ACA Frequently Asked Questions

There are many ways the ACA benfits specific populations such as children and parents, childless adults, the elderly, women, low-income individuals and families, LGBT individuals and families, racial and ethnic minorities, and others. The ACA also benefits small businesses, health care providers and states, and it contains important public health provisions such as the Prevention and Public Health Fund.

Resources you can use to educate the public include  the APHA fact sheets Why Do We Need the Affordable Care Act? (PDF) and The Prevention and Public Health Fund. (PDF)

The Affordable Care Act includes a number of coverage and other provisions that will require more government spending. But these costs are offset by other ACA provisions that will either bring new revenue into the government, or decrease current spending. As of May 2013, the CBO predicts that the budgetary impact of the ACA’s coverage provisions will be $1,363 billion over 2014-23. In the same May 2013 report, the CBO notes, "Taking the coverage provisions and other provisions together, CBO and JCT have estimated that the ACA will reduce deficits over the next 10 years and in the subsequent decade."

The ACA’s Health Insurance Marketplace gives individuals and families a new option to purchase heath insurance. There is also a marketplace for small businesses. The marketplace opened in October 2013, and coverage purchased through the marketplace began as early as January 2014. 

States had three options regarding the creation of their marketplaces: to establish their own state-based marketplaces, or SBMs, to defer to a federally faciliated marketplace, or FFM, or to establish a marketplace in partnership with the federal government. The Kaiser Family Foundation offers a list and map of which states have opted for which model.

The marketplaces will be most useful for consumers who don’t have access to employer-based coverage, and who don’t qualify for public programs like Medicaid. Individuals and families with incomes between 100 percent and 400 percent of the federal poverty level ($23,550-$94,200 for a family of four in 2013) will receive income-based subsidies to help them afford coverage, and small businesses will also receive tax credits to help them afford coverage for their employees.

Starting in 2014, the minimum coverage provision will require most U.S. citizens and legal residents to obtain and maintain coverage for themselves and their dependents, or to pay a small penalty. People can opt out if they qualify for one of numerous exemptions.

While this provision is more commonly known as the "individual mandate," that term is not accurate, and does not appear anywhere in the ACA. The provision is not a mandate, because people have the option of paying a penalty instead, and because there are numerous exemptions.

Examples of coverage that individuals may obtain include employer-based insurance; individual insurance purchased through the exchanges; or public insurance such as Medicaid, Medicare or CHIP.

The penalty will be the greater of a flat fee or a percentage of income ($695 or 2.5 percent of taxable income for an individual, capped at the national average premium for a bronze-rated insurance plan), and it will be phased in over 2014-2016. It will be assessed as part of peoples’ income taxes.

There are many exemptions , including: having income below 100 percent of the federal poverty level ; not being required to file income taxes; if the purchase of insurance would cause financial hardship; having religious objections; having a coverage gap shorter than three months; or being an American Indian, undocumented immigrant, or incarcerated person. 

Most people will not directly be affected by the minimum coverage provision because they already have employer-based coverage, or other coverage such as Medicaid or Medicare, that meets the minimum coverage requirement; or because they are exempt. A March 2012 analysis (PDF) by the Urban Institute found that of the nearly 270 million non-elderly individuals in the U.S., only 7 percent would "face a requirement to newly purchase insurance or pay a fine."

Of the nearly 270 million non-elderly individuals in the U.S., nearly 160 million already have coverage, and another 90 million would be exempt for one of the reasons noted above. Thus, they would not be directly affected by the provision.

Only 26 million people are both currently uninsured and wouldn’t be exempt, and would thus be affected by the requirement to obtain coverage.

However, within this group, 8 million would be eligible for no-cost or low-cost public insurance (such as Medicaid or CHIP), and would not necessarily have to purchase their coverage.

Another 11 million would be eligible for subsidies to purchase coverage through the new exchanges. Only about 7 million people would be subject to the minimum coverage provision, but would not receive any public coverage or exchange subsidies. The Urban Institute’s estimate that 7 percent would face a requirement to newly purchase coverage or pay a penalty includes these 7 million, and also the 11 million that would receive subsidies.

These estimates were published before the Supreme Court ruled on the ACA in June 2012, and if fewer states now choose to expand Medicaid, there will likely be more people who must "newly purchase" coverage, with or without a subsidy. However, many of those who now won't qualify for Medicaid may be exempt for income or other reasons.

