Cost Sharing Reduction Explained

Trump is once again threatening to destroy Obamacare by withholding payments the government is scheduled to make to insurance companies. The payments are called cost sharing reduction payments. In the individual insurance marketplace, cost sharing reduction is known as extra savings. The purpose of extra savings is to help offset the cost of copays, deductibles, and coinsurance (the percentage of expenses not covered by insurance). In order to qualify for extra savings, your income must be between 100 and 250 percent of the federal poverty level. An individual qualifies for extra savings if their income is between $12,060 and $30,150. To get the extra savings, you must sign up for a silver plan.

In 2017, seven million people (about 58 percent of those with insurance from the individual marketplace) qualified for extra savings.

In 2014, the Republican-controlled House sued the Obama administration arguing cost sharing reduction payments are unconstitutional because the funds weren’t appropriated by Congress. A federal judge sided with the House and the Obama administration appealed. After the election, the House asked for a break while Congress tried to reform health care.

It has been estimated that marketplace premiums would rise by 19 percent if cost sharing reduction payments are stopped. Premium increases would be higher in the 19 states that didn’t accept Medicaid expansion, because a large number of marketplace participants in the states without Medicaid expansion earn between 100 and 138 percent of the federal poverty level and would otherwise qualify for Medicaid.

I'd love to hear from you.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: