What is Affordable Care Act?

Affordable Care Act – Overview

What is the Affordable Care Act (ACA)? Obamacare is a healthcare reform that includes a list of policies that open opportunities for Americans.

ACA’s overarching goals are to expand access to affordable health insurance, improve quality and system performance, increase consumer protections, emphasize prevention and wellness, expand the health workforce, and reduce healthcare costs.

The ACA is aimed at all Americans, especially those without insurance, regardless of income level, although it does place a special emphasis on providing for low-income individuals and families.

What is the Affordable Care Act? – Overview

The Obama Administration passed the ACA in 2010 as a comprehensive healthcare reform.

Also known as the Patient Protection and Affordable Care Act (PPACA) and often called Obamacare, the law is designed to expand health insurance coverage to millions of uninsured Americans.

ACA aimed to reduce the cost of health insurance coverage for qualified and lower-income people. The law offers premium tax credits and cost-sharing reductions to lower expenses.

Premium tax credits are federal tax credits that lower your monthly health insurance bill.

Cost-sharing reductions lower out-of-pocket costs for co-pays, deductibles, and coinsurance, and they also reduce the out-of-pocket maximum—the total amount you pay for health expenses in a year.

All ACA-compliant health insurance plans sold on the Health Insurance Marketplace must cover essential health benefits. People can buy or switch insurance plans during an open enrollment period on the Health Insurance Marketplace every year.

Key Takeaways

  • The Affordable Care Act, also known as the Patient Protection and Affordable Care Act (PPACA) or Obamacare, was signed into law in March 2010.
  • It was designed to expand health coverage to uninsured Americans.
  • The Act expanded Medicaid eligibility, mandated Americans to purchase or obtain health insurance, created a Health Insurance Marketplace, prohibited insurance companies from denying coverage, and allowed children to stay on their parent’s insurance plan until age 26.
  • For coverage purchased through the marketplace, lower-income families qualify for subsidies.

What is the Affordable Care Act? – Coverage Highlights

Under the ACA, health insurance carriers must make the following provisions for policyholders:

  • Medicaid Expansion

The ACA expanded Medicaid and the Children’s Health Insurance Program (CHIP) to cover uninsured and low-income families in America. Originally, the ACA intended to cover individuals under 65 who earn below the Federal Poverty Level (FPL) through state-sponsored Medicaid programs.

Now, individuals without children and with low income qualify for Medicaid.

Low-income men and women, like uninsured individuals, eligible for Medicaid can browse various coverage options using the ACA Healthcare Exchange.

  • Young Adult Coverage

Men and women under 26 can be covered under their parent’s health insurance plan, whether it is an individual or employer-sponsored coverage plan.

This rule applies in all the United States states, regardless of marital status and educational status.

  • Subsidized Coverage

While the ACA mandates that most Americans obtain health insurance, it also provides financial assistance to help lower the cost for those eligible. However, to help such people whose annual income falls below 400% of FDL qualify for federal government subsidies.

  • Consumer Protection

The ACA emphasizes preventive care and wellness to improve health outcomes and reduce healthcare costs. Under ACA, the policyholders cannot be denied by health insurance companies due to pre-existing conditions such as a chronic illness or permanent disability.

Additionally, insurance providers cannot impose premiums for individuals or women facing chronic health issues.

Free preventative services must be included in the plan, where insurance companies cannot impose limitations on Essential Health Benefits, including screenings and preventative treatments.

As per the 80-20 rule. Insurance providers spending less than 80% of premium revenue on medical services must issue rebates to their policyholders.

  • Essential Benefits

Under the ACA, certain benefits must be included in individual and group coverage plans. These are:

  1. Ambulatory patient services
  2. Hospitalization
  3. Emergency services
  4. Mental health and substance abuse disorder services
  5. Prescription drugs
  6. Laboratory services
  7. Preventive services and chronic disease management
  8. Maternity and newborn care
  9. Rehabilitative and habitability services
  10. Pediatric services

What is the Affordable Care Act? – ACA Health Insurance Marketplace

The Federal government created an online health insurance marketplace to ease the process by which individuals and business owners can purchase health insurance and maximize enrollments.

