Affordable Care Act and Cost Sharing Reduction
The Affordable Care Act (ACA) offers two types of subsidies to help reduce insurance premiums and out-of-pocket healthcare costs. The first is Federal Premium Subsidies, which is an advance tax credit that lowers the cost of insurance premiums. The second is Federal Cost-Sharing Reduction (CSR), which lowers a member’s cost of care. While Federal Premium Subsidies are widely understood, there is often confusion around Cost-Sharing Reduction.
What is Cost-Sharing Reduction?
Cost-sharing refers to what you pay for medical services, including copayments (a fixed dollar amount for a service or drug), coinsurance (a percentage for a service or drug), deductible (the amount you pay before your insurance company contributes to your service), and out-of-pocket maximum (the most you will pay for medical bills in a given year).
If your income falls within a certain range, you may qualify for both a subsidy and cost-sharing reduction. Cost-sharing reduction eligibility is determined by your household income, family size, and where you live. These amounts are set by the federal government and change annually. If you qualify for CSR, you’ll benefit from lower copays, coinsurance, deductibles, and out-of-pocket maximums. It’s important to note that cost-sharing reduction is only available through Silver-level plans under the ACA. While Silver plans may have higher premiums than Bronze plans, they can result in significantly lower overall medical costs.
Need Help Reviewing Your Plan?
If you currently have an Affordable Care Act plan and would like a plan review for the coming year, or if you’re interested in exploring plan options in your area, please contact United Benefits via the form below.