Jane Dotson
The Affordable Care Act (ACA) is a comprehensive health care reform law enacted in March 2010. It provides consumers with subsidies, expands the Medicaid program, and supports innovative medical care delivery methods. The ACA offers a wide range of health insurance plans, including individual and family plans, that cover medical, dental, and vision care. These plans are guaranteed issue, meaning pre-existing conditions are not a factor in eligibility, and there are no lifetime or annual limits on coverage for essential health benefits. Additionally, young adults can stay on their family's insurance plan until the age of 26. The ACA also includes requirements for employers, mandating that they offer affordable health insurance to 95% of their full-time employees and their children up to the age of 26. So, can you have a medical plan and carry ACA insurance? The answer is yes, and here's how it works.
| Characteristics | Values |
|---|---|
| Type of Insurance | Medical, dental, vision, and more |
| Coverage | Minimum essential coverage, no annual or lifetime maximums |
| Eligibility | Pre-existing conditions not a factor, young adults can stay on family plans until age 26 |
| Cost | Affordable, with subsidies available for households with incomes between 100% and 400% of the federal poverty level |
| Enrollment | Open enrollment period each year, with special enrollment periods available for certain life events or income levels |
| Compliance | All individual and small-group plans with effective dates of January 1, 2014, or later must be ACA-compliant |
| Carriers | Varies by state, including Cigna and Aetna CVS Health |
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What You'll Learn
ACA-compliant coverage
ACA-compliant individual and small-group policies must include coverage for ten essential health benefits with no annual or lifetime coverage maximums. These plans are guaranteed issue during open enrollment, meaning pre-existing conditions are not a factor in eligibility. ACA-compliant policies cannot be rescinded except in cases of fraud or intentional misrepresentation, and insurance companies must comply with medical loss ratio (MLR) rules. MLR rules require a carrier to spend at least 80% of premiums (85% for large-group plans) on medical expenses. All individual and small-group health insurance policies with effective dates of January 1, 2014, or later, are required to have these features to be ACA-compliant, regardless of whether they are sold on or off-exchange.
Grandfathered plans, which are major medical health insurance, are exempt from certain ACA rules. These plans do not have to cover the cost of preventive care, pre-existing conditions, or essential health benefits, and they can impose annual benefit limits. However, they must allow young adults to remain on a parent's plan until the age of 26 and comply with the ACA's MLR rules if they are not self-insured. No individual or business has been able to purchase a new grandfathered plan since March 23, 2010, but eligible employees may still enroll in existing plans. Grandmothered or transitional policies are also exempt from some ACA regulations. While these plans must abide by the ban on lifetime and annual limits for essential health benefits, their coverage can remain generally the same as it was before 2014.
Other types of non-ACA-compliant coverage include short-term health insurance, accident supplements, fixed-dollar indemnity plans, dental/vision plans, critical illness insurance policies, travel insurance, and medical discount plans. These plans do not fulfil the shared responsibility provision, which is the mandate requiring people to have health insurance, and they are not considered minimum essential coverage. While there is no longer a federal penalty for not having minimum essential coverage, there are state-imposed penalties in California, Rhode Island, Massachusetts, New Jersey, and the District of Columbia.
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Patient protection
The Patient Protection and Affordable Care Act (ACA) provides numerous rights and protections to make health coverage fairer and easier to understand. It offers special patient protection for those insured through the Health Insurance Marketplace, including:
- Insurers cannot refuse coverage based on sex or a pre-existing condition.
- There are no lifetime or annual limits on coverage for essential health benefits.
- Young adults can stay on their family's insurance plan until the age of 26.
ACA-compliant individual and small-group policies must include coverage for ten essential health benefits with no annual or lifetime coverage maximums. These plans are guaranteed issue during open enrollment, so pre-existing conditions are not a factor in eligibility. ACA-compliant policies cannot be rescinded except in cases of fraud or intentional misrepresentation, and insurance companies must comply with the medical loss ratio (MLR) rules. This means that a carrier must spend at least 80% of premiums (85% for large-group plans) on medical expenses.
The ACA also directs the Secretary to establish a program to award grants or contracts to develop, update, and produce patient decision aids to assist healthcare providers and patients. This includes the development, implementation, and evaluation of shared decision-making using patient decision aids to improve patients' understanding of their medical treatment options. The Secretary is also responsible for determining whether adding quantitative summaries of the benefits and risks of prescription drugs in a standardized format would improve healthcare decision-making by patients and clinicians.
Additionally, the ACA sets payments for certain medical services, such as dual-energy x-ray absorptiometry services, and eliminates funding in specific areas, such as the Medicare Improvement Fund for FY2014. It also increases the fee schedule for certified-midwife services provided on or after January 1, 2011, to 100% of the fee schedule amount for the same service performed by a physician.
The ACA's protections and provisions aim to make healthcare more accessible, understandable, and patient-centric.
