What Exactly Is the Patient Protection and Affordable Care Act (PPACA)?

DEFINITION:

The Patient Protection and Affordable Care Act is a statute that provides substantial health insurance changes meant to assist attain near-universal, affordable health coverage.

The Patient Protection and Affordable Care Act (ACA) is a comprehensive health-reform bill passed by former President Barack Obama on March 23, 2010. The bill aspires to enhance access to affordable health care for everyone via cost-sharing reductions and premium tax credits. It also gives rights and safeguards against unscrupulous insurance business practices.

Read more about the Patient Protection and Affordable Care Act, how it works, its pros and downsides, and more.

Patient Protection and Affordable Care Act Definition and Examples

The Patient Protection and Affordable Care Act is a statute that provides substantial health insurance changes meant to assist attain near-universal, affordable health coverage. The law’s provisions generate premium and cost-sharing subsidies, outline new regulations for the health insurance sector, and create a new market for health insurance purchase. Customers are also protected against negative insurance industry practices, such as refusing coverage due to a previous health condition.

• Alternative name: Affordable Care Act, Obamacare
• Acronym: PPACA, ACA

How the Patient Protection and Affordable Care Act Works

On March 23, 2010, President Obama enacted the ACA, putting in place reforms that guarantee access to near-universal, affordable health insurance coverage from birth through retirement.1 More than 10 years since its enactment, the ACA has reduced the number of uninsured Americans by 20 million and extended vital consumer protections to over 100 million citizens.

The U.S. Department of Health & Human Services revealed in June 2021 that a record number of Americans—31 million—had health coverage via the Affordable Care Act. Since the law’s coverage expansions took effect, every state in the US has experienced a decline in uninsurance rates. More than 11 million individuals registered in an ACA Marketplace plan as of February 2021, and 14.8 million newly eligible persons enrolled in Medicaid under the ACA’s extension of eligibility to adults as of December 2020.

Comprising of nine unique legislative titles, the Affordable Care Act features four fundamental improvements.

Greater Consumer Rights and Protections

The ACA’s Patient’s Bill of Rights removed medical underwriting and preexisting-condition exclusions, so insurance companies are unable to refuse you or charge you extra for coverage based on your health status or medical condition. The measure also removes lifetime dollar limitations on critical health benefits and the yearly dollar limit on what insurers pay for your plan.

Note

Under the ACA’s Patient’s Bill of Rights, insurers may no longer cancel your health coverage because of a mistake you made on your application.

More Affordable Coverage

The ACA delivers more affordable coverage by cutting health care costs and mandating responsibility for health care resources. The 80/20 rule usually mandates that insurance firms spend at least 80% of your premium dollar on health care and quality improvements; otherwise, they must offer a refund.

The ACA has further tightened the examination of rate increases by demanding that insurance firms explain their reasons for increasing insurance premiums by 15% or more before they implement the rate changes.

Note

Depending on your family income, you may be able to cut your monthly premiums via subsidies like cost-sharing reductions and tax credits. For instance, if your income is between 100% and 400% of the federal poverty level (FPL), you’re probably eligible for premium subsidies that will lower your monthly payments. In addition, the American Rescue Plan Act (ARPA), which took effect in 2021, extended eligibility for premium tax credits to some taxpayers with income above 400% of the FPL through 2022.

Improved Access to Health Care

The ACA not only gives greater access to treatment but also offers a variety of health insurance alternatives.

For starters, it gives you access to several recommended preventive health services, including diabetes, cancer, and blood screenings, without requiring any additional cost-sharing in the form of deductibles or copays. Second, young adults who fail to secure health coverage through their jobs can remain on their parents’ health plans until they are 26 years old.

The ACA bill enhanced access to health care by introducing the Health Insurance Marketplace (HIM) (HIM). HIM is a federal- and state-level one-stop-shop online exchange where you may buy a private health insurance plan directly from insurers that suits your requirements.

