Obamacare & Medical Billing: Understanding the Affordable Care Act

The Affordable Care Act (ACA), a landmark piece of legislation enacted in 2010 under the Obama administration, fundamentally reshaped the American healthcare landscape. Comprising the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, its primary objectives were ambitious: to significantly increase the number of insured Americans and to curb escalating healthcare costs for both individuals and the government.

Prior to the ACA’s full implementation in 2014, a concerning 15% of the U.S. population lacked health insurance in 2013. Millions faced barriers to coverage due to pre-existing conditions and other factors. The ACA aimed to dismantle these barriers. By the close of 2016, the uninsured rate in the U.S. had notably decreased to 10.9%. Furthermore, the Congressional Budget Office (CBO) projected that the ACA could potentially reduce the national deficit by up to $100 billion over a decade. This article delves into the key aspects of the Affordable Care Act, providing a comprehensive overview for individuals seeking to understand this critical legislation and its impact on healthcare access and affordability.

This guide will cover essential topics, including:

The core provisions of health plans available through the ACA marketplaces.
Navigating the online ACA Healthcare Exchange for individual and business coverage.
Step-by-step instructions for applying for health insurance under the ACA.
Clarification of financial penalties for those who choose not to obtain health coverage.
An explanation of ‘coverage gaps’ in relation to varying state health insurance programs.
Key considerations for individuals exploring health insurance options in the post-ACA era.

It’s important to note that while this article provides a broad overview of the ACA and its impact, the complexities of healthcare legislation and medical billing and coding within this framework are significant. Understanding the nuances of the ACA can empower individuals to make informed decisions about their healthcare coverage and navigate the system effectively.

Key Coverage Provisions Under the Affordable Care Act

The ACA mandates several crucial provisions that all health insurance carriers must offer to policyholders. These provisions are designed to ensure a baseline level of coverage and consumer protection.

One of the most significant changes brought about by the ACA is the guaranteed issue provision. This means that insurance companies are now required to provide health coverage to all applicants, regardless of pre-existing health conditions. This was a monumental shift from pre-ACA practices, where individuals could be denied coverage or charged exorbitant rates due to their health status. The ACA ensures that no one can be turned away from essential health insurance due to their medical history.

Another vital provision is the establishment of essential health benefits (EHBs). ACA-compliant health plans must cover ten categories of essential health benefits. These include:

Ambulatory patient services: Care received as an outpatient, such as doctor’s visits and same-day procedures.
Emergency services: Treatment for sudden and serious medical conditions.
Hospitalization: Inpatient care in a hospital.
Maternity and newborn care: Care for pregnant women and newborns.
Mental health and substance use disorder services: Treatment for mental health conditions and addiction.
Prescription drugs: Coverage for medications.
Rehabilitative and habilitative services and devices: Services and devices to help individuals recover from injuries or illnesses, or to cope with disabilities.
Laboratory services: Medical testing.
Preventive and wellness services and chronic disease management: Services to prevent illness and manage chronic conditions, such as vaccinations and screenings.
Pediatric services, including oral and vision care: Care for children, including dental and eye care.

These EHBs ensure that all ACA-compliant plans offer comprehensive coverage across a wide spectrum of healthcare needs.

It’s important to note the distinction regarding grandfathered policies. Plans that existed prior to the ACA’s enactment (before March 23, 2010) and have remained largely unchanged may be classified as “grandfathered.” Grandfathered policies are exempt from certain ACA requirements, most notably the mandate to cover individuals with pre-existing conditions and the requirement to include essential health benefits. Insurance providers offering grandfathered plans are legally obligated to inform policyholders of this status. Individuals enrolled in grandfathered plans have the option to maintain their current coverage or explore plans on the ACA Healthcare Exchange that offer comprehensive coverage, including pre-existing condition protection.

Navigating the ACA Health Insurance Marketplace

To streamline the process of purchasing health coverage and maximize enrollment, the federal government established an online health insurance marketplace. This marketplace, often referred to as the ACA Healthcare Exchange, serves as a centralized platform where individuals and small business owners can compare and enroll in health insurance plans. Insurance providers who list their plans on the exchange pay a nominal fee for enhanced visibility within the marketplace. This structure promotes competition and aims to provide consumers with a wide array of plan choices.

