The Health Insurance Marketplace (www.healthcare.gov), also called exchanges, is the source for people to buy health coverage with a subsidy that can be used to reduce monthly premium. In addition to the subsidy, known as the Advance Premium Tax Credit (APTC), In addition to the APTC, is Cost-Sharing Reduction (CSR), which is an additional form of financial assistance available to Marketplace enrollees. This additional financial assistance reduces a person or family’s out-of-pocket cost such as deductibles, copayments, and coinsurance when they use healthcare services. Unlike the APTC, which can be applied toward any metal level of coverage, cost-sharing subsidies can only be applied toward a Silver plan.
The availability of subsidies make insurance more affordable and increase insurance coverage, which as a key goal of the Affordable Care Act (ACA). Cost-sharing subsidies, which represent a substantial share of the federal cost of the ACA, provide assistance for low to moderate income families, enabling them to purchase coverage and gain better access to care.
The CSR is available to individuals and families with household incomes between 100% to 250% of the Federal Poverty Line (FPL) and who purchases a Silver plan through the Health Insurance Marketplace. People eligible for cost-sharing reductions who enroll in a Silver plan will automatically receive a plan with reductions of out-of-pocket expenses in plan benefits such as deductible, out-of-pocket maximum or copayments. CSR are not provided as a APTC but are available as part of the plan design. CSR does not have to be “reconciled” when the insured files taxes for the year they received the CSR.
The federal government reimburses each health insurer for the estimated costs of reducing the out-of-pocket costs that would otherwise be charged under their standard Silver plans for those eligible for the CSR. The federal government will reconcile the CSR payments to the costs the insurer actually incurred by the carrier to provide cost-sharing reductions, and make adjustments needed to account for any under or overpayments.
In combination, the APTC and CSR result in an increase in the plan’s actuarial value and establishes a reduction in expenses such as deductible, maximum out-of-pocket or copays as compared to plans for individuals who do not qualify for CSR. The increase in the actuarial value produced by the CSR can result in a Silver plan, in many cases that are equal to or greater in benefits to a Gold plan. Typically, Silver plans have an actuarial value of 70%, meaning that on average the plan pays 70% of the cost of covered benefits, with the remaining 30% of total costs being covered by the insured in the form of deductibles, copayments, and coinsurance. By lowering an individual or family’s out-of-pocket costs, the cost-sharing subsidies increase the actuarial value of the Silver plan.
The ACA sets maximum out-of-pocket (OOP) spending limits, but otherwise does not specify the combination of deductibles, copayments, and coinsurance that plans must use to meet the actuarial value requirements. For example, one insurer may choose to have a relatively high deductible but low copayments for office visits and other services, while another carrier may choose a lower deductible but higher copayments or coinsurance for each service. Regardless of the difference in plan design, both carriers could have plans assigned to the same metallic level.
Without the CSR, the out-of-pocket maximum may be no more than $8,550 for an individual and $17,100 for two or more people in 2021. With the cost-sharing reduction, the out-of-pocket maximum can be no higher than $2,700 to $6,500 for an individual, or $5,400 to $13,000 for a family in 2021, depending on income.
When enrolling in a Silver plan eligible for CSR, the plan will clearly state CSR designation and the reduction in out-of-pocket expenses will be identified. This means that the Silver plan they choose will already reflect the lowered out-of-pocket expense as compared to a Silver plan without CSR
A change in circumstances during the year may result in a change in eligibility for CSR but the plan components such as deductible, maximum out-of-pocket and office visit copays do not change
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
Stateside can be contacted either by phone (866) 444-3332 (toll free) or by email at firstname.lastname@example.org. Our Telephone Appointment System can be accessed through:
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.