Basics of the Affordable Care Act
The ACA allowed people with private insurance to keep their insurance while expanding insurance to millions of others. It also broadened coverage for people already insured. In total, the ACA had 4 main effects on insurance.
First, it guaranteed coverage for many people, even people with pre-existing conditions that had previously been denied insurance. It also allowed these people to pay the same amount for insurance rather than having them pay an increased premium for that condition.
Second, it expanded services to essential healthcare services. This means that other services were now guaranteed to be covered that were not before, such as preventive services, maternity benefits, newborn care, and emergency services.
Third, it adds an element of financial assistance depending on your income.
Lastly, it opened up a new way to shop for insurance called the Marketplace. You can shop for plans on the Marketplace or buy directly from the insurance company.
ARPA Changes to the ACA
Previously, the financial assistance for insurance premiums only extended to people who made up to 400% of the poverty line. In 2021, 400% of the poverty line for a single individual was $51,040, meaning that if you made more than that, you would not get a subsidy. The ARPA has now changed that. Now, premiums are capped regardless of income. Because of the ARPA, the maximum you can pay for your premium is 8.5% of your modified-adjusted gross income (MAGI). Most people’s MAGI is very close to their adjusted gross income.
Everyone benefits from these subsidies, but it increases the value of the subsidy most for people who make between 100% and 400% of the poverty line who were previously getting a smaller subsidy under the old rules.