health insurance.
Conclusion
Obamacare and the Affordable Care Act remains the law of the land. Which means that the Marketplace is still open and running! People who wish to shop for their own plans can do so during Open Enrollment and Special Enrollment Periods. And regardless of what plan they choose, it will come with the level of coverage that the law prescribes.
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