The Patient Protection and Affordable Care Act came into effect in 2010. Prior to the introduction of the act, insurers had the right to refuse individuals health coverage for any reason, effectively preventing many people from accessing the benefits of health insurance.
Even some employer-run health plans would deny coverage for those who had pre-existing conditions. This left many individuals with crippling medical debts through no fault of their own.
- What Is the Affordable Care Act?
- What about People with Pre-Existing Conditions?
- What Other Protections Does the Affordable Care Act Offer?
- Understanding the Health Insurance Marketplace
- Is Health Insurance a Legal Requirement?
- What’s Next for Health Insurance?
What Is the Affordable Care Act?
The Affordable Care Act (ACA), also known as Obamacare, fixes a number of loopholes in the health insurance system. It guarantees coverage for all, regardless of the presence of pre-existing conditions.
Plans under the ACA are required to carry certain forms of health coverage:
- Emergency health services
- Prescription drugs
- Ambulatory (non-overnight) hospital services
- Laboratory services
- Pediatric medical services
- Pediatric services (for children), including dental and vision care
- Maternity care
- Mental health services
- Substance abuse services
- Preventative medicine
- Wellness/chronic disease management
- Rehabilitative care and devices
What about People with Pre-Existing Conditions?
The Affordable Care Act states that health insurance companies are not permitted to refuse to cover someone or charge more for coverage due to a pre-existing condition.
These rules cover health care plans that started on or after January 1, 2014. The rules are important because they protect people with conditions such as asthma, cancer or diabetes. Before these protections were put in place, someone who had a chronic (long-term) medical condition that required careful management may have found themselves paying far more for their health insurance, even if they were otherwise healthy.
In addition to preventing insurers from refusing coverage or increasing their prices, the act also prevents insurers from limiting the benefits for a specific condition. So, if someone with asthma takes out health insurance, the insurance company can’t refuse to cover that customer’s asthma treatment.
The one exception to these rules is for “grandfathered” plans. If you have a health insurance policy that was purchased on or before March 23, 2010, the insurance company does not have to update its rules to be in line with the restrictions on new plans.
What Other Protections Does the Affordable Care Act Offer?
The ACA offers consumers a number of protections to consumers.
Protection against Spending Limits
The ACA specifically prevents health insurance companies from limiting yearly or lifetime coverage for essential health benefits. This means insurance providers cannot set a limit on the number of dollars they will spend on providing care for a customer during the time that the customer is signed up to that plan. They also can’t set a yearly dollar limit for spending.
The protection against yearly limits applies to most health insurance plans, but grandfathered plans are exempt. The protections against lifetime limits do apply to grandfathered plans, however.
Protection from Frivolous Cancellation
The ACA states that insurance companies are not allowed to cancel a person’s coverage for frivolous reasons, such as making a mistake on the application.
Before the act came into effect, an insurance company could invalidate coverage for these kinds of mistakes. In some cases, companies would even require policyholders to pay back any money that the insurance provider had already spent on their care.
The ACA makes it illegal for insurance companies to do this for honest mistakes or minor omissions. These rules apply to individual and job-related health coverage plans, including grandfathered plans.
Protection against Employer Retaliation
The ACA makes it illegal for an employer to retaliate against an employee or fire them because the employee gets a premium tax credit for purchasing a health plan via the Marketplace.
In addition, employers are not allowed to retaliate against an employee who reports violations of the ACA to the government. If an employee feels their employer has broken the law in this way, they can file a report against their employer with the U.S. Occupational Safety and Health Administration.
Protecting Your Right to Choose a Provider
Policyholders have the right to choose any doctor they wish from within the insurance provider’s network. This means you can choose any primary care provider (PCP) from within the plan’s network for yourself and any pediatrician for your child, as long as they’re a part of the network. The protections also extend to OB-GYN services. Policyholders can seek OB-GYN care without needing to get a referral from their PCP.
Insurance companies are not allowed to have higher co-payment requirements for seeking care at an emergency room outside of the plan’s network. Insurance providers are also forbidden from requiring users to seek permission to access emergency care from an out-of-network provider.
These protections apply to all new plans but not grandfathered ones.
Understanding the Health Insurance Marketplace
Most people are expected to sign up for a health insurance plan during a specific period known as Open Enrollment. For example, the Open Enrollment window for 2021 is from November 1 to December 15, 2020. Coverage starts on January 1, 2021.
If a person misses the Open Enrollment window for a given year but still needs coverage, they may be able to sign up during a Special Enrollment Period. There are many things that may trigger eligibility for a Special Enrollment Period, including:
- Getting married or divorced
- Having a baby
- The death of someone who is listed on your current health plan
- Moving to a house in a new ZIP code
Is Health Insurance a Legal Requirement?
The answer is yes, but the reality is a little more complicated than that.
In the early years of the Affordable Care Act, people were required to have health insurance that met certain standards. This was known as “minimum essential coverage.” While it was not considered a crime to fail to get health insurance, there was an “individual mandate.” Failure to have adequate coverage could lead to a tax penalty.
The federal tax penalty was called the shared responsibility penalty. In 2017, both houses of Congress agreed to repeal this penalty. This took effect in 2019 as part of the Tax Reconciliation Act. While the law mandating individuals to take out health insurance still exists, the lack of penalty means it is no longer enforced.
As of 2019, there is no federal tax penalty for failing to get health insurance that meets the minimum essential coverage requirements. Individual states, however, may have penalties.
States that require residents to have a certain level of health insurance include:
- New Jersey
What’s Next for Health Insurance?
The Trump administration has made several changes to the ACA, and President Trump has made it clear that he wishes to see the program restricted and the industry moved back towards a more market-driven form of health insurance.
In spite of Trump’s efforts to restrict the program, enrollment increased in 2018 and 2019. As of September 2020, it’s still unclear what Trump’s plans are for the act, although the idea of removing the pre-existing conditions requirement has been mentioned as has removing the minimum level of cover rules.
Read more about Trump’s plans and the possible future of the ACA in our Cancel the Affordable Care Act? Yes-No-Maybe-Now-Never-I don’t know! overview.