Patient Protection and Affordable Care Act (PPACA)

The Patient Protection and Affordable Care Act (PPACA), commonly known as the Affordable Care Act (ACA) or Obamacare, is a federal law that was enacted in 2010. The law aims to increase access to affordable health insurance for individuals and small businesses, improve the quality of health care, and reduce health care costs. The law has a significant impact on employee benefits, particularly in the area of employer-sponsored health insurance.  

Key features of the ACA include:

• Individual mandate: The ACA requires most individuals to have health insurance coverage or face a penalty. This requirement, known as the individual mandate, was repealed in 2019, but the requirement for employers to provide health insurance to their employees remains.

• Employer mandate: The ACA requires employers with 50 or more full-time equivalent employees to offer affordable health insurance coverage to their employees or pay a penalty.  

• Health insurance exchanges: The ACA established health insurance marketplaces, also known as exchanges, where individuals and small businesses can purchase health insurance.  

• Essential health benefits: The ACA requires health insurance plans to cover a set of essential health benefits, including ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, preventive and wellness services, and pediatric services.  

• Pre-existing conditions: The ACA prohibits health insurance companies from denying coverage to individuals with pre-existing conditions or charging them higher premiums.  

• Dependent coverage: The ACA requires health insurance plans to allow young adults to remain on their parents' health insurance plan until age 26.  

• Lifetime and annual limits: The ACA prohibits health insurance plans from placing lifetime or annual limits on essential health benefits.  

• Wellness programs: The ACA allows employers to offer wellness programs that provide incentives for employees to engage in healthy behaviors, such as quitting smoking or losing weight.  

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