It’s crucial to understand that the ACA marketplace is not the only avenue for obtaining health insurance. Many Americans continue to receive coverage through employer-sponsored plans, Medicare, Medicaid, or other sources. The ACA marketplace is primarily designed for individuals and families who do not have access to these types of coverage.

However, individuals who do have access to other forms of coverage might still choose to explore the marketplace. For example, someone with employer-sponsored insurance might find that marketplace plans offer more comprehensive benefits or lower costs. Individuals are free to supplement their existing coverage or opt out of their current plan entirely in favor of a marketplace plan.

To enroll in a health insurance plan through the marketplace, individuals must typically do so during the ACA Open Enrollment Period. This annual period is the designated time for most people to enroll in or change health insurance plans for the upcoming year. The open enrollment period typically runs from November 1st to December 15th, with coverage starting on January 1st of the following year. For instance, the 2018 Open Enrollment Period concluded on December 15, 2017.

Individuals who miss the open enrollment period may still be eligible for coverage if they experience certain qualifying life events, such as job loss, marriage, birth of a child, or relocation. These events may trigger a Special Enrollment Period, allowing individuals to enroll in a marketplace plan outside of the standard open enrollment timeframe. Special Enrollment Periods typically last for 60 days from the qualifying life event.

In addition to the nationwide marketplace (HealthCare.gov), several states have established their own state-specific exchanges. These state-based marketplaces cater exclusively to residents of those states. States that operate their own healthcare exchange websites include:

California
Colorado
Connecticut
District of Columbia
Idaho
Kentucky
Maryland
Massachusetts
Minnesota
Nevada
New Jersey
New Mexico
New York
Pennsylvania
Rhode Island
Vermont
Washington

Residents of all other states utilize the federal HealthCare.gov marketplace. Regardless of whether an individual uses the national marketplace or a state-specific exchange, they can choose from four main categories of individual health plans, often referred to as “metal levels.” These categories are distinguished by the approximate percentage of medical costs covered by the insurer:

Bronze: The insurer covers approximately 60% of medical costs, while the policyholder is responsible for 40%. Bronze plans typically have the lowest monthly premiums but the highest out-of-pocket costs when care is needed.
Silver: The insurer covers roughly 70% of medical costs, and the policyholder pays 30%. Silver plans strike a balance between monthly premiums and out-of-pocket expenses.
Gold: The insurer covers about 80% of medical costs, with the policyholder paying 20%. Gold plans have higher monthly premiums but lower out-of-pocket costs compared to bronze and silver plans.
Platinum: The insurer covers approximately 90% of medical costs, and the policyholder pays 10%. Platinum plans have the highest monthly premiums but the lowest out-of-pocket costs.

The “metal plan” structure allows consumers to choose a plan that aligns with their budget and anticipated healthcare needs. Bronze and silver plans may be suitable for younger, healthier individuals who anticipate fewer medical needs, while gold and platinum plans are often preferred by individuals with chronic conditions or those who expect to utilize healthcare services more frequently.

Applying for ACA Coverage

As previously mentioned, the standard open enrollment period for ACA health coverage occurs annually in the fall. When the next open enrollment period commences (specific dates are announced each year), individuals seeking health insurance can apply for plans through several convenient methods:

Online Application: The most common method is to shop for plans and apply directly online through HealthCare.gov (or the relevant state exchange website). The online platform provides tools to compare plans, estimate costs, and complete the application process electronically.
Phone Enrollment: For those who prefer to apply over the phone, assistance is available by calling (800) 318-2596 or TTY: (855) 889-4325. This phone enrollment service is accessible 24 hours a day, seven days a week, providing convenient support for applicants.
Small Business Enrollment: Small business owners seeking coverage for their employees can call a dedicated line at (800) 706-7893 or TTY: (800) 706-7915 for phone-based enrollment assistance tailored to their needs.

