The Affordable Care Act, explained in plain terms, is the federal health insurance law signed on March 23, 2010, that created online marketplaces for buying private coverage, banned insurers from turning people away for pre-existing conditions, set minimum standards for what plans must cover, subsidized premiums for middle-income households, and expanded Medicaid for low-income adults. It is often called the ACA, the PPACA, or “Obamacare,” and its rules touch nearly every private health plan and public coverage program in the country. Several of its financial provisions are shifting for 2026, so the details below reflect where things stand now.
What Every Health Plan Must Cover
Plans sold on the individual and small-group markets have to cover ten categories of care known as essential health benefits: outpatient care, emergency services, hospitalization, maternity and newborn care, mental health and substance use treatment, prescription drugs, rehabilitative services and devices, lab tests, preventive and wellness services, and pediatric services including children’s dental and vision. Emergency room visits are covered whether or not the hospital is in your plan’s network, and prescription coverage must include at least one drug in every therapeutic category.
On top of the ten categories, non-grandfathered plans must cover a specific list of preventive services with no copay, coinsurance, or deductible, even if you haven’t met your annual deductible yet. That list includes routine immunizations, annual wellness visits, cancer screenings like mammograms and colonoscopies, blood pressure and cholesterol checks, contraception, tobacco cessation programs, and diabetes prevention medication for adults at risk.
Plans are sorted into metal tiers based on how costs are split between you and the insurer. Bronze plans cover roughly 60 percent of expected medical costs, Silver covers 70 percent, Gold covers 80 percent, and Platinum covers 90 percent. Lower tiers mean cheaper premiums and higher out-of-pocket costs when you use care; higher tiers work the other way.
Protections the ACA Gives You
Before the law, insurers in many states could deny you a policy outright or charge far more because of a condition like asthma or diabetes. That is now banned. In the individual and small-group markets, insurers can only vary premiums based on four things: whether the plan covers an individual or family, geographic rating area, age (capped at a 3-to-1 ratio between the oldest and youngest adults), and tobacco use (capped at a 1.5-to-1 ratio).
Lifetime and annual dollar caps on essential health benefits are gone. Someone in the middle of cancer treatment can no longer hit a policy maximum and lose coverage. Young adults can stay on a parent’s plan until age 26 regardless of whether they are married, financially independent, or offered coverage at their own job.
Insurers also can’t rescind a policy retroactively after you get sick and file expensive claims. The only grounds for rescission are fraud or intentional material misrepresentation on the application. And under the Medical Loss Ratio rule, insurers must spend at least 80 percent of premiums in the individual and small-group markets (85 percent in the large-group market) on actual medical care and quality improvement rather than overhead or profit. When they fall short, they owe rebates to policyholders.
How and When You Buy a Marketplace Plan
The ACA set up online marketplaces where you can compare private plans side by side, run either by the federal government through Healthcare.gov or by individual states that built their own exchanges. Every plan sold on a marketplace has to display what it covers, what it costs, and what you’d owe out of pocket before you enroll.
Coverage isn’t available year-round. You pick or renew a plan during annual open enrollment, which for the 2026 plan year ran from November 1, 2025, through January 15, 2026. Outside that window, you can only sign up if a qualifying life event triggers a special enrollment period. Qualifying events include losing existing coverage, getting married, having or adopting a child, moving, or gaining a new immigration status. You generally have 60 days from the event to pick a marketplace plan, and 30 days for employer-sponsored coverage. Miss those windows and you usually wait until the next open enrollment.
Help Paying for Coverage
Two forms of financial help are attached to marketplace plans: premium tax credits that lower your monthly bill, and cost-sharing reductions that lower what you pay at the doctor or pharmacy.
Premium tax credits are available if your household income falls between 100 and 400 percent of the Federal Poverty Level. For 2026, that works out to roughly $15,650 to $62,600 for a single person and $32,150 to $128,600 for a family of four. Between 2021 and 2025, Congress temporarily removed the 400 percent income cap so higher earners could also get help, but that expansion expired at the end of 2025. As of early 2026 the income cliff is back: a household earning even slightly above 400 percent of poverty gets no subsidy at all. Legislation to extend the enhanced credits has passed the House but has not become law.
Most people take the credit in advance so it flows straight to the insurer and they only pay the balance. You can instead claim it at tax time, but that means paying full premiums out of pocket all year. Cost-sharing reductions cut your deductibles, copays, and coinsurance, but only if you enroll in a Silver-tier plan and your income falls within the eligible range. Bronze, Gold, Platinum, and Catastrophic plans don’t qualify.
If you took advance credits, you reconcile them on Form 8962 with your federal tax return, using the Form 1095-A your marketplace sends by mid-January. Lower income than estimated can mean an added refund; higher income means paying some or all of the excess credit back. For 2026 there is no cap on that repayment, a change from more forgiving rules in prior years.
Are You Required to Have Coverage?
The ACA’s individual mandate is still on the books, but the Tax Cuts and Jobs Act of 2017 reduced the federal penalty to zero starting in 2019. You will not owe the IRS anything for going uninsured.
Some states have filled that gap. California, Massachusetts, New Jersey, Rhode Island, and the District of Columbia impose a state tax penalty on residents without qualifying coverage. Vermont requires coverage but does not attach a penalty. Everywhere else, going uninsured no longer carries a tax bill.
What Large Employers Must Offer
Businesses with 50 or more full-time equivalent employees must offer affordable coverage that meets minimum value standards to at least 95 percent of their full-time workforce. Affordable for 2026 means the employee’s share of the premium for self-only coverage can’t exceed 9.96 percent of household income.
An employer that offers no qualifying coverage owes $3,340 per full-time employee for 2026, minus the first 30 employees, if even one worker gets a subsidized marketplace plan. An employer that does offer coverage, but the coverage is unaffordable or falls short of minimum value, owes $5,010 per affected employee who ends up receiving marketplace subsidies. These amounts are inflation-adjusted each year; the base figures in the statute are $2,000 and $3,000.
Medicaid Expansion and the Coverage Gap
The ACA broadened Medicaid to cover nearly all adults under 65 with household incomes up to 138 percent of the Federal Poverty Level. The federal government pays 90 percent of the cost for this expansion population, down from 100 percent in the initial 2014 through 2016 rollout years. That 90 percent match is permanent under current law.
The Supreme Court’s 2012 decision in National Federation of Independent Business v. Sebelius made expansion optional for each state, ruling that Congress could not use existing Medicaid funding as leverage to force adoption. As of early 2026, 40 states and the District of Columbia have expanded, while 10 have not. In non-expansion states, many low-income adults fall into a coverage gap: they earn too much for traditional Medicaid but less than 100 percent of the poverty level, which is where premium tax credit eligibility begins.