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](https://www.healthcare.gov/glossary/cost-sharing-reduction/#:~:text=If you're a member of a federally recognized tribe or an Alaska Native Claims Settlement Act (ANCSA) Corporation shareholder%2C you may qualify for additional cost-sharing reductions.).

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:

  1. 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.
  2. 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:

Explaining Health Care Reform: Questions About Health Insurance Subsidies | KFF

Health Insurance Premium Tax Credit and Cost-Sharing Reductions | Congressional Research Service

Last Revised April 28th, 2022