Affordable Care Act (Obamacare)
- Learn about Obamacare, or the Affordable Care Act (ACA), including what it covers, how to sign up for Obamacare, eligibility requirements, costs and more.
“Obamacare” is a name some people use to refer to the Patient Protection and Affordable Care Act, also known as the Affordable Care Act (ACA).
In our detailed overview of Obamacare, we outline all the important information you need to know about Obamacare eligibility, the various health insurance plans available on the Marketplace, their costs, subsidies and more.
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What Exactly Is Obamacare?
Obamacare is a sweeping piece of legislation passed by Congress and signed into law by President Barack Obama in 2010. The goal of the national health insurance program was to improve the quality, affordability and accessibility of health insurance in the U.S.
Obamacare targeted the millions of Americans who did not have health insurance provided through an employer and who were not able to afford individual coverage purchased directly from a health insurance provider.
There are two main components of the ACA:
- A series of laws consisting of more than 1,000 pages of provisions that expand Medicaid eligibility, create tax credits and subsidies, require certain preventive care services to be covered in full and more.
- The Health Insurance Marketplace, which is an insurance exchange where those without employer-sponsored coverage can go to purchase and enroll in a health insurance plan for themselves and their families.
What Is Obamacare Like Today?
While some of the provisions of the ACA have been struck down or modified over the years, Obamacare is still mostly intact today.
As of 2021, more than 31 million Americans were enrolled in a health insurance plan obtained through the Obamacare Marketplace or via Medicaid expansion, marking the highest enrollment total since the act was introduced more than a decade before.
When the ACA was signed into law in 2010, there were more than 48 million non-elderly adults who were uninsured (representing 18.2% of the demographic). That number fell to as low as 28.2 million (10.4%) by 2016.
What Are the Key Provisions of Obamacare?
The Affordable Care Act includes a number of provisions and mandates that went into effect in the years following the passing of the legislation, most of which remain in place today.
Below are some of the key components.
Essential Health Benefits
The ACA mandated that certain health insurance plans include coverage of the following 10 “essential health benefits:”
- Outpatient doctor and same-day surgery care
- Emergency services
- Hospitalization
- Pregnancy, maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services
Protection for Pre-Existing Conditions
Obamacare prevents insurers from charging higher premiums, denying coverage or imposing waiting periods for people with certain pre-existing conditions. The protections tighten even further for children with pre-existing conditions.
Free Preventive Health Care
Select preventive health care services such as certain screenings and immunizations must be covered in full under certain plans. Services that are free of charge to qualifying patients because of Obamacare include:
- Colonoscopies
- Cholesterol and blood pressure checks
- Birth control
- Routine vaccinations
- Breastfeeding supplies
- Screenings for gestational diabetes
- Pap smears and HPV tests
- Screenings for HIV, Gonorrhea and Hepatitis
- Tobacco cessation
- Rh incompatibility screening for pregnant women
Individual Mandate
The ACA imposed an “individual mandate” that required anyone without health insurance to pay a penalty. The individual mandate was repealed in 2017.
Medicaid Expansion
Obamacare loosened Medicaid’s eligibility requirements to expand coverage. There were nearly 15 million Medicaid expansion enrollees between 2010 and 2020 as a result.
Dependent Age Increase
The ACA allows young adults to remain on their parents’ health insurance as a dependent until the age of 26, even if they are not full-time students.
Elimination of Lifetime Limits
Before Obamacare, health insurers could impose a lifetime limit on the amount of coverage granted to a plan member. These limits were eliminated under the law.
Ease of Appeal
Obamacare created an internal appeals process for consumers who disagree with a ruling or believe their benefits have not been distributed in accordance with their coverage. If the internal appeals process does not work, consumers then have the right to an external review by an independent organization.
Protection Against Rescission
The ACA protects consumers from rescission, or a retroactive cancellation of coverage by a health insurance company unless the policy application was fraudulent or contained intentional misrepresentation.
How Does Obamacare Affect Medicare?
It wasn’t just private insurance and Medicaid that the Affordable Care Act targeted. Obamacare also implemented some key provisions geared toward Medicare improvement.
Free Preventive Services
The ACA created the “Welcome to Medicare” preventive care visit offered to Medicare beneficiaries in addition to annual wellness visits, personalized prevention plans and certain screenings.
Prescription Drug Cost Savings
The ACA addressed Medicare’s “donut hole,” or coverage gap, by phasing in cost-sharing adjustments that would gradually shrink the gap over time. Beneficiaries paid 100% of the cost of their medications during the donut hole before the ACA and now pay just 25%.
Medicare Cost Savings Through Medicare Advantage
Part of making health insurance more affordable meant reducing government spending on Medicare.
The Affordable Care Act restructured payments to Medicare Advantage plans (private Medicare health plans, also known as Medicare Part C) to drive down costs for Original Medicare (Medicare Part A and Part B, the Medicare public option).