While the minimum coverage provision would directly affect only a small percentage of the population, it is a very important part of the health reform law. It will make many other ACA provisions possible, by ensuring that insurance markets stay balanced and costs stay low.

Because so many other ACA reforms, particularly guaranteed issue and community ratingrequirements, will protect consumers’ right and ability to purchase insurance, it’s important to ensure that individuals don’t take advantage of the new system by choosing not to buy insurance as long as they’re healthy, and only buying coverage when they become sick. If too many individuals were to do this, costs would rise for both insurers and consumers who do have coverage. The minimum coverage provision is necessary to provide an incentive for everyone – including healthy individuals – to pay their fair share, keep the system balanced, and keep costs low for everyone.

The minimum coverage provision was one of two major ACA provisions at stake in the legal challenges decided by the Supreme Court in June 2012. The Court upheld the minimum coverage provision, and the Medicaid expansion (although its decision on the Medicaid expansion was more complex).

Medicaid has been the country's health coverage program for low-income individuals and families since 1965. It is jointly administered and funded by the federal government and the states. The federal government sets basic guidelines, and the states have broad authority to modify their Medicaid programs as they see fit, as long as they meet the federal guidelines. 

To be eligible for coverage, a person has historically had to satisfy two tests: belonging to a "categorically" eligible group (generally: children, pregnant women, parents, blind or disabled persons, and the elderly); and meeting the financial test set by the state for that group. Prior to the ACA, the federal government already mandated that eligibility levels for children and pregnant women be at least 100-133 percent, but eligibility levels for parents could be much lower, and states were not required to cover adults without dependent children at all. 

In states that choose to participate, the Medicaid expansion creates a new eligible group: all adults not already eligible. This especially means that adults without dependent children will no longer be excluded from the program. Additionally, the ACA expands the minimum income eligibility threshold to 133 percent FPL (effectively 138 percent FPL) for everyone except the elderly and disabled. This is a floor, not a ceiling: if states already had higher thresholds for certain populations, or want to set higher thresholds, that's fine.

Under the ACA expansion, the definitions shown in the table  below will be less relevant than the difference between "traditionally eligible" and "newly eligible" persons.

Those in any population who were already eligible in their state (whether they were already enrolled) can be thought of as "traditionally eligible." They will continue to receive the services to which they are already entitled, and states will continue to receive their standard federal contribution for covering them, whether they enroll before or after 2014.

Those in any population who were not previously eligible but become eligible under ACA (which will include nearly all childless adults, plus many parents and some children depending on states' current thresholds) can be thought of as "newly eligible." Most importantly, states will receive a much higher federal contribution for covering them. Another important distinction: newly eligible enrollees will not necessarily be entitled to standard Medicaid benefits packages. However, states must provide them with "benchmark" or "benchmark equivalent" benefits, which will include the same essential benefits that private plans must include in order to be sold in the new insurance exchanges.

Table: Medicaid income eligibility thresholds before and after the ACA Medicaid expansion 

Source: Kaiser Family Foundation 1, 2, 3 

*State threshold must be at or above the U.S. minimum threshold. 
**In states that choose to expand Medicaid, the threshold will be at or above the new U.S. minimum threshold starting in 2014. If a state's threshold was already higher, it may remain so. 
^AFDC was Aid to Families with Dependent Children, the cash welfare program replaced by TANF (Temporary Assistance to Needy Families) in the 1996 welfare reform bill. SSI is the Supplemental Security Income program that provides cash assistance to low-income disabled, blind and elderly persons.

The federal poverty level is the federal government's official threshold for determining whether an individual or family is in poverty, according to their resources and family size and composition. It's an income amount, and if a family's income falls below that amount (if they are "below 100 percent of FPL"), they are considered in poverty. Eligibility for many government programs depends on having an income below 100 percent FPL, or some other level above or below 100 percent. The FPL numbers are part of the federal poverty guidelines, updated each year. The ASPE office within the U.S. Department of Health and Human Services has more information about the FPL, federal poverty guidelines and the federal poverty thresholds (which are used to count the number of people in poverty, not to determine whether an individual is in poverty).

Income data sources: ASPE, FHCE 

These are selected thresholds; other calculations exist for various family sizes and percents of FPL. Also note: these thresholds apply to the 48 contiguous states. Different thresholds exist for Alaska and Hawaii. 

