US Healthcare Explained: ACA, Medicare, Medicaid, and More

# US Healthcare Explained: ACA, Medicare, Medicaid, and More

The United States spends more on healthcare per capita than any other country—over $13,000 per person annually—yet millions remain uninsured or underinsured. Understanding how the system works is essential for anyone living in or moving to America.

The Patchwork System

Unlike countries with a single universal system, the US has multiple programs serving different populations:

| Program | Who It Covers | Funding | |---------|-------------|---------| | Employer-sponsored insurance | ~155 million people | Employer and employee contributions | | ACA Marketplace | ~20 million people | Individual premiums, government subsidies | | Medicare | ~65 million (age 65+ and disabled) | Payroll taxes, premiums, general revenue | | Medicaid/CHIP | ~90 million (low-income) | Federal and state funding | | Military (TRICARE/VA) | ~10 million | Federal funding | | Uninsured | ~27 million | N/A |

The Affordable Care Act (ACA / "Obamacare")

The ACA, passed in 2010, transformed the individual insurance market. Key provisions:

### Guaranteed Issue Insurers must accept all applicants regardless of health status. No one can be denied coverage or charged more for pre-existing conditions on an ACA-compliant plan.

### Essential Health Benefits All ACA plans must cover ten categories of care: 1. Outpatient care 2. Emergency services 3. Hospitalisation 4. Maternity and newborn care 5. Mental health and substance abuse 6. Prescription drugs 7. Rehabilitative services 8. Lab services 9. Preventive care and chronic disease management 10. Pediatric services (including dental and vision)

### Metal Tiers ACA plans are sold in four tiers based on how costs are shared:

| Tier | Insurer Pays | You Pay | Best For | |------|-------------|---------|----------| | Bronze | 60% | 40% | Healthy people who want low premiums | | Silver | 70% | 30% | Moderate healthcare users; subsidy-eligible | | Gold | 80% | 20% | Regular healthcare users | | Platinum | 90% | 10% | Heavy healthcare users |

### Premium Tax Credits Subsidies are available for individuals and families earning between 100% and 400% of the Federal Poverty Level (FPL). In 2026, a family of four earning up to approximately $124,800 may qualify for premium assistance.

The subsidy is calculated so that you pay no more than a fixed percentage of your income for the benchmark Silver plan. The subsidy can be applied to any Metal tier.

### Open Enrollment The annual enrollment period for ACA plans typically runs from November 1 to January 15. Outside this window, you can only enroll if you have a qualifying life event (marriage, birth, job loss, relocation). See our open enrollment guide.

Medicare

Medicare is federal health insurance for: - People aged 65 and older - People under 65 with certain disabilities - People with end-stage renal disease

Parts of Medicare

Part A (Hospital Insurance) - Covers inpatient hospital stays, skilled nursing, hospice, and some home health care - Most people pay $0 in premiums (funded through payroll taxes) - Has a deductible of $1,632 per benefit period in 2026

Part B (Medical Insurance) - Covers doctor visits, outpatient care, preventive services, and medical equipment - Standard premium is $185/month in 2026 (higher for high earners) - 20% coinsurance after the $257 annual deductible

Part C (Medicare Advantage) - Private plans that combine Parts A and B, often including Part D - May offer additional benefits (dental, vision, hearing, gym memberships) - Typically require using a network of providers (HMO or PPO) - No additional premium beyond Part B in many plans

Part D (Prescription Drugs) - Covers prescription medications through private plans - Premiums average $35–$55/month - Coverage gap ("donut hole") largely eliminated by 2026 reforms - Out-of-pocket cap of $2,000/year for prescriptions (effective 2025+)

### Medigap (Medicare Supplement) Medigap plans, sold by private insurers, help cover costs that Original Medicare (Parts A and B) does not—deductibles, coinsurance, and copays. You pay the Part B premium plus a Medigap premium ($100–$300/month depending on plan type and location).

Medicaid

Medicaid provides free or low-cost coverage to low-income individuals and families. It is jointly funded by federal and state governments, and eligibility varies by state.

In states that expanded Medicaid under the ACA, adults earning up to 138% of FPL (about $20,800 for an individual in 2026) qualify. In non-expansion states, eligibility is more restrictive.

Medicaid covers a broad range of services, including doctor visits, hospital stays, prescriptions, and long-term care. Cost-sharing is minimal or nonexistent.

Employer-Sponsored Insurance

Most working-age Americans get insurance through their employer. Key characteristics: - Employers typically pay 70–80% of the premium. - Plans are often PPO or HMO. For plan type differences, see our HMO vs PPO vs EPO guide. - The average employee contribution is $115/month for individual coverage and $500/month for family coverage. - Employers must offer coverage to full-time employees at companies with 50+ workers.

Health Savings Accounts (HSAs)

If you have a high-deductible health plan (HDHP), you may contribute to an HSA—a tax-advantaged account for medical expenses. In 2026: - Individual contribution limit: $4,300 - Family contribution limit: $8,550 - Contributions are tax-deductible, growth is tax-free, and withdrawals for medical expenses are tax-free.

HSAs are one of the most powerful tax-advantaged tools in the US. Learn more in our insurance vs. HSA guide.

Navigating the System

The US system rewards those who research their options: 1. If you have employer coverage, compare the plans offered during annual enrollment. 2. If self-employed or without employer coverage, use Healthcare.gov to compare ACA plans and check your subsidy eligibility. 3. If approaching 65, begin researching Medicare options six months before your birthday. 4. If low-income, apply for Medicaid through your state's health department.

For help choosing, see our plan comparison guide.