The Patient Protection and Affordable Care Act, often shortened to the Affordable Care Act and also known as Obamacare, was enacted to make health insurance affordable for more people. It expanded the Medicaid program and it supports innovations in the medical care field designed to lower overall health care costs.
Affordable Care Act History
The Affordable Care Act, or ACA, has met with some amount of opposition since its inception. It passed without a single Congressional Republican voting for it back in 2010. Its main objective was to provide affordable health insurance coverage to more Americans by offering private health insurance to the masses through online marketplaces.
These online marketplaces or exchanges provide coverage with help from federal premium subsidies. States were encouraged to expand Medicaid to include more low-income Americans, and the ACA requires that health insurance providers cover basic services like cancer screenings. Health insurers can no longer cancel coverage for sick patients who need costly medical treatments, and they can't turn down applicants with pre-existing conditions.
Some aspects of the ACA weakened under the Trump administration, such as the provision requiring that birth control services be paid by health insurance and the repeal of the mandated tax penalties for not carrying insurance.
The ACA and its provisions are still debated, but 4.5 million Americans signed up for 2022 coverage through the Marketplaces during the 2021 Open Enrollment Period, according to the U.S. Centers for Medicare and Medicaid Services.
How the Marketplace Works
The Health Insurance Marketplace, also known as the Marketplace or the Exchange, assists people with finding and enrolling in suitable health plans. The Marketplace is operated by the federal government for most states, but some have elected to run their own exchanges. California has its own health insurance exchange known as Covered California.
There are four categories of health insurance plans, according to Healthcare.gov: Bronze, Silver, Gold, and Platinum. These "metal categories" differ in how the costs of your coverage are split between you and your plan.
You must provide your income and other household information to shop for and compare various health insurance options on the Marketplace. You can also find out if you are eligible for the Premium Tax Credit or other discounts that can make health insurance coverage more affordable for you and your family.
The Marketplace provides for an open enrollment period for obtaining health coverage each year. The last period ran from November 1, 2021 through January 15, 2022 after the Biden Administration extended it for one month from the usual December 15 deadline. New York has moved its deadline back to March 13 in response to the ongoing public health emergency. Maryland has taken a similar step, extending its deadline to February 28.
You can check the Healthcare.gov site to see if you qualify for Special Enrollment Period coverage if you miss this period.
Read More: Health Insurance Basics
Changes to the Affordable Care Act
Changes made to the Act include the repeal of the individual mandate penalty and the introduction of alternative health care options, including short-term plans. The repeal of the penalty doesn't absolve you from the requirement to maintain health care coverage, but you no longer have to pay a financial penalty if you don't.
The good news is the federal subsidies that assist with health insurance coverage have seen an increase. The average monthly subsidy for health insurance premiums is $492 in 2020.
The not so good news is that people who are shopping for plans at the Marketplace will get less guidance. The ACA's navigator program, which helps consumers select a plan, has been subject to some funding cuts. Some people might have a harder time signing up for coverage or selecting an appropriate plan.
Read More: Health Insurance for Freelancers
Affordable Care Act and Taxes
The ACA can impact your taxes even with the 2019 repeal of the tax penalty for not carrying health insurance coverage.
You should receive IRS Form 1095-A, "Health Insurance Marketplace Statement," if you're enrolled in health coverage through the Marketplace. This form allows you to apply for the Premium Tax Credit, file an accurate tax return and to reconcile the credit on your return.
The Premium Tax Credit
The IRS gives taxpayers a break on their taxes to help shoulder the burden of the cost of health care premiums. The Premium Tax Credit is a refundable credit that helps individuals and families with covering their premiums for insurance purchased on the Health Insurance Marketplace. You must meet certain requirements that determine your eligibility.
You can't file your tax return using the married filing separately status if you qualify for and want to claim the credit, with a couple of exceptions. This rule is waived if you're a domestic violence victim or you were abandoned by your spouse. You can't be claimed as a dependent on anyone else's tax return.
The IRS website provides a full list of PTC eligibility requirements and more information.
Enrolling through the Marketplace will automatically determine if you qualify for advance payments of the premium tax credit. These payments are remitted directly to your insurance company to lower your out-of-pocket health care premiums, but you can also opt to receive the cash as a tax refund instead. You'd then have to pay the full amount of your premiums yourself, however.
Read More: Tax Credits: What Are They and How Do You Qualify?
- Tax Policy Center: What Tax Changes Did the Affordable Care Act Make?
- IRS: Affordable Care Act – Tax Facts for Individuals and Families
- IRS: Affordable Care Act - What To Expect when Filing Your Tax Return
- Healthcare.gov: Affordable Care Act (ACA)
- HealthCare.gov: Health Insurance Marketplace
- HealthCare.gov: Official Health Insurance Guide
- CNN: 4 Ways Obamacare Is Changing for 2019
- Healthcare.gov: Exemptions From the Requirement To Have Health Insurance
- IRS: Affordable Care Act Tax Provisions
- IRS: About Form 1095-A, Health Insurance Marketplace Statement
- IRS: The Premium Tax Credit - The Basics
- Fortune: Since Obamacare Became Law, 20 Million More Americans Have Gained Health Insurance
- Health Affairs: ACA Round-Up – HealthCare.gov Updates, Potential Impact Of Texas Lawsuit
- HealthCare.gov: 2021 Obamacare Subsidy Calculator
- HealthCare.gov: Special Enrollment Period (SEP)
- U.S. Centers for Medicare and Medicaid Services: Biden-Harris Administration Announces 14.5 Million Americans Signed Up for Affordable Health Care During Historic Open Enrollment Period
- HealthInsurance.org: What Are the Deadlines for the ACA's Open Enrollment Period?
Tara Thomas is a Los Angeles-based writer and avid world traveler. Her articles appear in various online publications, including Sapling, PocketSense, Zacks, Livestrong, Modern Mom and SF Gate. Thomas has a Bachelor of Science in marine biology from California State University, Long Beach and spent 10 years as a mortgage consultant.