The Affordable Care Act (ACA) set out to make healthcare more affordable. It had various effects on Medicare, such as improving coverage and eliminating the drug coverage gap (also called the donut hole).
More than 68 million people in the United States are enrolled in Medicare, according to the Centers for Medicare & Medicaid Services.
The main goal of the Affordable Care Act (ACA) has been to provide affordable healthcare to everyone in the United States. To that end, the ACA made various changes and improvements to the Medicare program.
In 2010, President Barack Obama signed the ACA (also known as Obamacare) into law. This law marked an overhaul of the U.S. healthcare system. Before the ACA, many people were uninsured as a result of exclusions based on preexisting conditions, a lack of affordability, high out-of-pocket costs, and coverage limits.
The ACA affects nearly every aspect of the U.S. healthcare system, including:
- state governments
- employers
- consumers
- taxpayers
- providers
- insurers
Read about the pros and cons of Obamacare.
The ACA has various provisions that are designed to strengthen and improve Medicare. The ACA aims to sustain Medicare for years to come by:
- eliminating fraud, waste, and inefficiency through methods such as:
- bundling payments for services
- detecting, preventing, and fighting fraud
- providing incentives to transition to Electronic Health Records
- reducing annual payment increases to hospitals, nursing homes, and insurance companies
The ACA also aims to improve coverage in various ways, including:
- eliminating the prescription drug coverage gap (also called the donut hole)
- providing a free annual medical exam
- eliminating coinsurance for preventive services
Eliminating the donut hole
Previously, when a person with Medicare Part D coverage reached a certain amount of out-of-pocket costs, they would enter the coverage gap, or donut hole. While in the donut hole, they were responsible for 100% of the costs of their prescription drugs until they reached the set limit and entered catastrophic coverage.
As of 2025, the donut hole has been replaced with an out-of-pocket spending cap. When someone with Part D reaches $2,000 of out-of-pocket expenses, they automatically enter catastrophic coverage. This means they pay nothing for their prescriptions for the rest of the year.
Free medical exam
Another change the ACA made to Medicare involved providing each enrollee with an annual wellness visit. During this visit, people can update or develop a personalized plan to help prevent disability or disease based on their current health or risk factors.
During the first year a person has Medicare Part B, they can have a free “Welcome to Medicare” preventive visit. They can then use the annual wellness visit each year.
Eliminating coinsurance for preventive services
The ACA aims to encourage prevention by making it less expensive for people to stay healthy. As part of that goal, the ACA eliminated the coinsurance (the percentage of treatment a person must self-fund) for preventive services such as:
- tobacco use cessation counseling
- screenings, such as:
- cervical cancer screening
- bone mass measurement
- cardiovascular screenings, including cholesterol
- diabetes screening
- mammograms
- prostate cancer screening, not including digital rectal exams
Preventive services also include shots and vaccines such as those for:
Read about what Medicare covers.
Medicare eligibility
To be eligible for Medicare, you must meet the following requirements:
- be 65 years old or older or have certain disabilities or medical conditions, such as end stage renal disease or amyotrophic lateral sclerosis
- be a United States citizen or a legal resident of the United States
If you do not have Medicare, are not eligible for Medicare, and do not have health coverage through another means, the Healthcare Marketplace can help you find insurance coverage that fits your budget and needs.
You are eligible to enroll in coverage through the Marketplace if you:
- live in the United States
- are a U.S. citizen or national or a lawfully present noncitizen
- are not incarcerated
You can’t buy a Marketplace plan if you already have Medicare. It may be possible for you to choose a Marketplace plan instead of Medicare, but generally, this is not the case.
The ACA made various changes and improvements to the Medicare system. For example, it eliminated the prescription drug donut hole, provided free annual wellness exams, and eliminated coinsurance on preventive services.
If you’re not eligible for Medicare, the Health Insurance Marketplace can help you find health coverage that meets your needs and budget.