The Affordable Care Act: What to Know and What to Expect
Obamacare helps uninsured Americans obtain health care. Get the details on how the law protects you, what some of the rules are and much more.
The Affordable Care Act is a set of health care reforms that was passed by Congress and signed into law by President Barack Obama in March 2010. The goal of this law, which is more formally called the Patient Protection and Affordable Care Act and more informally nicknamed Obamacare, was to make affordable, quality health care accessible to more Americans. It also aims to give both the insured and uninsured new patient protections to make coverage more fair and easier to understand. The law is wide-sweeping – covering things as big as preventing insurance companies from denying you coverage for pre-existing conditions and as small as requiring chain restaurants to post calories of their menu items. Mostly, though, the law is made up of provisions to help an estimated 30 million uninsured Americans get coverage either through an expansion of Medicare or through the new Health Insurance Marketplace that launched Oct. 1, 2013.
How the new law protects you
A Patient's Bill of Rights was created along with the health care law to set down new rights and protections for patients dealing with insurance companies. Some of those protections have already gone into effect; others are being phased in and will take full effect in 2014 and beyond.
The health care law is designed to help people who today are excluded from being able to have insurance get coverage – and keep it. The reforms are intended to cut down on fraud and waste, while helping everyone involved in your health care work together better. The health care law also includes major reforms to the Medicare program. Under the new law, you have the following health care rights:
No annual and lifetime dollar limits on essential health benefits
In the past, insurance policies could set limits on how much an insurer would pay for your essential health care over your lifetime. Someone with a major or long-term illness could go into debt once his or her coverage ran out. Now, such coverage caps are illegal.
Likewise, yearly caps on health care spending are also banned starting in January 2014. Exceptions are allowed for limits on doctor visits, prescription costs and days spent in the hospital. In addition, services considered non-essential are not subject to this ban.
Extension of coverage for young adults
Young adults can now stay on a parent's health insurance policy until age 26. A rule exempting insurance providers from extending benefits to young adults if they can get coverage through work ends Jan. 1, 2014.
Providers prohibited from canceling your policy when you get sick
In the past, insurance companies could look for an error or technical mistake on your insurance application when you got sick and use that error as a basis to cancel your policy, a process known as "rescission." Now, it's illegal for a provider to cancel your policy if you make an honest mistake on your application.
Free preventative care
New private health plans may not charge a copayment or deductible for proven preventative care, such as immunizations and cancer screenings. This part of the law is intended to help people stay healthy and prevent or manage medical conditions before they become more costly to treat. Additional preventive measures for women, such as contraception and domestic violence screening, went into effect in August 2012. Many existing plans are exempted until 2014.
No discrimination for pre-existing conditions
Starting in 2014, insurance companies will be required to cover people with pre-existing conditions, and not charge them more than they would charge a healthy person of the same age. Insurers are, however, allowed to charge an older person up to three times more than they would charge a younger person.
Currently, children under 19 may not be refused coverage based on a pre-existing condition (with some exceptions), but may be charged more. In 2014, those exceptions and higher premiums will no longer apply.
Coverage that's easier to understand
Insurance providers must use a standardized form to summarize benefits and coverage to make it easier for you to understand your plan. The form includes information on cost-sharing measures like copayments and deductibles and will make excluded services more clear. They are required to use understandable language instead of jargon and fine print to help you make an informed decision about your policy.
Additional regulations will:
- require insurers to spend most of the money you pay on health care and not overhead or profit
- hold insurers accountable for excessive premium increases
- guarantee you the right to quickly appeal an insurance provider's decision
- prohibit charging more for out-of-network emergency services
- protect your right to choose a doctor
Which rules apply to my plan?
An important exception to these rules is what has been termed "grandfathered plans." Plans that existed on or before March 23, 2010 and have stayed basically the same – with no major changes to benefits or how much you pay – may not be subject to all of the above rules … yet. Insurance providers may also request exemptions from these requirements, some of which have already been granted by the U.S. Department of Health and Human Services. It's important to review your individual plan to know whether these rights apply to you.
(For more on which rules grandfathered plans are subject to, see the "I Have Insurance" section.)
What to expect in 2014
The individual mandate is a requirement that takes effect Jan. 1, 2014, requiring all Americans not covered by a job-based health plan or government-subsidized program like Medicare and Medicaid to purchase an approved insurance policy. Those who don't comply will have to pay a penalty and pay for all of their health care costs, with some exceptions for very-low-income households. The health care law also includes provisions for tax credits and subsidies for families with low or modest incomes.
This part of the law was designed to better distribute responsibility for the costs of health care. Today, when an uninsured individual gets urgent medical care and doesn't pay the bill, the cost is absorbed by the hospitals and service providers and passed on to those who are insured.
To keep costs down, insurers want a large enrollment base of consumers, including young people and healthy people, whose care is less costly. The law keeps those groups of people from waiting until they get sick to buy insurance.
To help uninsured individuals find and secure coverage, Health Insurance Marketplaces were launched Oct. 1. These are state-, federal- or joint-run online marketplaces where people can comparison shop for health insurance plans. Michigan's Health Insurance Marketplace, which is run by the federal government, is located at HealthCare.gov.
AARP, American Public Health Association, Centers for Medicare & Medicaid Services, Consumer Reports, FAIR Health, Inc., HealthCare.gov, Internal Revenue Service, Kaiser Family Foundation, Medicaid.gov, Michigan Department of Community Health, Michigan Department of Insurance and Financial Services, U.S. Chamber of Commerce, U.S. Department of Health and Human Services, U.S. Department of Veterans Affairs.
Every effort was made to provide clear, accurate information about health care reform. We verified any information we had with first-tier sources – those who are involved in this change and its effect on our health care system. We also relied on well-respected national nonprofits, some who've done a masterful job of providing clear information to consumers. Our primary source of information was the Affordable Care Act's official website, HealthCare.gov. If you need additional information about how health care reform affects you, that would be your best place to start.