The general principle of Obamacare health insurance is to ensure that basically all American citizens have proper health coverage.
Obligation to take out health insurance
The law requires all citizens to purchase health insurance from a private insurer listed on the website healthcare.gov as ACA compliant. In return, the state provides financial aid to those who cannot afford the coverage.
Those who did not comply faced a fine of either $695 per adult and $347.50 per child, or 2.5% of their Adjusted Gross Income.
As of January 1, 2019, U.S. residents no longer incur penalties if they do not have health insurance, or if they choose insurance that does not meet ACA Compliant criteria. However, some states, such as Massachusetts, Washington D.C, New Jersey or Vermont, have maintained the health insurance requirement.
Obamacare and the new regulations for insurers
Obamacare also introduced new rules for insurance companies, which must now:
- Provide the insured with an easily understandable summary of their coverage
- Respect the Medical Loss Ratio: 80% of the customer’s premium must be used to make reimbursements and improve the quality of care, and only 20% to cover administrative and marketing costs
- Refund a portion of the client premium if the Medical Loss Ratio is not met
- Justify any rate increase of 10% or more
- Give the insured the possibility to appeal in case of a reimbursement dispute
- Cover dependent children up to age 26 under their parents’ policy
- Cover any person wishing to be insured, regardless of their state of health and without applying an additional premium
- Cover preventive care free of charge
In addition, they are now prohibited from:
- Cancel a contract because of excessive consumption by the insured
- Implement annual caps as well as caps per contract on the 10 coverages considered essential
Obamacare: pros and cons
The implementation of Obamacare has had its pros and cons and a number of consequences for the American healthcare system.
Increase in the number of insured people
Obamacare has partially achieved its main goal: the number of people without insurance has dropped from 16% in 2010 to 8.5% in 2018.
Creating insurance marketplaces
For people needing to purchase health insurance, the government has created online marketplaces where they can browse and compare different private insurance options.
The number of insurers in these marketplaces has declined since their inception, and premiums have tended to rise steadily each year.
What is Obamacare? Explained for expats
Is it essential to purchase health insurance in the USA?
The ACA had made it mandatory for all U.S. residents, which includes expats, to purchase health insurance.
Since January 2019, President Trump removed this obligation, which however remains in force in five states under financial penalties: Massachusetts, New Jersey, Washington DC, California and Vermont.
In any case, when you live in the United States, it is essential to be insured. In fact, health care costs are the highest in the world (a simple consultation can cost 80 dollars), and paying for a hospitalization can be very complicated without health insurance.
Expats can take out Obamacare-compliant insurance
The U.S. healthcare system relies almost exclusively on private medical insurance, which is poorly regulated and expensive in most cases. Choosing an Obamacare-compliant or ACA-compliant insurance policy guarantees compliance with the rules dictated by the authorities regarding the protection of the insured and the contract: absence of limit of 10 essential coverages, prohibition of cancellation of the contract in the event of consumption considered excessive by the insurer, etc.
Under certain conditions, it is also possible to benefit from the coverage of medical history, especially at the time of arrival in the United States.
The limits of Obamacare health insurance
But ACA-compliant insurance also has serious drawbacks for expats, first of all, it is only valid on American territory.
This means that there is no coverage during stays abroad, and that repatriation of the insured to his/her native country will be at the expat’s expense.
Choosing an American insurance policy also requires understanding and accepting the conditions of the American health system: you need to know certain specific notions such as coinsurance, copay or out-of-pocket maximum in order to be able to foresee your real expenses, and to be able to manage your contract and its procedures.
In addition, certain reimbursements are only possible if the patient has been treated in a health network approved by his insurer or with the agreement of a referring physician.
Therefore, Obamacare insurance is usually not the most suitable for expats.
International insurance for expats is often more interesting
Now that you have a better understanding of what Obamacare is, you need to also know that international insurance for expats is often more interesting than Obamacare insurance in case of moving abroad to the USA.
The contracts are easier to understand than the ACA compliant contracts because they are written in a simplified way that does not require extensive knowledge of the American health system.
All the procedures are done in your native language, with a representative who has a good knowledge of the healthcare system and local healthcare networks, as well as of the issues specific to expats.
These insurances are specially designed to meet your needs, and exist in many formulas, more flexible than the Obamacare contracts.
They allow coverage anywhere in the world, including during stays in your home country, and cover at least the essential benefits of hospitalization and repatriation assistance.
It is also possible to add additional covers that do not exist in Obamacare insurance (civil liability, legal assistance, identity documents protection, airline tickets or luggage in case of loss, theft or flight cancellation, etc.).
However, be aware if you reside in any of the states that still apply financial penalties for taking out health insurance outside of the Obamacare system, you will need to add these penalties to the health insurance cost you have taken out, in order to know the total cost of your health coverage.