Affordable Care Act (ACA)


On March 23,2010, the federal government approved a law — the Patient Protection and Affordable Care Act (Affordable Care Act) —Together with the Health Care and Education Reconciliary Act, it represents the most significant regulatory overhaul of the country’s healthcare system since the passage of the Medicare and Medicaid in 1965.

The Affordable Care act seeks to increase the number of Americans with health insurance and cut the cost of health care through a federal mandate, subsidies and the creation of health insurance exchanges. The law also imposed new laws prohibiting insurance companies from denying coverage to an individual, eliminating life time caps and expanding Medicare.

California has taken the lead in adopting the affordable care act and setting the model for the rest of the country. The California legislature has pushed forward key legislation that will allow the state to adopt all key provisions of the Affordable Care Act including the creation of a health insurance market place, known in California as Covered California. For more information on Covered California visit the ACA tab on this website.


Guaranteed issue

The health care law includes new rules to prevent insurance companies from denying coverage to children under the age of 19 due to a pre-existing condition.Effective for health plan years beginning on or after September 23, 2010.

The Pre-Existing Condition Insurance Plan provides new coverage options to individuals who have been uninsured for at least six months because of a pre-existing condition. States have the option of running this program in their state. If a state chooses not to do so, a plan will be established by the Department of Health and Human Services in that state. National program effective July 1, 2010.

Partial community rating

Beginning in 2014, all insurers selling personal or small group products must use theAdjusted Community Rating (ACR). With ACR, insurers calculate the Community Rating and can adjust your cost based only on;your family size,where you live,if you use tobacco, your age. 

Individual mandate

Under the law, most individuals who can afford it will be required to obtain basic health insurance coverage or pay a fee to help offset the costs of caring for uninsured Americans. If affordable coverage is not available to an individual, he or she will be eligible for an exemption. Effective January 1, 2014.

Health insurance exchange

Individuals and small businesses can buy affordable and qualified health benefit plans in this new transparent and competitive insurance marketplace. Effective October 1, 2013.


Tax credits to make it easier for the middle class to afford insurance will become available for people with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage. (In 2010, 400% of the poverty line comes out to about $43,000 for an individual or $88,000 for a family of four.) The tax credit is advance able, so it can lower your premium payments each month, rather than making you wait for tax time. It’s also refundable, so even moderate-income families can receive the full benefit of the credit. These individuals may also qualify for cost-sharing reduction (a discount that lowers the amount you have to pay out-of-pocket for deductibles, coinsurance, and copayments).Effective January 1, 2014.

Essential health benefit standards

The Affordable Care Act ensures health plans offered in the individual and small group markets, both inside and outside of the Health Insurance Marketplace, offer a comprehensive package of items and services. Essential health benefits must include: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.Effective January 1, 2014.

Medicaid expansion

Americans who earn less than 133% of the poverty level (approximately $14,000 for an individual and $29,000 for a family of four) will be eligible to enroll in Medicaid. States will receive 100% federal funding for the first three years to support this expanded coverage, phasing to 90% federal funding in subsequent years.Effective January 1, 2014.

Employer mandate

Under the employer mandate, employers with at least 50 full-time workers must provide affordable health coverage or face a $2,000 fine per worker after the first 30 employees. Starting in 2014 if your employer doesn’t offer insurance, you will be able to buy it directly in the Health Insurance Marketplace.Effective 2015.

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The law is important to Californians because it provides financial assistance to help individuals and small businesses pay for health insurance. Those who already have affordable health insurance don’t need to take any action, unless they lose their coverage for certain reasons, such as the loss of a job.

To help those without health insurance get covered, the Affordable Care Act included a requirement that states either set up their own marketplace for people to buy health insurance or have one set up by the federal government. These marketplaces will offer one-stop shops where people can compare health insurance plans and buy the plan that works best for them, their family and their budget. California chose to set up its own marketplace — Covered California™ — as its doorway to health coverage. California also decided to expand its Medi-Cal program, and Covered California is the place to go to find out if you are eligible.

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