Cost Sharing Reduction Subsidies (CSR)

ObamaCare’s Cost Sharing Reduction Subsidies (CSR) lower out-of-pocket costs, based on income, for Silver plans bought on the Health Insurance Marketplace. Along with Premium Tax Credits, ObamaCare’s Cost Sharing Reduction subsidies lower what you pay for out-of-pocket costs like deductibles, copays, and coinsurance, making health insurance coverage more affordable and effective for those enrolled.

Bottomline: Cost sharing Reduction Subsidies (CSR) lower out-of-pocket cost sharing amounts on Health Insurance Marketplace Silver plans for those making between 100% – 250% of the Federal Poverty Level in household income. These pair with Premium Tax Credits which lower premium costs for those making between 100% – 400% of the poverty level.

ADVICE: One of the best deals anyone can get under the Affordable Care Act on health insurance is a high end marketplace Silver plan with cost sharing reduction subsidies applied. This can not only give you a solid network at a low premium (due to tax credits), it can also give you cost sharing amounts in-line with a Gold or Silver plan. Try pairing a high deductible Silver plan with an HSA to lower your Household Modified Adjusted Gross Income for maximum savings!

What Costs Do Cost Sharing Reduction Subsidies Cover?

Cost Sharing Reduction Subsidies lower the amount you have to pay out-of-pocket for deductibles, coinsurance, and copayments. They can also reduce the maximum out-of-pocket costs you are responsible for in a policy period. More specifically, they do this by raising the actuarial value of your health plan.

Typically CSR subsidies only apply to covered benefits, meaning it won’t reduce costs on services your plan doesn’t cover.

What Does Covered Costs Mean?

CSR subsidies only apply to “covered costs” (in-network services covered on your plan). Covered costs usually include only items from ten categories of essential Health Benefits. When you compare plans you’ll see what services are covered in-network and will see the plans out-of-pocket costs reflecting your Cost Reduction Subsidies.

Typically your insurer will only offer to cover part of your costs or count your costs toward your deductible if you use covered in-network services. If you shop out-of-network expect higher costs.

How to Qualify For Cost Reduction Subsidies

To qualify for Cost Sharing Reduction Subsidies you must:

ObamaCare’s Cost Sharing Subsidies are Based on Income

The amount of out-of-pocket assistance you are eligible for is based on income and is offered to those making between 100% to 250% of the Federal Poverty Level (FPL). CSR subsidies do not lower your premium like Advanced Premium Tax Credits, as they apply only to cost sharing amounts.

How Much Do CSR Subsidies Reduce My Costs

CSR subsidies reduce your out-of-pocket expenses by raising the actuarial value of your plan (the average out-of-pocket costs an insurer pays on a plan). Specifically, they lower coinsurance, and lower copays, deductibles, and maximum out-of-pocket costs you will pay in a policy period through subsidization. This means that some folks will not only qualify for lower premiums on a Silver plan via tax credits, but may also get the out-of-pocket costs similar to a Gold or Platinum plan.

There are three levels of CSR subsidies: CSR 73, CSR 87, and CSR 94. The numbers refer to the actuarial value (AV). Benefits sheets will include different summaries for different CSR levels.

Income Level Actuarial Value (the amount of costs a Silver plan will cover due to cost sharing reduction subsidies for % of the Poverty Level).

100-150% FPL = 94% Actuarial Value (CSR 94)

150-200% FPL = 87% Actuarial Value (CSR 87)

200-250% FPL = 73% Actuarial Value (CSR 73)

More than 250% FPL = 70% Actuarial Value

An Example of Out-of-pocket maximum limits (equal to deductible limits):

The below example uses 2015 numbers, for 2017 limits for over 250% are $7,150 for an individual and $14,300 for a family and the same methodology (as described above) applies. CSR assistance is automatically calculated on plans when you buy them. Keep in mind not every plan uses the same deductible or out-of-pocket limit, but all have maximum limits that change each year.