Some sources state that the new minimum Medicaid eligibility threshold is 133 percent FPL; other sources state it will be 138 percent. Both are correct. The text of the ACA says 133 percent, but the law also calls for a new methodology of calculating income, which will make the effective minimum threshold 138 percent. (Either way, remember that these are minimum thresholds; states can set eligibility thresholds higher, and many already have for certain populations, which means more people qualify.)

Currently, the system for determining whether someone meets the eligibility threshold is complicated and varies from state to state. It involves calculations of income and assets, as well as "disregards" of income and assets that vary for different populations. (Disregarding income or assets means not counting it for purposes of determining eligibility.)

Under the ACA, the system for determining eligibility will be streamlined and unified across the states, and it will be tied to the Modified Adjusted Gross Income, or MAGI, tax rules. This system will also be used to determine eligibility for exchange subsidies.

Now, instead of a variety of different income disregards, there will be one standard disregard for most populations: 5 percent. That means a person's income can be up 138 percent FPL, but because 5 percentage points of her income will be ignored, she will effectively meet the 133 percent threshold. The new MAGI system is also important in terms of what sources of income it counts and doesn't count (importantly, it doesn't count assets), and in how family size is determined.

The federal government will finance the great majority of the costs associated with the Medicaid expansion. For the "newly eligible population" (anyone not previously eligible in their state), the federal government will cover 100 percent of costs in 2014-16. And it will always cover at least 90 percent of the costs of this population. States will continue to receive their standard federal contributions for "traditionally eligible" populations. This amount is different from state to state, and averages less than 60 percent.

Some additional Medicaid provisions are: the maintenance of effort, or MOE, requirement, enhanced provider payments, incentives to states to cover preventive services at no cost to beneficiaries, a new option for states to expand family planning eligibility without having to apply for a waiver, and Disproportionate Share Hospital, or DSH, payment reductions.

The ACA’s health insurance exchanges are meant to be virtual marketplaces where individuals and families can comparison shop for health coverage. There will also be exchanges for small businesses. States may set up exchanges themselves or in partnership with the federal government, or the federal government will set them up in states that can’t or won’t do so by 2014, when they are to become effective.

The exchanges will be most useful for those who don’t have employer-based coverage, and who don’t qualify for public programs like Medicaid. They will also be useful for small business owners seeking coverage options for their employees.

In 2012, more than half of U.S. consumers below age 65 received insurance through their employers (also called "group" coverage), and another 17.9 percent received coverage through the public programs Medicaid and CHIP. These individuals will likely have very little, if any, interaction with the exchanges.

However, 6 percent of consumers purchased coverage on their own, through the "individual" or "non-group" market, likely because they were self-employed or their employer didn’t offer coverage. Another 20 percent of the population was uninsured, but might have been able to purchase coverage in the non-group market if they could better understand their options or afford a plan. While the ACA's Medicaid expansion is meant to cover many of the lowest-income uninsured, and other provisions aim to increase the number of workers that can access coverage through their jobs, the exchanges are meant to make it easier and more affordable for others to purchase private coverage in the individual market. Exchanges for small businesses are also intended to make it easier and more affordable for those employers to cover their employees.

Historically, plans purchased in the individual market (see above) have been more expensive and offered fewer benefits than employer-based plans. And it has been difficult for consumers and small business owners to clearly compare their options. The exchanges will make the process of comparing and purchasing plans more transparent, and will create incentives for insurers to compete for consumers’ business. Key ACA provisions will improve benefits and lower costs for consumers and small businesses purchasing plans in the exchanges. Selected provisions are summarized here; follow links for more information from the Health Insurance 101 project.

• Easy navigation, no wrong door: The exchanges will consist of websites and other ways for consumers and small businesses to determine their options for coverage (including consumer eligibility for Medicaid and other public programs). Regarding plans in the exchange, shoppers will be able to: compare benefits, costs, provider networks, and other features; see the subsidy they are eligible for; and purchase the plan of their choice. 
• Essential health benefits: In order for a plan to qualify to be sold through the exchange, it must offer a defined set of essential health benefits. This will mean all plans will meet basic quality requirements.
• Affordability subsidies and tax credits: The federal government offers income-based subsidies to help individuals and families purchase plans through the exchange. People with incomes between 100 percent and 400 percent of the federal poverty level will qualify for subsidies that will ensure that insurance does not cost families more than 9.5 percent of their incomes. Tax credits will also be available to help small businesses afford coverage for their employees.