The Basics of the Affordable Care Act


Text Icon Publish Date: November 29, 2013

Text Icon Written by: Barbara Meier
Text Icon Medically reviewed by: Dr. Manan Trivedi and Dr. Marc Kimmel

The Affordable Care Act (ACA) was signed into law March 23, 2010.
This historic law:

  • Expands access to health insurance coverage for most Americans
  • Provides financial help to low-income individuals & families
    • Sliding-scale tax credits for premium and co-pays available to individuals and families with incomes between 133-400% of the Federal Poverty Level
      Click here for a helpful subsidy calculator see from the Kaiser Family Foundation.
  • Caps annual out-of-pocket spending for individuals and families
    finally, an end to medical bankruptcy in America!
  • Strengthens Medicare benefits
    • Ends Medicare Part D Rx Drug “Doughnut-hole”
    • Now covers annual wellness visits, personalized prevention plans with no co-pays for preventive services
  • Expands Medicaid eligibility to 133% of the Federal Poverty Level
    • Covers childless adults ($29,326 for a family of 4 – other sizes)
    • Cost of increase to States covered by Federal dollars for those newly eligible
      • 100% of the cost the first 3 years, 90% by 2020 and beyond
    • 26 states + DC moving forward with expansion, 25 states not moving forward at this time – map with list
  • Provides Small Business Tax Credits to Help Cover Employees
    • Businesses with ≤25 employees, average wage <$50,000
    • Tax credits up to 35% of employer’s contribution to premium in 2010, goes up to 50% by 2014
  • Increases Regulation of Private Health Insurance Companies
    • Creates Policies that Encourage Wellness – Requires Full Coverage for Preventive Services
      • All new group and individual plans must eliminate co-pays and deductibles for preventative care
    • Ends “Pre-existing Condition” Denials – eliminated for children on 9/23/10, for adults in 2014
    • Prohibits Caps on Coverage Benefits – lifetime caps on benefits eliminated 9/23/10, annual caps end in 2014
    • Allows Young Adults to Stay on Parent Policies Until Age 26
    • Prevents Coverage Rescissions
    • Sets Medical Loss Ratios: 80-85% of premiums on “real” health care
    • Prohibits charging higher premiums based on health status or gender
    • Premiums only allowed to vary for age by no more than 3 to 1,
      smokers by no more than 1.5 to 1
  • Creates State-based Health Insurance Marketplaces
    • Online competitive place for small businesses & individuals without insurance, with no employer sponsored insurance
    • Requires Members of Congress and their staff to obtain health insurance through their State-based Health Insurance Marketplaces
    • Enrollment Period Opened Oct. 1, 2013 – visit www.HealthCare.gov
    • New Resources from Consumer Reports
      • Health Law Helper – an informational tool designed for individual consumers (Spanish language version)
      • Documents you will need to apply
      • 1040 Form worksheet
  • Establishes Personal Responsibility to Purchase Health Insurance
    • Applies U.S. citizens and legal immigrants
    • Exemptions for religious objection, American Indians, those without coverage < 3 months, undocumented immigrants, incarcerated individuals, lowest cost plan is >8% of income, or income below tax filing threshold
    • Penalty total is the greater of:
      • in 2014 = $95    or  1% taxable income
      • in 2015 = $325  or  2% taxable income
      • in 2016 = $695  or  2.5% taxable income
    • What if you don’t have coverage in 2014? – info link

For more information on benefits and consumer protections in the Affordable Care Act visit www.HealthCare.gov

Scroll down for additional resources

  • Consumer Reports Guides: Medicare:  6 Things to Know Know
    Health Reform: 7 Things You Need to Know to be Ready
  • What the Health Care Law Means for Women – updated brochure with non-partisan, fact-based information from NPA & the National Women’s Law Center
    • If your insurance company is giving you a hard time or you need help getting the care you should get, see this great resource guide from NWLC
  • Visit Understanding the ACA for additional information and resources from NPA
    • To download free waiting room posters and handouts, click here