Cost-sharing reduction (CSR) is a discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. These discounts were part of a provision of the Affordable Care Act, which was signed into law in 2010. In the Health Insurance Marketplace®, cost-sharing reductions are often called “extra savings.”
CSRs are available to eligible enrollees who select Silver plans in the marketplace and have household incomes up to 250% of the federal poverty level (FPL). The lower income threshold for CSR is 100% of the poverty level in states that have not expanded Medicaid, and above 138% of FPL in states that have expanded Medicaid. The federal government used to directly reimburse health insurance companies for the cost of cost-sharing reductions. That ended in the fall of 2017, but cost-sharing subsidies have continued to be available to eligible enrollees. To cover the cost, most insurers simply add the cost of CSR to Silver plan premiums. This approach, known as “Silver loading,” results in larger premium subsidies for everyone in the area, as premium subsidy amounts are based on the cost of the second-lowest-priced Silver plan in each area.
If you qualify for extra savings, you must enroll in a plan in the Silver category to get them. Moreover, if you qualify for cost-sharing reductions, you also have a lower out-of-pocket maximum — the total amount you’d have to pay for covered medical services per year. When you reach your out-of-pocket maximum, your health insurance plan covers 100% of all covered services.
CSRs are not available for those enrolled in Bronze, Gold, or Platinum plans. For example, if a member would normally have a $1,000 deductible under a Silver plan, the cost-sharing reductions may lower it to $500 or even $0, depending on their income level. One important feature of CSRs is the maximum out-of-pocket (MOOP) limit. The MOOP limit sets a cap on the total amount individuals and families must pay for covered healthcare services in a year. Once the MOOP limit is reached, the insurer covers 100% of the remaining costs for covered services. Each metal tier corresponds to a different level of cost-sharing between the member and insurer.