Interested individuals can browse health insurance plans on the marketplace and sign up for coverage within the ACA Open Enrollment Period. Four plans match the coverage rate. To learn more, visit https://www.healthcare.gov/quick-guide/

How to Apply for ACA?

Let us learn about the five ways to apply for ACA coverage.

  • Online Assistance

If you want online assistance, visit https://www.healthcare.gov/ and create an account. If you already have an account, you are enrolled in a plan log-in.

  • Personal Assistance

If you want to determine the best plan under the ACA, you can seek personal assistance. Several specially trained community assisters can help you complete the application and enrollment process with a suitable plan.

To find community assisters, visit HealthCare.gov and enter your zip code, where you will find someone to assist you locally with your ACA coverage.

  • Telephone

Customer service representatives are always available to assist you in completing the ACA application process, helping with enrollments, and reviewing coverage options. Contact 1-800-318-2596

  • Agents and Brokers

Agents and brokers might only work with specific plans; however, they can be good options for making the best decisions. To search for brokers available in your community, visit https://localhelp.healthcare.gov/

The hard copy of the application is also available on the website. The standard processing usually takes two weeks for eligibility.

Regardless of your option, ACA is an option that works for the uninsured and those needing coverage.

There are time frames for applying and a particular enrollment period in case you cannot meet the guidelines. Make sure to consider all the options carefully.

What is the Affordable Care Act? – Pros

There are various benefits of implementing the ACA.

  • Health Insurance Coverage

The ACA has given millions of Americans access to health insurance coverage.

  • Cheaper Health Insurance

Though insurance coverage under the ACA isn’t free, it made health insurance more affordable to lower-income families.

Insurance companies must contribute at least 80% of insurance premiums to medical care and health improvements, making it accessible to most American families.

  • Cheaper Prescription Drugs

Historically, due to the higher prices of medications, most seniors and low-income families were unable to afford them. Under the ACA, prescription drugs became more affordable, allowing Medicare beneficiaries to save a huge amount.

  • Extended Coverage for Various Health Conditions

Individuals used to experience difficulties while receiving health insurance under certain pre-existing health conditions such as cancer. Many health insurance companies denied covering the treatment for specific conditions incurred before registering for Medicare.

With the introduction of ACA, Americans could not be denied coverage due to such circumstances.

What is the Affordable Care Act? – Cons

Besides several benefits, there are also some cons to implementing the ACA. Let us learn about them.

  • Higher Premiums

Though insurance companies offer more comprehensive benefits options and cover Americans with pre-existing conditions, the cost of upholding such conditions charged them higher premiums.

  • High Tax Rates

Individuals with high incomes were taxed at higher rates to compensate for ACA, with the rise in taxes on pharmaceutical sales and medical devices.

  • Affecting Employment Hours

The ACA mandates that businesses with 50 or more full-time equivalent employees offer health insurance to their full-time employees.

As a result, many businesses reduced their full-time employees to part-time, avoiding paying for additional expenses.


What is the Affordable Care Act? Is it working? To answer these questions, it is vital to understand its impact on the American healthcare system.

The ACA ensures that more Americans are insured regardless of income and the state of their health.

The main goal of ACA was to make health insurance affordable to millions of Americans. The implementation of ACA has also been beneficial to the Health insurance industry.

Go through the available coverage options and choose the suitable one to get the maximum benefits.

Remember that some treatments are not considered essential and, hence, not covered by the Affordable Care Act.

For instance, if you are missing a tooth and cannot afford a dental implant, you should consider other options, such as government-provided dental grants.

See Also

How to get Medicare to Pay for Dental Implants

How to get free medical insurance for the unemployed

What is NIH

What is HHS?

Current Version
April 26, 2021
Written By
Victoria Abigail Friedland
April 24, 2024
Updated By
Andrea Morales G.

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