The Affordable Care Act (ACA or Obamacare) has been around now for seven years, but many people are still confused by it. Among its most important provisions was the creation of a “marketplace” for health insurance plans – providing affordable coverage to millions of Americans. It also makes finding and signing up for health insurance more straightforward, with a process similar to buying an airline ticket. You can search, compare and filter multiple options on an online portal.
Here is a breakdown of what the ACA Marketplace is, how it works and tips to make sure you buy the best plan for you and your family.
What Is Obamacare?
“Obamacare” is actually an unofficial nickname that’s used to refer to the Patient Protection and Affordable Care Act, which took effect in 2013. It has affected the type of coverage provided, how and when coverage is purchased, who provides it, and how much it will cost.
While more than 80% of the population gets healthcare coverage from their employer, Medicare or Medicaid, people without these options need to buy their own insurance. Before the ACA, many of these individuals and families had no coverage.
The ACA was created with four key provisions that were meant to reduce the costs of healthcare in the U.S.:
- Establishing a Marketplace where individuals can purchase coverage for themselves and/or their families. States can create their own marketplace, which must adhere to federal guidelines, or use the federal one.
- Grouping plans offered through the Marketplace with an easy-to-understand description – using metal titles of platinum, gold, silver and bronze. Most importantly, it became illegal for insurance companies to exclude someone with a pre-existing medical condition.
- Requiring everyone to have health insurance or pay a penalty. By requiring healthy people who didn’t need much care to have insurance, their payments helped offset the costs of sicker individuals. This rule has since expired nationally, though some states still require it.
- Providing discounts, called subsidies, to help individuals afford their required insurance. These discounts are typically paid as tax credits that can be applied to monthly premiums. (Even though the federal coverage requirement no longer applies, these subsidies are still available.)
How To Buy Obamacare Coverage
You can buy your insurance through the marketplace each year during the annual Open Enrollment Period (typically November 1 through December 15, although some states have a longer enrollment period). In some circumstances, you may be eligible to sign up outside the annual open enrollment period (these are called Special Enrollment Periods, which are explained below). In fact, due to COVID-19 and the havoc it has caused to so many Americans, a Special Enrollment Period has been extended to May 15, 2021.
You can also purchase an insurance plan through web-enabled brokers, or licensed agents like HealthCare.com, which can show you options both on and off the ACA marketplace. These options include low-cost plans for people who aren’t eligible for subsidies.
Here are two checklists of things to keep in mind when you get started.
Checklist: What You’ll Need If You’re Buying Obamacare for the First Time
- Social security numbers and birthdates for each applicant
- Expected income for the year. If you’re unsure about your income, look at things like your Federal W-2 form, your 1099 forms if you’re self-employed, recent pay stubs, or your previous year’s tax return
- Policy numbers for each applicant’s current health insurance coverage, if any.
- Information about employer-sponsored health plans for you and eligible family members, even if you are not enrolled in this coverage
- Banking information to pay the first month’s premium.
Checklist: What You Need to Re-Enroll In Your Obamacare Health Insurance
If you are already enrolled in a health insurance plan, it’s most likely set for auto-renewal. You should receive a notice from your insurance company with updated monthly rates and details about the coming year. Before your renewal goes into effect, check the following:
- Ask yourself if your plan still works for your and your family.
- Do the new premium, deductible and benefits meet your healthcare needs?
- Will you still have in-network access to the same providers?
- Are your current prescription medications on the 2021 drug list (formulary)?
- Can you still afford it or do you need to switch to a different metal level?
- Have you become eligible for other coverage – through your employer, your spouse’s employer, Medicaid or Medicare?
2. Be sure to report any income and household size changes to your insurance provider if you receive subsidies. If you don’t do this, you may wind up owing the IRS money when you file your taxes. Conversely, you may lose out on a larger subsidy.
3. Remember that subsidies will automatically renew each year, unless new income documents you sent in don’t match your reported income when you originally applied.