The ACA also increased revenue for Medicare by increasing Medicare taxes for the top three percent of earners.
Expanded Access to Underserved Areas
The ACA expanded a previous program to pay bonuses to health care providers working in health professional shortage areas (HPSAs). These can include rural areas and other communities where there is limited access to health care providers, doctors, facilities and more.
What Is the Monthly Cost of Obamacare?
Plans sold on the Health Insurance Marketplace, commonly referred to as “Obamacare plans,” are divided into four levels according to the cost required and the coverage provided:
- Platinum
- Gold
- Silver
- Bronze
Monthly premiums for Obamacare vary by plan level and location, but the average Obamacare premium was $576 per month in 2020. However, 86% of those enrolled in Obamacare qualify for subsidies that cover around 85% of the premium. The average subsidy amount in 2020 was $492, leaving most enrollees paying less than $100 per month for their coverage.
What Is the Income Limit for Obamacare in 2022?
There is no income limit to purchase an Obamacare plan from the Health Insurance Marketplace. Anyone who can afford coverage is free to enroll.
However, there are income limits to who can qualify for the tax credits and subsidies that help lower your costs. There are three types of cost assistance associated with Obamacare:
- Expanded Medicaid
- Premium tax credits
- Out-of-pocket subsidies
“Expanded” Medicaid means you can qualify for Medicaid based on your income alone and do not need to be of a certain age, have a disability or any other requirement. As of 2021, 38 states and the District of Columbia offer expanded Medicaid.
Premium tax credits help lower the amount of your monthly premium. And subsidies help lower the amount of your out-of-pocket spending on deductibles, copayments and coinsurance. (Subsidies apply only to Silver level plans.)
Premium Tax Credit Income Limits
To be eligible for an Obamacare premium tax credit, your household income must be no more than 400% of the federal poverty level for your family size.
The chart below shows the maximum income level a household may have in order to qualify for a premium tax credit in 2022.
| Number of people in household | Income limit to qualify for tax credit (400% of federal poverty level) |
|---|---|
|
|
|
|
1 |
$51,520 |
|
2 |
$69,680 |
|
3 |
$87,840 |
|
4 |
$106,000 |
|
5 |
$124,160 |
|
6 |
$142,320 |
|
7 |
$160,480 |
|
8 |
$178,640 |
For households of more than eight people, add $4,540 to the income limit for each additional person.
The amount of your tax credit will depend on your income. For example, a household of three with an income of $60,000 will qualify for a higher credit than a household of three with an income of $70,000.
Out-Of-Pocket Subsidy Income Limits
Eligibility for subsidies that reduce the cost of deductibles, copayments and coinsurance are based on an income level that is 250% of the federal poverty level. The chart below shows how much annual income that equals.
| Number of people in household | Income limit to qualify for out-of-pocket subsidies (250% of federal poverty level) |
|---|---|
|
1 |
$32,200 |
|
2 |
$43,550 |
|
3 |
$54,900 |
|
4 |
$66,250 |
|
5 |
$77,600 |
|
6 |
$88,950 |
|
7 |
$100,300 |
|
8 |
$111,650 |
For households of more than eight people, add $4,540 to the income limit for each additional person.
As with the premium tax credits, the amount of subsidy you qualify for will depend on your income.
Medicaid Income Limits
Most states with expanded Medicaid use 138% of the federal poverty level as an income limit for eligibility. The chart below shows the income equivalent to 138% of the federal poverty level according to household size.
| Number of people in household | Income limit to qualify for expanded Medicaid (138% of federal poverty level) |
|---|---|
|
1 |
$17,775 |
|
2 |
$24,040 |
|
3 |
$30,305 |
|
4 |
$36,570 |
|
5 |
$42,836 |
|
6 |
$49,101 |
|
7 |
$55,366 |
|
8 |
$61,631 |
For households of more than eight people, add $4,540 to the income limit for each additional person.
When Can You Enroll in Obamacare Plans?
Obamacare plan enrollment is limited to an annual enrollment period that takes place from Nov. 1 to Dec. 15 each year for most states. A special enrollment period may be granted at any time throughout the year to those who experience a qualifying life event such as marriage, birth of a child, involuntary loss of coverage, a move to a new area, divorce and more.
Individuals may enroll in an ACA-compliant plan through their state health insurance marketplace or on an off-exchange that operates outside of the marketplace. However, premium tax cuts and out-of-pocket subsidies are only available through the official marketplace.
Who Can Enroll in Obamacare Plans?
To be eligible for an Obamacare plan, you must be lawfully present in the United States and not fully incarcerated.
For assistance with your ACA health insurance coverage or for questions about Marketplace insurance plans, you can call 1-800-318-2596 (TTY: 1-855-889-4325), available 24 hours a day, 7 days a week (except holidays).
You can also read more information online and find an Obamacare health insurance representative near you by visiting www.healthcare.gov/contact-us, the official federal website for the ACA.
