Cost-sharing reductions (CSRs) are a type of subsidy that reduces the amount you pay when you go to the doctor or hospital. Eligibility is based on having an annual household at or lower than 250% of the Federal Poverty Level. CSRs may lower your coinsurance, copayments, deductibles, and out-of-pocket maximum. On the federal Marketplace, CSRs are called “extra savings”, and you are automatically eligible if you fall within a certain income threshold. Additionally, if you identify as an American Indian or Alaskan Native, you may be eligible for additional savings.
With CSRs, the insurance plan “shares the cost” of what you pay. For example, if you qualify for a CSR, your $1,000 deductible may be lowered to $500, meaning you’ll need to pay half of the normal deductible before your insurance plan starts to pay for services. Unlike Premium Tax Credits, which apply to any metal-tiered plan, CSRs are only available with Silver plans and the savings do not have to be reconciled when you file taxes since it is not considered a tax credit.
There are two types of CSRs and individuals may qualify for both:
- Subsidies that reduce annual out-of-pocket costs. This type of CSR aims to benefit individuals and families with high out-of-pocket healthcare costs in a year.
- Subsidies that reduce cost-sharing requirements, which are your everyday costs such as deductibles and copayments. This type of CSR benefits individuals and families with ongoing healthcare costs in a year.
Health insurance coverage is made more affordable and accessible through subsidies. You may qualify for both PTCs and CSRs if your annual household meets the income requirements.
Learn More:
Health Insurance Premium Tax Credit and Cost-Sharing Reductions | Congressional Research Service
Last Revised April 28th, 2022