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Employer mandate
Under the Affordable Care Act (ACA), certain employers are required to provide their employees with affordable health insurance that meets minimum value standards. This mandate, known as the "employer mandate" or "employer shared responsibility provisions", applies to applicable large employers (ALEs) with 50 or more full-time employees. Full-time employees are defined as those working 30 or more hours per week.
The employer mandate requires ALEs to offer minimum essential coverage to at least 95% of their full-time employees and their children until the end of the month in which they turn 26. Spouses are not considered dependents. To be considered affordable, employee contributions for employee-only coverage should not exceed 8.39% of an employee's household income in 2024 and 9.02% in 2025.
ALEs that do not comply with the employer mandate may be subject to penalties. The penalty is $2,570 per full-time employee, excluding the first 30 employees. However, even if an ALE offers coverage to at least 95% of its full-time employees, it may still be subject to penalties if the coverage does not meet the minimum value and affordability requirements.
To ensure compliance, ALEs are required to file an annual report detailing the employees who were offered and accepted coverage, along with the associated costs on a month-by-month basis. Additionally, ALEs have information reporting responsibilities, including reporting on the minimum essential coverage offered to employees.
It is important to note that the employer mandate does not apply to insured plans issued in US territories, including Puerto Rico, the US Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.
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Health Insurance Marketplace
The Affordable Care Act (ACA) has made health insurance more accessible to a larger number of people. The ACA's Health Insurance Marketplace provides a range of affordable health insurance options. There is no income limit to be eligible to enroll in health coverage through the Marketplace. However, to be eligible, you must be a U.S. citizen or national, or be lawfully present, and meet other requirements.
The Health Insurance Marketplace offers plans that cover medical, dental, and vision care. During the annual Marketplace open enrollment period, you can change your coverage. You may also be able to change it during a special enrollment period if you experience a significant life event, such as moving or having a baby, or if your household income falls below a certain level.
Under the ACA, you have special patient protection when insured through the Health Insurance Marketplace. Insurers cannot deny coverage based on sex or a pre-existing condition, and there are no lifetime or annual limits on essential health benefits. Young adults can stay on their family's insurance plan until the age of 26.
If you purchased health insurance through the Marketplace, you should receive a Form 1095-A, Health Insurance Marketplace Statement, which will help you complete your federal individual income tax return. This form reports the total monthly health insurance premiums paid to the insurance company you selected through the Marketplace, as well as any premium assistance you received. You may also need to complete Form 8962, Premium Tax Credit, and file a federal income tax return to claim or reconcile advance payments of the premium tax credit.
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Tax provisions
The Affordable Care Act (ACA) contains comprehensive health insurance reforms and includes tax provisions that affect individuals, families, businesses, insurers, tax-exempt organizations, and government entities. These tax provisions contain important changes, including how individuals and families file their taxes. The ACA also includes requirements for employers regarding health care coverage.
Under the ACA, individuals who purchase coverage through the Health Insurance Marketplace may be eligible for advance payments of the premium tax credit (APTC). The premium tax credit is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, certain requirements must be met, and a tax return with Form 8962, Premium Tax Credit (PTC), must be filed. For tax years 2021 and 2022, the American Rescue Plan Act of 2021 (ARPA) temporarily expanded eligibility for the premium tax credit by eliminating the rule that a taxpayer with a household income above 400% of the federal poverty line cannot qualify for a premium tax credit.
The ACA requires all health insurance issuers and self-insured group health plans to make contributions under the transitional Reinsurance Program to support payments to individual market issuers that cover high-cost individuals. For tax years 2012 and subsequent, the credit is non-refundable, with a maximum amount (dollar limitation) of $14,300 per child for 2019.
The ACA established the Small Business Health Options Program (SHOP) for small employers (generally those with 1–50 full-time and full-time equivalent employees) who want to provide health and dental coverage to their employees. Certain employers can enroll in SHOP through private insurance companies or with the help of a SHOP-registered agent or broker. SHOP plans are generally the only way to qualify for the Small Business Health Care Tax Credit to lower premium costs. Employers must provide employees with a standard "Summary of Benefits and Coverage" (SBC) form explaining what their health plan covers and what it costs.
Additionally, the ACA provides guidance on health reimbursement arrangements (HRAs) and group health plans. This includes situations where an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy.
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Frequently asked questions
The Affordable Care Act, or ACA, is a comprehensive health care reform law enacted in March 2010. It provides affordable health insurance to more people and expands the Medicaid program to cover all adults with an income below 138% of the federal poverty level.
The ACA covers essential health benefits, including mental health, prescription drugs, maternity and newborn care, dental and vision, and more. It also covers young adults up to the age of 26 under their family's insurance plan.
You can get insurance through the ACA Health Insurance Marketplace, also known as the ACA Marketplace or "exchange". Each state's Marketplace has its own enrollment instructions and plans to choose from.
