Cost Sharing Reduction (CSR): What It Means and Who's Eligible?
Cost-sharing reductions (CSRs) are discounts on medical bills if you earn less than $36,450 as a single person or $75,000 as a family of four.
Part of the Affordable Care Act (ACA), also known as Obamacare, CSRs help you pay less for your deductible, copays and coinsurance. This can make medical care much more affordable. But you can only get cost sharing reductions with a Silver plan bought through HealthCare.gov or your state's marketplace.
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What are cost sharing reductions (CSRs)?
Cost sharing reductions lower your medical costs when you have a Silver health insurance plan and a low income.
That means you'll pay less when you go to the doctor, pick up a prescription or have surgery.
CSR's are a popular program. About two-thirds of people who use the health insurance marketplace are eligible. However, some people may not even realize they're getting the savings because the CSRs are automatically applied to plans when you qualify.
Who qualifies for cost sharing reductions?
You can qualify for a cost-sharing reduction if you make up to $36,450 as a single person or $75,000 for a family of four.
Income limits for cost sharing reductions in 2024
Household size | Yearly income eligibility |
|---|---|
| 1 | $14,580 - $36,450 |
| 2 | $19,720 - $49,300 |
| 3 | $24,860 - $62,150 |
| 4 | $30,000 - $75,000 |
100% to 250% of the federal poverty level (FPL)
You'll also need to get a Silver health insurance plan on HealthCare.gov or your your state exchange to get cost-sharing reductions.
It doesn't matter what health insurance company you choose. But the extra savings of CSRs are only available with Silver coverage plans. This is different from premium tax credits that lower the monthly cost of a plan. Tax credits can be used with Bronze, Silver, Gold or Platinum plans.
Cost sharing reductions versus premium tax credits
Cost sharing reductions are one of the two types of health insurance subsidies you can get. The other is premium tax credits.
Where you save | Income (indiv.) | |
|---|---|---|
| Cost sharing reductions | Medical costs | $14,580 - $36,450 |
| Premium tax credits | Monthly cost of insurance | $14,580 - $58,320 |
You can get both types of health insurance discounts if you're eligible for both. If you make too much to qualify for cost sharing reductions, you can still get tax credits.
With both types of subsidies, the lower your income, the more you'll save. If your income is too low to qualify, you'll usually be eligible for Medicaid.
How cost sharing reductions make plans cheaper
CSRs make health insurance more affordable by lowering your out-of-pocket medical costs. This means your health insurance plan will have a lower deductible, copay, coinsurance and maximum out-of-pocket limit.
- Deductible: Medical costs you pay before your full benefits begin.
- Copays and coinsurance: Your portion of medical costs when the bill is split with insurance.
- Out-of-pocket max: The most you will pay for health care in a year.
This can make day-to-day medical expenses more affordable. For example, a typical doctor appointment could cost $10 instead of $50, because the plan has lower copays.
You'd also have a much lower deductible to meet, before the plan's full benefits kick in. This could reduce your upfront medical costs from a few thousand dollars to a few hundred dollars. For example, if you earned $25,00 per year, your deductible would be an average of $737 per year, after the cost sharing reduction. That's much lower than a regular Silver plan which has an average deductible of $5,421.
Cost sharing reduction savings in 2024
Individual
Family of four
Income | What you pay for medical care | Avg. deductible |
|---|---|---|
| $14,580 - $21,870 | 6% | $90 |
| $21,870 - $29,160 | 13% | $737 |
| $29,160 - $36,450 | 27% | $4,527 |
| Silver plan, no CSR | 30% | $5,241 |
Individual
Income | What you pay for medical care | Avg. deductible |
|---|---|---|
| $14,580 - $21,870 | 6% | $90 |
| $21,870 - $29,160 | 13% | $737 |
| $29,160 - $36,450 | 27% | $4,527 |
| Silver plan, no CSR | 30% | $5,241 |
Family of four
Income | What you pay for medical care |
|---|---|
| $30,000 - $45,000 | 6% |
| $45,000 - $60,000 | 13% |
| $60,000 - $75,000 | 27% |
| Silver plan, no CSR | 30% |
With a normal Silver health insurance plan, you pay around 30% of your medical costs overall and your insurance company picks up the other 70% of the bill. If you qualify for the highest CSR discount, you'd pay about 6% of your medical costs while the insurance company pays for about 94% of your costs.
The cost split between you and your insurance plan is based on a plan's coverage across all medical services. This is called the actuarial value. So a plan with an 87% actuarial value means that you'll pay 13% of your medical costs, on average.
Maximum out-of-pocket costs in 2024
Cost sharing reductions also give you a better limit on your medical costs for the year. So if you need surgery or other expensive medical care, you'll have to spend less money.
Individual
Family of four
Income | Most you'd pay for medical care |
|---|---|
| $14,580 - $29,160 | $3,150 |
| $29,160 - $36,450 | $7,550 |
| Income higher than $36,450 per year | $9,450 |
Individual
Income | Most you'd pay for medical care |
|---|---|
| $14,580 - $29,160 | $3,150 |
| $29,160 - $36,450 | $7,550 |
| Income higher than $36,450 per year | $9,450 |
Family of four
Income | Most you'd pay for medical care |
|---|---|
| $30,000 - $60,000 | $6,300 |
| $60,000 - $75,000 | $15,100 |
| Income higher than $75,000 per year | $18,900 |
After you reach your plan's limit, called the out-of-pocket maximum, you won't have to pay anything for medical care. The insurance company will pay all of your medical bills for the rest of the year.
You may find that some plans have an even lower out-of-pocket maximum. These limits are the highest maximum out-of-pocket that's allowed.
Signing up for cost-sharing reductions
Native American and Alaska Natives cost-sharing reductions
Members of federally recognized Indian tribes and Alaska Natives can get free medical care through cost sharing reductions.
- You won't pay for any medical care if you make between $14,580 and $43,740 as an individual. That's $30,000 to $90,000 for a family of four. The cost sharing reductions will cover all copayments, coinsurance, and deductibles.
- No matter what your income is, you won't pay anything if you get medical care through a doctor who works with the Indian Health Service (IHS)
Frequently asked questions
What is a cost-sharing reduction?
A cost sharing reduction (CSR) lowers how much you'll have to spend on medical care, such as your insurance deductible, copay, coinsurance and out-of-pocket maximum. You'll qualify if you earn less than two and a half times the poverty level and buy health insurance through a state health exchange or on Healthcare.gov.
What does a 73% cost-sharing reduction mean?
A 73% cost sharing reduction means that your insurance company will pay an average of 73% of your health care costs while you'll pay the remaining 27%. This is a better deal than a regular Silver plan where you'll pay 30% of your medical costs. The percentage that the insurance company pays is called an actuarial value.
How are cost-sharing reductions calculated?
Cost sharing reductions are calculated based on your income. If you have a lower income, you'll qualify for a larger discount on your medical expenses.
Sources and methodology
- Maximum out of pocket and cost sharing rates are from 2024 Congressional Report about Health Insurance Cost-Sharing Reductions
- Federal poverty level guidelines and income limits are from Healthcare.gov.
- Information about average deductibles and the income distribution of those shopping on the marketplace is from KFF.
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