Regardless of the application method chosen, applicants will need to gather certain essential documents and information to complete the process efficiently. The following materials are typically required:

Household Size Information: Details about the number of people in the applicant’s household who are seeking coverage. Household size is a key factor in determining eligibility for subsidies and plan options.
Personal Information: Home or mailing addresses and dates of birth for all individuals applying for coverage.
Social Security Numbers: Social security numbers (or document numbers for legal immigrants) are required for all applicants.
Income and Employment Details: Information about employment and earnings for everyone in the household who needs health coverage. This may include W-2 tax forms, payment invoices, or other documentation.
Income Estimates: Estimates of the current year’s household income are necessary to determine potential eligibility for financial assistance.
Existing Health Coverage Information: Details about any current health insurance plans covering anyone in the household.
Employer Coverage Form (if applicable): An Employer Coverage form for each employer-sponsored health plan for which anyone in the household is eligible. This form helps determine eligibility for marketplace subsidies.

Having these materials readily available will streamline the application process, whether applying online, by phone, or through other means.

Subsidies and Penalties under the ACA

A core component of the Affordable Care Act is its aim to make health insurance more affordable for individuals and families with modest incomes. To achieve this, the ACA provides financial subsidies in the form of premium tax credits to eligible individuals and families who purchase health plans through the marketplace.

Individuals and families within specific income ranges may qualify for these subsidies. Eligibility criteria typically include:

Purchasing a plan through the ACA marketplace during the open enrollment period.
Not being eligible for employer-sponsored health insurance or government-sponsored health programs like Medicare or Medicaid (unless the employer-sponsored insurance is deemed unaffordable or does not meet minimum value standards).
Meeting certain income requirements.
Not being claimed as a dependent on someone else’s tax return.

Individuals and families who meet these criteria may be eligible for the Premium Tax Credit. This tax credit effectively reduces the monthly premiums individuals pay for their marketplace health insurance plans, making coverage more accessible. The amount of the premium tax credit is calculated based on household income, family size, and the cost of benchmark health plans in the individual’s area.

Conversely, the ACA initially included an individual mandate, which required most U.S. citizens and legal residents to have health insurance coverage or face a financial penalty. This penalty was intended to encourage widespread enrollment in health insurance and help stabilize the insurance market. However, it’s important to note that the individual mandate penalty was effectively eliminated starting in 2019. While the mandate to have health insurance remains, there is no longer a federal financial penalty for not having coverage. Some states, however, have implemented their own individual mandates and associated penalties.

Prior to its elimination, the federal penalty for not having health insurance in 2017 was the greater of:

$695 per adult and $347.50 per child, with a family maximum of $2,085.
2.5% of the uninsured household income.

These penalty amounts were set to increase annually with inflation. While the federal penalty is no longer in effect, understanding its historical context is helpful in understanding the ACA’s original design and goals.

It’s also important to be aware that even without a federal penalty, maintaining health insurance coverage remains crucial for financial protection and access to necessary healthcare services. Uninsured individuals are responsible for the full cost of their medical care, which can lead to significant financial burdens in the event of illness or injury.

Furthermore, certain types of health coverage are considered to meet the ACA’s coverage requirements, even if they are not purchased through the marketplace. Individuals with the following types of coverage generally do not face penalties (and did not face penalties when the mandate was in effect) for not obtaining marketplace coverage:

Any qualified health plan purchased outside of the Health Insurance Marketplace.
“Grandfathered” health plans that were in effect before March 23, 2010.
Employer-sponsored health plans (including retiree plans and COBRA coverage).
Medicare Part A or Part C.
Most Medicaid coverage.
The Children’s Health Insurance Program (CHIP).
Coverage under a parent’s health insurance plan (for dependents under age 26).
Most student health plans.
Peace Corps volunteer health coverage.
Certain types of coverage offered through the Department of Veterans Affairs.
Most TRICARE plans for military personnel and their families.
Department of Defense Nonappropriated Fund Health Benefits Program.
Refugee medical assistance.
State high-risk pools (in states that still operate them).

