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What is Obamacare? And Why Should You Know?

Dec 10, 2019 3 min read Zina Kumok

The term "Obamacare" has become a part of the national lexicon, but few people know the details of law. It's become such a heavily politicized topic that most discussions about Obamacare have little to do with the actual policy.

So in a broad sense, what is Obamacare? Why was it passed? And what did it change? Here's a rundown of the essentials.



What is Obamacare and the Affordable Care Act?

The Affordable Care Act (ACA) is commonly referred to as Obamacare because it was championed and passed into law by President Barack Obama in 2010. It's a piece of legislation that increased access to health insurance for millions of Americans.

Many facets of the ACA changed the health insurance landscape, like allowing children to stay on their parents' health insurance until they're 26 years old — even if they're married or have access to insurance through an employer.


Increased access to health insurance

The ACA also banned health insurance companies from charging patients with preexisting conditions higher premiums. Previously, many of these people were unable to buy health insurance or had to pay extremely high rates.

It also created a national health care marketplace where insurance companies could sell directly to consumers. Like traditional employer-based insurance plans, there's an open enrollment period each fall where people can log in healthcare.gov Opens in new window to see what plans are available in their state.

Before the ACA, consumers could buy health insurance either through their employer or directly through insurance companies, which could be difficult to do. The ACA makes it easier for those who are self-employed or own their business to buy health insurance.


More affordable health insurance

The federal government also provides subsidies for individuals who can't afford to pay the entire premium. These subsidies apply if you earn 400% of the federal poverty guidelines or less Opens in new window. The subsidies also make insurance more affordable for more people.

Under the ACA, states could choose to expand Medicaid and provide more coverage to low-income populations. While 37 states and the District of Columbia have expanded Medicaid Opens in new window, 13 states, including Texas and Florida, have not.

Many preventative services are free under the ACA, including annual physicals, flu shots and screenings for breast and lung cancer. Before the ACA, policyholders had to pay for these services out of pocket if their insurance provider didn't cover them.


Coverage limits removed

The ACA also removed annual and total limits for essential health benefits. Before Obamacare, companies could limit how much they covered in a given year. That meant cancer patients or those with chronic illnesses often reached their annual or lifetime caps quickly and had to switch providers.

Thanks to the ACA, insurance companies are no longer allowed to cancel a plan if a patient is diagnosed with a serious illness. As long as you pay your premiums, you'll continue to have coverage. If you miss a payment, there's a grace period that allows you to make up the payments without losing your coverage.


Zina Kumok is a freelance writer specializing in personal finance. She has written for the Associated Press, Indianapolis Monthly and more. She also writes a blog about how she paid off her student loans in three years.


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