Strengthen Medicare

The Affordable Care Act enhances Medicare for nearly 61 million Americans who depend on the program by combatting fraud, boosting benefits, and enhancing care for patients.10 The health care legislation offers assistance for seniors with a coverage gap in their prescription medication expenditures. Seniors may obtain recommended preventative treatments like diabetes testing and flu vaccines for free.

The ACA also helps decrease waste—as well as combat fraud and abuse in public programs—through harder screening processes, lengthier supervision periods for new suppliers and providers, and greater sanctions.

Low-income families, qualifying pregnant women, qualified children, and those receiving Supplemental Security Income are automatically eligible for the Medicaid program. Nonetheless, the ACA permitted states to extend Medicaid to cover virtually all low-income People under age 65. Eligibility for children was expanded to at least 133% of the federal poverty line in every state, and most state jurisdictions were given the option to extend eligibility to adults who reach that income level, as well.

Note

As of November 2021, 38 states and Washington, D.C., have embraced the Medicaid expansion.12 ARPA encourages nonexpansion states to do the same by giving an extra temporary economic incentive for enacting the ACA Medicaid expansion.

How To Obtain ACA Health Coverage

You may apply for or adjust your 2022 ACA health insurance during the open enrollment period that runs through Jan. 15, 2022. If you don’t enroll in a health plan by that date, you won’t get coverage unless you experience a qualifying extraordinary event.

You may apply for ACA health coverage in any of these ways:

• Apply online. Visit HealthCare.gov to acquire benefits via the ACA Health Insurance Marketplace. You may be forwarded to your state’s Marketplace website.
• Utilize a recognized enrolling partner’s website. You may utilize the website of an authorized enrollment partner, like an insurance provider, to apply and enroll in a Marketplace plan.
• Contact the Marketplace Call Center. A person at the Marketplace contact center (800-318-2596) can assist you fill out an application and enroll.
• Send your paper application. You may send in your paper application by mail and wait to get your eligibility results in two weeks.

Remarkable Happenings

The Patient Protection and Affordable Care Act revolutionized the health insurance environment with several insurance reforms, although it has subsequently undergone further revisions. In 2017, legislation was approved to repeal the requirement that compelled most individuals to either obtain health insurance or face a tax penalty. The mandatory elimination goes into effect in 2019.

During the Trump administration, short-term plans were re-introduced in 2018, allowing for policies that offered coverage for as little as a few months to up to 364 days. Although these policies have cheaper rates than ACA-compliant plans, they are not bound by the standards of the ACA; consequently, insurers may be more selective in their coverage options.

For example, these plans are not subject to the bans on prior condition exclusions or lifetime and yearly dollar limits. Many such plans also exclude payments for medicines, maternity care, preventative care, mental health services, and drug addiction treatment.

The ACA has also imposed a restriction on the amount of cost-sharing that families and individuals may pay for treatment yearly. It now establishes maximum annual out-of-pocket spending limitations on Marketplace plans, with lower restrictions for cost-sharing-reduction plans. In 2022, the maximum out-of-pocket limit is $8,700 for individuals and $17,400 for families.

In 2022, persons with an income of up to 150% of the federal poverty threshold won’t pay to their premium. However, a payment of up to 8.5% of the family income is needed for individuals with income exceeding 400% of the federal poverty line. Before July 2021, households at 150% of the FPL had to pay more than 4% of their family income for the benchmark plan.

Important Takeaways

• The Patient Protection and Affordable Care Act (ACA) is a health care legislation that offers health insurance reforms to ensure near-universal, inexpensive coverage.
• This legislation establishes rights and safeguards that defend customers from unscrupulous activities of the insurance sector.
• By cutting health care costs and ensuring responsibility for health care funds, the ACA delivers more affordable coverage.
• You may enroll for or adjust your 2022 ACA health insurance during the Open Enrollment Period that runs through Jan. 15, 2022. If you don’t enroll by then, you’ll only obtain coverage if you qualify for a Special Enrollment Period.