Health Insurance Benefits Under Obamacare Coverage
The ACA requires all ACA health insurance plans to cover 10 essential health insurance benefits. But, specific services under each of these categories can vary based on your states’ requirements. These detailed services are described in the plan’s Summary of Benefits, which is typically found after information about the plans’ premium, copays and coinsurance costs and deductibles. The 10 essential benefits are:
- Outpatient care
- Emergency services
- Prescription drugs
- Laboratory services
- Pregnancy, maternity and newborn care
- Mental health and substance use disorder services
- Preventative and wellness services, as well as chronic disease management
- Rehabilitation services and devices for injuries, disabilities and chronic conditions
- Pediatric services including oral and vision care
This broad list also includes birth control, breastfeeding equipment and counseling coverage.
Keep in mind that some states require additional coverage of more than what is on this list of mandatory essentials. These are outlined in the plan summary and are typically only partially covered.
While the ACA requires certain plans sold on the Marketplace to cover these 10 types of medical services, not every expense within these categories will be covered. For example, some restrictions may apply, such as only one type of medication to treat a particular condition may be covered.
What Doesn’t Obamacare Cover?
The ACA doesn’t require coverage for such things as vision benefits or dental care for adults, long-term care, or alternative medicine such as acupuncture, for example. And like all other plans, it doesn’t cover out-of-pocket costs until you meet your deductible, which can be up to $8,150 for individuals. But you can purchase supplemental health insurance to fill in the gap, to help with the cost of deductibles, unexpected medical needs and dental and vision coverage.
When Can Obamacare Health Insurance Be Purchased?
During a couple of months each year, called the Open Enrollment Period (OEP), you can purchase an ACA plan as long as you are eligible.
The OEP is always at the end of the year but specific dates may vary from state to state.
For example, the national Open Enrollment Period for 2021 is from November 1 until December 15. In California, though, you can buy an ACA plan from October 15, 2020 until January 31, 2021.
How To Buy Obamacare Health Insurance Any Time via Special Enrollment
You can buy an ACA plan outside the OEP if you have a Qualifying Life Event (QLE). Basic life changes, such as moving or changing jobs, count as a QLE.
When you have a QLE, you have a 60-day Special Enrollment Period (SEP) to sign up for coverage. In most cases, your SEP starts the day you experience a QLE, though there are exceptions. For example, if you experience domestic violence, you can request a SEP at any time of the year.
Remember, though, in 2021, a Special Enrollment Period has been implemented that stretches to May 15. It is open to anyone needing health insurance, not just those affected by COVID-19 or a qualifying-life event, as described below.
Health Insurance Qualifying Life Events
- You get married or divorced
- You have a baby or adopt a child
- The death of an individual living in your home reduces your reported household size
- You experience a change in household size that impacts your tax subsidy
- You have a change in income that will affect your tax subsidy
- You have an increase in income and no longer qualify for Medicaid
- You lose your employer health insurance coverage
- Your health insurance plan cancels your coverage, though you’ve paid your premiums
- Your COBRA coverage expires
- You turn 26 years old and can no longer stay on your parent’s healthcare plan
- You move to a different ZIP code
- You are released from jail
- You experience domestic abuse
- You are discharged from the Armed Forces
- When applying for health insurance, an error was made – either human or technical – which results in you not obtaining coverage
How Much Does Obamacare Cost?
Every Obamacare plan varies in price. Costs depend on your location, age, insurer, and what metal level of plan you choose. When selecting a plan, compare your monthly premium, deductible, copays and coinsurance.
- Bronze: covers 60 percent of your healthcare costs – often with the cheapest premiums
- Silver: covers 70 percent of your healthcare costs, and is the most commonly picked plan
- Gold: covers 80 percent of your healthcare costs
- Platinum: has the highest premiums, but covers 90 percent of your healthcare costs (these plans can be hard to find)
Monthly premiums vary widely: in 2019, the average unsubsidized cost was $448 per person. But in Wyoming, the average silver plan cost $865; in Minnesota, the same plan was $326.
Pay Attention to the Deductible
When comparing prices, always factor in deductibles. A deductible is the amount you pay for your healthcare before your insurance covers any bills. For example, if you have a plan with a $1,000 deductible, you will pay $1,000 before your plan pays any portion of in-network costs.
In 2021, deductibles cannot be higher than $8,550 for individuals and $17,100 for a family.
Do You Have To Pay A Penalty If You Don’t Have Insurance?
