Close this search box.

Table of Contents

Affordable Care Act


The Affordable Care Act, also known as the ACA or “Obamacare,” is a U.S. law enacted in 2010 aimed at improving access to healthcare for Americans. It includes measures to increase insurance coverage through public and private insurance, expand the Medicaid program, and introduce protections for consumers. The ACA also requires most individuals to have health insurance and businesses of a certain size to offer health insurance to their employees.


The phonetics of “Affordable Care Act” would be: əˈfôrdəbəl ker akt

Key Takeaways


  1. The Affordable Care Act, also known as Obamacare, expanded healthcare coverage for millions of Americans by prohibiting insurance companies from denying coverage due to pre-existing conditions and by offering subsidies to lower-income individuals and families.
  2. The ACA also put a greater emphasis on preventative care. It mandates that insurance plans cover numerous preventative services without copayments and expanded the role of community health centers.
  3. Despite its aim to increase the affordability of healthcare, critics argue that the ACA has increased health insurance premiums for many Americans, especially those who do not qualify for subsidies. Furthermore, although the ACA has led to a decline in the number of uninsured Americans, millions still remain without coverage.



The Affordable Care Act (ACA), also known as Obamacare, is a significant piece of legislation in the United States that has impacted the landscape of healthcare finance, making it a crucial term in business and finance. This law was enacted to extend health insurance coverage to millions of uninsured Americans, which not only affects individuals but also influences the financial operations and directing strategies of healthcare businesses and insurance agencies. It is important because it changes the way healthcare is financed by creating marketplaces for low-cost insurance and creating consumer protection laws in healthcare, impacting costs, quality, and consistency of health insurance. This act has had substantial financial effects on government, businesses, and individuals, placing it at the heart of financial discussions about healthcare.


The Affordable Care Act (ACA), also known as Obamacare, is a comprehensive healthcare reform law enacted in March 2010 with a primary goal to make healthcare more accessible and affordable for millions of uninsured Americans, and to reduce the overall costs of healthcare in the United States. The ACA sought to achieve its objectives by introducing measures such as prohibiting insurers from denying coverage or charging more due to pre-existing conditions, expanding Medicaid eligibility, creating health insurance marketplaces, and requiring most people to have health insurance or pay a penalty. In practice, the ACA is used for the broader purpose of health policy reformation as it implemented significant changes in the health sector through various provisions. Key provisions include free preventative care, extension of parents’ policies for youths up to age 26, and insurance exchanges through which individuals and families can purchase subsidized coverage. The ACA has also incorporated a measure to control healthcare-related expenses through the “individual mandate” clause which required everyone to procure a minimum amount of health insurance or pay a tax penalty, thereby expanding the risk pool. The ultimate goal is to create an environment where every American citizen can afford and access quality healthcare.


1. Small Business Coverage: Under the Affordable Care Act (ACA), small businesses with 50 or fewer full-time employees can access health care for their workers through the Small Business Health Options Program (SHOP). An example would be a small independent bookstore with 40 full-time staff. Thanks to the ACA, they were able to secure a comprehensive group health insurance plan at a rate they could afford.2. Medicaid Expansion: A notable example is that of the state of California, which greatly expanded its Medicaid program (Medi-Cal) after ACA was implemented. This benefited individuals with low income, such as a single mother working a minimum wage job, who was previously uninsured but is now covered under Medi-Cal.3. Pre-existing Condition Coverage: Before the ACA, a self-employed freelance worker with a pre-existing condition like diabetes might have struggled to find insurers who would cover them, or if they did, the premiums would be high. The ACA prohibits insurance companies from denying coverage or charging more for people with pre-existing conditions. Now, this freelancer is assured of obtaining necessary health coverage at an affordable rate.

Frequently Asked Questions(FAQ)

What is the Affordable Care Act (ACA)?

The Affordable Care Act (ACA), also known as Obamacare, is a healthcare reform law enacted in March 2010. It introduced comprehensive health insurance reforms with the aim of improving the quality and affordability of health insurance.

What is the objective of the ACA?

The ACA was envisioned to lower health care costs, improve the quality of care, regulate the health insurance industry, and increase transparency in health care pricing.

Who is eligible for ACA?

The ACA extends coverage to millions of uninsured Americans by expanding eligibility criteria for Medicaid and implementing private insurance reforms.

What does the ACA mean for small businesses?

The ACA includes provisions that impact businesses, such as the employer mandate for larger businesses, tax credits for smaller businesses, and health insurance marketplaces for self-employed individuals.

How does the ACA affect the health insurance industry?

The ACA implements reforms to the insurance industry, including prohibiting insurers from denying coverage due to pre-existing conditions, requiring them to cover certain essential health benefits, and limiting the amount they can charge based on age or gender.

Is the ACA mandatory for all businesses?

No. Only large businesses with 50 or more employees are required to provide health insurance to their employees under the ACA.

What are the penalties for not complying with the ACA?

Businesses that do not comply with the ACA’s requirements face serious financial penalties. Penalties for not providing affordable coverage can range from $2,000 to $3,000 per employee annually.

How does the ACA impact individuals with pre-existing conditions?

Under the ACA, insurance companies cannot refuse coverage or charge higher premiums to individuals with pre-existing conditions.

How can one enroll for coverage under the ACA?

One can enroll for ACA coverage through the Health Insurance Marketplace during the designated open enrollment period, or after a qualifying life event like a job loss or birth of a child.

: What are the minimum essential benefits under ACA?

: ACA requires health plans to cover a set of 10 Essential Health Benefits including inpatient and outpatient care, prescription drugs, maternity and newborn care, mental health services, preventive services, and more.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More