Additionally, individuals may be eligible to apply for an exemption from the health insurance mandate (and potential penalties, when they were in effect) under certain circumstances. Exemptions may be granted for situations such as:

Income-related exemptions: If the lowest-priced available health insurance coverage would cost more than a certain percentage of household income (e.g., 8.16% in some years).
Hardship exemptions: For individuals facing significant life challenges, such as homelessness, eviction, domestic violence, or the death of a family member.
Health coverage-related exemptions: For short coverage gaps (e.g., being uninsured for less than 3 consecutive months).
Group membership exemptions: For members of federally recognized tribes or recognized healthcare sharing ministries.
Other exemptions: For situations like incarceration or living abroad.

Click here to access a comprehensive list of healthcare exemptions and instructions on how to apply.

Finally, it’s important to be aware that certain limited-benefit health plans do not meet the ACA’s coverage requirements. Enrolling in these types of plans may have resulted in penalties under the individual mandate (when it was in effect). These plans include:

Plans that solely cover dental and vision services.
Non-COBRA worker’s compensation plans.
Plans that exclusively cover specific medical conditions (e.g., cancer-only plans).
Plans that only offer discounts on medical services, rather than comprehensive coverage.

Individuals should carefully review plan details to ensure they are enrolling in ACA-compliant coverage that meets their needs and avoids potential financial repercussions.

Understanding the Medicaid Coverage Gap

Historically, Medicaid eligibility was primarily limited to specific populations, such as children and their parents, individuals with disabilities, and the elderly. Adults without dependent children often did not qualify, and eligibility criteria for parents varied significantly from state to state.

The ACA aimed to address this “coverage gap” by expanding Medicaid eligibility to encompass all individuals with incomes below a certain threshold, regardless of family status. The ACA established a “national Medicaid income eligibility level” set at 138% of the Federal Poverty Line (FPL). However, a Supreme Court decision in 2012 granted states the option to opt out of this Medicaid expansion.

As a result, the landscape of Medicaid expansion varies across the United States. In states that have chosen to expand Medicaid (currently 38 states and the District of Columbia), all individuals with incomes at or below 138% of the FPL are generally eligible for Medicaid coverage. In states that have not expanded Medicaid, eligibility rules remain more restrictive. In these non-expansion states, parents may qualify for Medicaid at varying income levels relative to the FPL, but adults without dependent children are typically not eligible for Medicaid, regardless of their income. Wisconsin is a unique case; it did not formally adopt the ACA Medicaid expansion but provides Medicaid coverage to adults up to 100% of the FPL through a separate Medicaid waiver program.

To stay informed about the current status of Medicaid expansion decisions in each state, consult resources such as this interactive map provided by the Kaiser Family Foundation. Understanding your state’s Medicaid expansion status is crucial for determining potential eligibility for this vital safety net program.

Final Considerations When Choosing a Health Plan

While HealthCare.gov and state-based ACA marketplaces simplify the process of obtaining health insurance, it’s essential for consumers to conduct thorough research and carefully evaluate their options before selecting a plan. Choosing the right health plan involves considering various factors to ensure it effectively meets individual healthcare needs and financial circumstances. Here are three critical considerations:

Health Benefits Coverage: A health insurance plan should provide adequate access to medical care, enabling individuals to seek necessary treatment and physician visits without incurring overwhelming costs. It’s crucial to scrutinize plan details to understand any limitations on physician visits, restrictions on covered medications, or other potential constraints that could impact the level of care received. Ensure the plan’s coverage aligns with your anticipated healthcare needs.
Overall Costs: When evaluating health plan costs, it’s important to look beyond just the monthly premium. Plans with lower premiums often come with higher deductibles and out-of-pocket expenses. While low-premium plans may seem appealing initially, they can lead to substantial out-of-pocket costs in the event of a medical emergency or significant healthcare utilization. Conversely, high-premium plans typically offer lower deductibles and out-of-pocket maximums, providing greater financial protection against unexpected medical bills. Assess your age, health status, and anticipated healthcare utilization to determine the most cost-effective balance between premiums and out-of-pocket costs. For individuals who anticipate minimal healthcare needs, a lower-premium plan might be suitable, while those with chronic conditions or frequent medical needs may benefit from a higher-premium plan with richer coverage.
Physician Networks: Many health insurance plans available through the ACA marketplaces operate within a “physician network.” These networks restrict plan holders to seeking care from doctors and specialists within the network to receive in-network coverage rates. Out-of-network care typically results in higher out-of-pocket costs. If you have established relationships with specific physicians or specialists, verify whether they are included in the network of the plans you are considering. If your preferred doctors are not in-network, you may need to explore plans with broader networks or consider plans outside of the marketplace that offer greater flexibility in provider choice, even if they come at a higher premium. Maintaining continuity of care with trusted physicians is an important factor for many individuals when selecting a health plan.

