What is the Affordable Care Act (ACA) and how does it work?

The Affordable Care Act (ACA), signed into law in March 2010, is the most significant federal health insurance legislation since Medicare and Medicaid. Its core goals: expand coverage, protect consumers, and control costs. The HealthCare.gov overview summarizes the law's consumer protections.

Key consumer protections

• Insurers cannot deny coverage or charge more because of a pre-existing condition.
• Plans must cover 10 essential health benefits including preventive care, mental health, and prescription drugs.
• Children can stay on a parent's plan until age 26.
• Annual and lifetime coverage limits are banned for essential health benefits.
• Preventive services (screenings, vaccines, annual checkups) must be covered at no cost.

ACA Marketplace

The ACA created HealthCare.gov (for 34 states) and state-based marketplaces (in 17 states + DC) where individuals and families can compare and purchase standardized plans. Open enrollment runs annually from November 1 through January 15 for most states. Premium tax credits are available based on household income — the American Rescue Plan (2021) and the Inflation Reduction Act (2022) temporarily enhanced these subsidies, but that enhancement expired at the end of 2025. For 2026 coverage, the original, less generous ACA premium tax credit structure applies unless Congress passes an extension.

Premium tax credits

If your household income is between 100% and 400% of the federal poverty level (FPL), you may qualify for a Premium Tax Credit (PTC) that reduces your monthly premium. The temporary rule letting households above 400% FPL qualify too (when benchmark plan premiums exceeded 8.5% of income) expired along with the enhanced subsidies at the end of 2025 — for 2026 coverage, the 400% FPL cutoff (the "subsidy cliff") is back in effect unless Congress acts. The U.S. House passed a bill to extend the enhanced credits for three more years in late 2025; as of this writing the Senate had not passed it. Use the KFF Subsidy Calculator for a personalized estimate under current law.