You won’t have to pay a federal penalty, since that part of the ACA was repealed in 2019. But people living in a handful of states – Massachusetts, Vermont, Rhode Island, the District of Columbia, California and New Jersey – must have coverage or face penalties. Be sure to check the rules in the state where you live, as other states are considering coverage requirements.
How ACA Subsidies Work — And Who Qualifies for Them
ACA subsidies are essentially discounts on your monthly premium. Also referred to as “premium tax credits,” they are available if your income is between 100% and 400% of the federal poverty level. (One disqualifying factor – if you are offered a plan through your employer but choose to buy a plan on your own, you most likely won’t qualify for any subsidy.)
Subsidies are calculated on the cost of silver plans, which will affect how much you get if you choose a different metal plan. They are based on what you expect your income to be in 2021: a single-income household making between $12,760 and $51,040 will qualify for subsidies.
How Much Can Subsidies Cover In Your Monthly Premiums?
Subsidies vary widely. For example, one study looking at healthcare subsidies for people making 150 percent of the poverty level in 2018 found that about 98 percent of counties across the United States had Bronze plans available with $0 monthly premiums, after subsidies. But in other scenarios, people pay hundreds of dollars in premiums, even with subsidies.
Just be aware that even if your subsidy covers your premiums completely, you will still have to pay a portion of your medical bills once you start needing care.
If Your Income Is Too High or Too Low — Then What?
Earning too much or too little will disqualify you from subsidies. If you make less than 100% of the federal poverty level, you most likely qualify for Medicaid, though eligible incomes for this vary by state. Go to your state’s Medicaid program to apply.
When you earn more than 400% of the federal poverty level, you can still buy a plan on the ACA marketplace, but you will not receive any subsidies. Remember, you can also shop on sites like Healthcare.com for plans, which are generally identical to subsidy-eligible plans, though cheaper. Since these plans don’t have to subsidize other members, premiums are often less than those on the ACA marketplace. These kinds of plans are only available on non-federal websites.
Obamacare vs. Alternatives
While Obamacare can be a great solution if you need coverage, there are alternatives out there. Here’s what to consider as you’re weighing your options:
Obamacare Is Right For You If:
- You aren’t eligible for insurance through your employer, or that plan is not affordable (as defined by the ACA).
- You’re eligible for a tax subsidy that can substantially reduce your monthly premium.
- You or a person needing coverage in your household has a pre-existing medical condition.
If you are considering alternatives to Obamacare, here are some options to consider:
COBRA is a law that allows people who lose their jobs to stay on their former employer’s health insurance for up to 18 months. COBRA also allows spouses (and children) of former employees (even if the couple divorces) to retain coverage for up to 36 months. COBRA is often expensive, as you typically pay 102% of the cost of coverage (your share, your employer’s share, plus an administrative fee).
- Temporary Health Insurance: Short-Term Health Insurance
Short-term health insurance plans are designed to provide a temporary safety net for people who have a gap in insurance. These plans last for 364 days or fewer (without extensions). Short-term plans can help people who recently lost their job and insurance or have aged out of their parent’s plan. They are typically cheaper than an ACA marketplace plan, but they don’t provide as much coverage or financial protection.
- Health-Sharing or Faith-Based Health Insurance
A faith-based health plan technically isn’t a health insurance policy. Instead, it is an alternative that allows members to share the costs of their medical bills with others in the group. These plans are much less expensive than regular plans, but have religiously oriented coverage restrictions. They also don’t count as health insurance in states that require it. They do have a wide variety of doctor choice.
- Direct Primary Care Membership or “Concierge Medicine”
Concierge medicine is primary care offered directly to patients and employers by a medical practice. Instead of paying a health insurance company, patients purchase Primary Care Memberships from their doctor for a contracted bundle of healthcare services, which typically includes unlimited access to your doctor. This membership usually costs between $100 and $300 per month. What’s included in the memberships varies. It’s typically a predetermined package of services that involve preventive care – and may not cover things like in-patient care or some outpatient procedures.
- Medicare, Medicaid and CHIP are government programs for people who qualify, by age and/or income, for services and coverage. With few exceptions, you must be 65 to qualify for Medicare, and Medicaid and CHIP are available to low-income individuals or those with disabilities.
Choosing a health plan is an important decision. It’s worth the time to understand your options and be sure to look for any type of financial assistance available before selecting coverage for you and your family.