By carefully considering these factors – health benefit coverage, overall costs (premiums and out-of-pocket expenses), and physician networks – consumers can make informed decisions and choose ACA health insurance plans that best meet their individual healthcare needs and financial circumstances. Navigating the complexities of health insurance requires diligence and informed decision-making to ensure access to quality, affordable healthcare.

Frequently Asked Questions About the Affordable Care Act

What is the Affordable Care Act?

The Affordable Care Act (ACA) is a comprehensive healthcare reform law enacted in the United States under President Barack Obama. Its primary goals are threefold: to expand health insurance coverage to more Americans, to enhance coverage for individuals and families through Medicaid, and to reduce the overall cost of healthcare. The ACA is particularly relevant for individuals who are not covered by employer-sponsored insurance, young adults, children, and individuals with incomes below 138% of the poverty line. It represents a significant effort to improve access to healthcare and address systemic issues within the American healthcare system.

What is Obamacare?

“Obamacare” is simply another name for the Affordable Care Act. The terms are used interchangeably to refer to the same healthcare law. Despite this, public confusion persists. A 2017 study by Morning Consult revealed that 35% of Americans believed Obamacare and the Affordable Care Act were distinct policies or were unsure if they were the same. The term “Obamacare” gained prominence as political opponents of the ACA sought to associate the law directly with President Obama, particularly if it were to face challenges or perceived failures. It’s crucial to recognize that Obamacare and the Affordable Care Act are, in fact, one and the same.

What is the Patient Protection and Affordable Care Act?

The Affordable Care Act is technically comprised of two legislative acts: the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010. The PPACA is the primary legislation and focuses extensively on expanding Medicaid eligibility to cover millions of additional low-income Americans. It also aims to improve existing Medicaid provisions and strengthen the Children’s Health Insurance Program (CHIP). Broadly, the PPACA seeks to enhance long-term care services, improve the quality of healthcare, refine healthcare delivery systems, and expand access to healthcare for a greater number of Americans.

How Many People Are on Obamacare?

The number of individuals enrolled in health coverage facilitated by the ACA has grown substantially since its implementation. Prior to the ACA, approximately 48 million Americans lacked health insurance. By 2016, this number had decreased to around 28.6 million, representing approximately 9% of the U.S. population. Despite a shortened enrollment period and ongoing political debates surrounding the ACA, nearly 11.8 million Americans signed up for Obamacare plans for 2018, demonstrating the ongoing demand for and reliance on ACA-facilitated health coverage.

When Did Obamacare Start?

Discussions and planning for what would become Obamacare began in February 2009 when President Obama convened a joint session of Congress to initiate the development of comprehensive healthcare legislation. Following extensive committee hearings and legislative processes, the resulting bill was passed by Congress and signed into law in March 2010. However, the key provisions of Obamacare, including the health insurance marketplaces and expanded coverage options, became effective and accessible to Americans starting in 2013, with full implementation in 2014.

How Does Obamacare Work?

