The Affordable Care Act (ACA) was signed into law in 2010 to address the needs of more than 47 million Americans who had no health insurance coverage.  It was also intended to provide financial help in the form of subsidies for those who had limited health insurance benefits and were financially unable to pay the premiums.

It wasn’t until January 2014 that the biggest impact of the Affordable Care Act was recognized.  This is the date that the majority of the mandates went into effect and most Americans were expected to sign up for health insurance either through their employer or through individual plan options offered through state and federal health insurance exchanges.

Previous barriers to enrollment such as pre-existing conditions and premiums based on health issues, age and gender were removed or altered under the Affordable Care Act to create a more universal approach to determine the premium charged for health insurance.  Moving away from medical underwriting to determine premium means that the majority of Americans need to have coverage so that those that are healthy will offset those that have health issues.  To accomplish these participation levels, an individual mandate of the Affordable Care Act requires individual participation in a health insurance plan or the individual is required to pay a penalty to remain uninsured.

In 2014 those without insurance were required to pay a penalty that equaled 1.0% of their income which is considerably less than purchasing health care for a year.  The penalty continues to increase to 2.5% on income in 2016 which is still well below the average cost of premium each year.

affordable care act

A health insurance marketplace was developed to provide a centralized area for consumers to shop for health insurance.   Private carriers offer plans on the marketplace and depending on income, consumers may qualify for subsidies to help cover the cost of the monthly premiums.  Websites such as provide the income guidelines for subsidies and tax credits given to those that qualify financially.

Along with the guaranteed access to coverage, the Affordable Care Act also provides specific language as to minimum benefit coverage that all health insurance plans must provide.  These benefits are referred to as essential benefits and consist of 10 general categories that must be covered.

Affordable Care Act

The categories of coverage include:

  • Maternity Care
  • Rehabilitative & Habilitative Services
  • Pediatric Services
  • Mental & Behavioral Health Treatment
  • Preventative & Wellness Services
  • Hospitalization
  • Laboratory Services
  • Prescription Drugs
  • Ambulatory Patient Services
  • Emergency Services

The overall concept behind the Affordable Care Act was to provide health insurance for all Americans and to help the consumer afford the cost of health care.  At the same time, other provisions of the law actually increase the cost of coverage due to the required essential benefits coverage and health insurance taxes.

The Affordable Care Act’s reach doesn’t just affect the individual market place.  Employer sponsored plans are also subject to many ACA requirements including minimum essential benefits, restriction on age rating and employer taxes.

There is a lot of discussion on both sides of the issue as to whether the Affordable Care Act will actually lower the cost of health care over time or if we will continue to see costs skyrocket.  According to the Health and Human Services website, about 16.4 million uninsured people have gained health insurance since the inception of the Affordable Care Act.   Whether this trend will continue and how the overall cost of health care will be affected remains to be seen as time progresses.

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