How Health Reform Affects Insurance Costs: FAQ

Medically Reviewed by Sarah Goodell on September 14, 2022

Your health care costs under the health reform law depend on where you get your health insurance and how much money you earn. Here are answers to some common questions.


Premiums have been going up for years, even before the health law took effect. Because the cost of medical care rises each year, so does the cost of health insurance. Although the law seeks to lower health care costs, we’re all paying more for our health insurance benefits and for the cost of getting care.

However, the law requires large employers to pay additional fees and taxes. That may continue to increase your employer’s costs, which may be passed along to employees.


Premiums continue to rise. 

If you use your state’s Marketplace to buy your insurance, you may qualify for a tax credit, depending on your income, to help pay your premiums. Also, if your premiums go up significantly, take a look at other plans during the Marketplace’s annual open enrollment. You may find a lower cost plan that better fits your needs. Under health reform, if your insurance company wants to raise premiums by 10% or more it must publicly justify the increase. This can help keep premium hikes in check. However, not all states have the power to stop rate increases if insurers refuse to reconsider.

Yes. Insurance companies can charge you up to 50% more for premiums than someone who doesn't use tobacco, although some states have eliminated this penalty for smokers.

On the other hand, smoking-cessation programs are one of the benefits that all health plans sold on a state's Marketplace must offer. 


Yes. Health plans must now spend at least 80%-85% of the premiums they charge customers on medical care or steps to improve the quality of care. Individual plans and small employer plans must spend at least 80% of the premium on these services while large employers must spend 85%.

If they spend less than this percentage, health insurance companies have to send out rebates to customers.

However, employers who are self-insured don't have to follow this rule. A self-insured employer is a company that bears the risk for workers' medical claims itself rather than purchasing an insurance policy. Most employers with 500 or more employees are self-insured.


You are entitled to a number of preventive treatments and services without extra out-of-pocket costs.

Out-of-pocket payments are medical costs that you have to pay on your own, often through a copay, coinsurance, or a deductible. A copay is a set amount you have to pay for a health service that's covered by your insurance plan. For instance, each time you see a doctor you may pay $15, and your health plan pays the rest of the charges. Coinsurance is a percentage of the cost of health care services. For instance, you might pay 20% of the cost when you see a doctor and your health plan pays the rest.

Preventive services that your insurance will pay for include:

  • Screenings for certain diseases and health risks, such as a mammogram to screen for breast cancerand a bloodtest to check for type 2 diabetes
  • Many vaccinations, such as a flu shot
  • Certain services for women, such as birth control, well-woman visits, and some screenings specific to women, such as a Pap test
  • Many services for children and teens, such as screening for autism spectrum disorder, depression, drug use, hearing problems, and certain vaccinations

You must see an in-network provider in order to get these services without having to pay out-of-pocket costs at the time of your visit.

Grandfathered plans – those that have been in existence since the law passed in 2010 and have not changed substantially – and short-term health plans – those that provide insurance for fewer than 12 months – do not have to provide free preventive care.

Show Sources


Towers Watson: “2014 Employer Survey on Purchasing Value in Healthcare.”

Congressional Budget Office: "An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act."

Henry J. Kaiser Family Foundation: "Why Premiums Will Change for People Who Now Have Nongroup Insurance;" "Health Insurance Market Reforms: Rate Restrictions;" and "Implementation Timeline."

Health Insurance 101: "Restricted annual lifetime limits." "Grandfathered health plans;" "Rate review;" "Value for your premium dollar: 80/20 rule and MLR;" "Preventive Services Covered Under the Affordable Care Act;" and "Preventive care."

Center for Consumer Information and Insurance Oversight: "The 80/20 Rule: How Insurers Spend Your Health Insurance Premiums."

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