Obamacare operates on several key mechanisms to expand health insurance coverage and reform the healthcare market. A central feature is the mandate requiring insurance companies to provide coverage to all Americans, regardless of pre-existing health conditions. This “guaranteed issue” provision prevents insurers from denying coverage or charging higher premiums based on an individual’s health status. To enroll in Obamacare plans, individuals can apply online, by mail, or in person. The application process involves answering questions to determine eligibility for different types of insurance plans and to estimate monthly premiums based on income. Applicants are then presented with a selection of different levels of insurance coverage to choose from, typically categorized as “metal levels” (bronze, silver, gold, platinum). While the individual mandate penalty has been eliminated at the federal level, the underlying principle of encouraging widespread coverage remains a core aspect of how Obamacare functions.

How Much is Obamacare?

The cost of Obamacare health insurance plans varies significantly based on numerous factors. Fortunately, various tools are available to help individuals estimate their potential premiums and out-of-pocket costs. Key factors influencing the cost of Obamacare plans include: geographic location (state and region), household income, marital status, whether children are being enrolled in coverage, and whether a spouse has access to employer-sponsored health insurance. Individuals and families with middle to low incomes may be eligible for Obamacare subsidies, also known as premium tax credits, which can substantially reduce their monthly premium payments. To gain a better understanding of potential healthcare costs under Obamacare, individuals can utilize online resources such as this subsidy calculator provided by the Kaiser Family Foundation.

Is Medicaid Obamacare?

The relationship between Medicaid and Obamacare can be a source of confusion. While Obamacare does incorporate provisions related to Medicaid expansion, it’s important to distinguish between the two. Obamacare health insurance plans, purchased through the marketplaces, are offered by private insurance companies. In contrast, Medicaid is a government-funded and government-administered healthcare program. Obamacare expanded Medicaid by providing states with the option to broaden eligibility to include more low-income individuals, particularly those with incomes up to 138% of the Federal Poverty Line. States that chose to expand Medicaid under Obamacare have significantly increased access to coverage for their low-income populations. Therefore, while Medicaid is not “Obamacare” itself, the ACA did significantly alter and expand the Medicaid program in many states.

How to Apply for Obamacare

Applying for Obamacare health insurance is a straightforward process that can be completed through multiple convenient methods:

Online: Visit the official Health Insurance Marketplace website at Healthcare.gov.
Phone: Call the Health Insurance Marketplace call center at 1-800-318-2596.
In Person: Seek assistance from a trained counselor or navigator in your local area who can guide you through the application process. These assisters are available in many communities.
Mail: Download and print a paper application form from the Health Insurance Marketplace website, complete it, and mail it in as instructed.

These diverse application methods ensure accessibility for individuals with varying preferences and levels of technological comfort.

Obamacare vs. Affordable Care Act

As previously emphasized, “Obamacare” and “Affordable Care Act” are simply different names for the same piece of healthcare legislation. It is crucial to remember this when encountering news reports, political discussions, or information about healthcare policy. Understanding that these terms are interchangeable is essential for accurate comprehension of the ACA and related issues.

Is the Affordable Care Act Working?

Assessing the effectiveness of the Affordable Care Act requires evaluating its performance against its stated goals and considering various metrics. After several years of implementation, data provides insights into the ACA’s impact on the American healthcare system.

One primary objective of the ACA was to increase health insurance coverage rates, ensuring more Americans, regardless of income or health status, had access to insurance. Data indicates that the number of uninsured Americans has decreased by nearly 50% since the ACA’s enactment, signifying a substantial expansion of coverage. Furthermore, the ACA’s mandate to cover pre-existing conditions remains a critical protection for millions of individuals.

Another key goal was to make health insurance more affordable. According to data from The New York Times, during the initial enrollment periods, a significant percentage (85%) of enrollees received subsidies to reduce their premium costs, demonstrating the ACA’s role in enhancing affordability for many. The level of premiums varies across states, often influenced by the number of insurance providers operating in a given market. States with greater insurer competition tend to have lower premiums. The ACA has also contributed to growth within the health insurance industry, with insurers gaining millions of new customers since its implementation. These metrics suggest that the ACA has had a significant impact on expanding coverage and addressing affordability challenges within the American healthcare system, although ongoing debates and proposed changes continue to shape its future.