6 Must-Know Facts about the Affordable Care Act

6 Must-Know Facts about the Affordable Care Act

Get the facts on the Affordable Care Act and what it means for you.

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Still confused about the Affordable Care Act (ACA)? You're not alone. Now that the law is in effect, many people have questions about how the law affects their tax bill, whether they have to buy new insurance and how they can afford it. Here's a keep-it-simple guide to the big, sprawling, sometimes-bewildering law.

(Almost) Everyone Needs Health Insurance

2 / 7 (Almost) Everyone Needs Health Insurance

Maybe the most famous part of the ACA is the “mandate,” the requirement that everyone have health insurance coverage. (Medicare, Medicaid, employer-provided plans and veterans’ insurance all count.) The rule exists to get healthy people into the insurance market to keep rates affordable, and to keep people from running up medical bills they can’t pay.

If you choose not to buy insurance, you’ll have to pay a tax penalty, although there are exceptions to the rule—such as if your income is below a certain level. And if you have a short gap in coverage—while between jobs, for example—you’re not penalized.

Health Insurance Shopping Made Easy

3 / 7 Health Insurance Shopping Made Easy

The exchanges, also called Health Insurance Marketplaces, are meant to simplify the process of choosing a health plan. Fill out one application online, by mail or in person, and you’ll see all the plans available for you in your area. You’ll be able to compare plans by price, benefits and quality, and plans will be grouped in simple categories (“Bronze” through “Platinum,” as well as “Catastrophic”) based on their levels of coverage. And, the plans will be explained in plain, easy-to-follow language.

100% Preventive Care Coverage

4 / 7 100% Preventive Care Coverage

The law requires that health plans pay 100 percent of costs for preventive care, which means you don’t pay out-of-pocket for services such as vaccinations and health screenings. The idea is to keep you healthy so you don’t develop costly-to-treat illnesses.

In addition, the ACA will end lifetime or yearly limits on “essential health benefits” such as hospitalization and maternity care. Insurance companies won’t be able to set dollar limits on what they’ll spend on you for these services. However, plans will still be able to limit coverage of “non-essential” services, such as chiropractic treatments. See the full list of covered preventive services.

You Can't Be Denied If You're Sick

5 / 7 You Can't Be Denied If You're Sick

As of January 1, 2014, insurance companies can't turn you down if you have a health condition, charge you more than a healthy person your age or refuse to pay for treatment for your pre-existing condition. And they can’t charge women more than men for coverage. In addition, your insurance plan can’t cancel your coverage if you develop an illness while covered. In the past, companies had been accused of using technicalities (like an error on an application) to take away coverage and even make customers pay back money spent on claims, a practice called rescission. Now, that’s allowed only if you purposely put false information on your application.

Health Insurance Discounts

6 / 7 Health Insurance Discounts

The law aims to help people with low and middle incomes in several ways. Under the ACA’s Medicaid expansion, people with limited incomes (under about $15,000 for an individual and $31,000 for a family of four) will be eligible for Medicaid—but only in states that participate. Look up your state here. People with incomes up to about $46,000 for an individual and $94,000 for a family of four, and who don’t have employer-provided coverage, will be eligible for discounts in the health exchanges. And if your employer-provided insurance costs exceed 9.5 percent of your income, you can buy insurance in the exchange and may be eligible for help.

The Big Exception: “Grandfathering”

7 / 7 The Big Exception: “Grandfathering”

One hole exists in the benefits and protections provided by the ACA. Plans that existed before March 23, 2010 and that have stayed basically the same are considered “grandfathered,” and many parts of the ACA don’t apply to them. Grandfathered plans don’t have to provide preventive care for free. Individual grandfathered plans—that is, plans that you buy for yourself, not provided by your employer—can still put yearly limits on your coverage, and can deny you if you have a pre-existing condition. To find out if your plan is grandfathered, check your plan’s materials or check with your employer.