Income inequality estimates based on traditional poverty measures do not capture the effects of health care spending and health insurance. To explore the distributional effects of the Affordable Care Act's (ACA's) expansion of health benefits and the resulting income inequality, this study used alternative income measures that incorporate the value of the ACA's health insurance changes under the law. The study simulated the impact of the ACA on income inequality in 2019 compared with a scenario without the ACA. We found that the ACA reduced income inequality and that the decrease was much larger in states that expanded Medicaid than in states that did not. We also decomposed the effect of the ACA on inequality by race/ethnicity, age, and family educational attainment. The ACA reduced inequality both across groups and within these groups. With efforts to repeal the ACA-specifically, California v. Texas-having shifted from Congress to the courts, it remains important to consider the consequences of fully repealing the ACA, which would likely reverse reduced inequality observed under the law.