What Is a Cost-Sharing Reduction (CSR)?

A Cost-Sharing Reduction (CSR) is a federal benefit that lowers out-of-pocket healthcare costs for eligible people enrolled in certain Health Insurance Marketplace® plans. Unlike a Premium Tax Credit, which reduces your monthly premium, a Cost-Sharing Reduction decreases the amount you may pay for deductibles, copayments, coinsurance, and your annual out-of-pocket maximum.

What is a Cost-Sharing Reduction?

A Cost-Sharing Reduction (CSR) is financial assistance available through the Affordable Care Act (ACA) that makes healthcare more affordable after you enroll in health insurance.

Instead of lowering your monthly premium, a CSR reduces the amount you pay when you receive covered medical care.

Depending on your eligibility, a Cost-Sharing Reduction may lower:

• Your deductible
• Your copayments
• Your coinsurance
• Your annual out-of-pocket maximum

These savings are built directly into your health insurance plan.

How does a Cost-Sharing Reduction work?

When you apply for Marketplace coverage, the Marketplace reviews your eligibility for financial assistance.

If you qualify for a Cost-Sharing Reduction and enroll in an eligible plan, your insurance plan automatically includes enhanced cost-sharing benefits.

You do not receive money directly.

Instead, your plan is designed so that you generally pay less when you receive covered healthcare services than someone enrolled in the same type of plan without a Cost-Sharing Reduction.

Who qualifies for a Cost-Sharing Reduction?

Eligibility is determined under federal law and generally depends on:

• Household income
• Household size
• Enrollment through the Health Insurance Marketplace®
• Eligibility for other qualifying health coverage

Importantly, Cost-Sharing Reductions are available only if you enroll in an eligible Silver Marketplace plan.

If you choose a Bronze, Gold, or Platinum Marketplace plan, you generally cannot receive Cost-Sharing Reductions, even if you otherwise meet the income requirements.

What costs can a CSR reduce?

Depending on your eligibility, a Cost-Sharing Reduction may lower:

• Deductibles
• Copayments
• Coinsurance
• Annual out-of-pocket limits

The exact amount of savings depends on the Marketplace plan and your eligibility under current federal rules.

Cost-Sharing Reduction vs. Premium Tax Credit

These programs are often confused because both help reduce healthcare costs.

Cost-Sharing Reduction (CSR)

• Reduces out-of-pocket medical expenses.
• Applies when you receive healthcare.
• Available only with eligible Silver Marketplace plans.

Premium Tax Credit (PTC)

• Reduces your monthly health insurance premium.
• Applies before you receive healthcare.
• Available for eligible Marketplace plans regardless of metal level, subject to federal eligibility rules.

Many Marketplace enrollees qualify for both programs.

Cost-Sharing Reduction vs. deductible

A Cost-Sharing Reduction is not a deductible.

A deductible is the amount you generally pay before your health insurance begins sharing many healthcare costs.

A Cost-Sharing Reduction lowers that deductible for eligible Marketplace enrollees, making it easier to access covered healthcare before significant out-of-pocket costs accumulate.

Why this matters

Many people compare Marketplace plans based only on monthly premiums. However, deductibles, copayments, and coinsurance can have an even greater impact on the total cost of healthcare during the year.

If you're eligible, enrolling in a Silver Marketplace plan with a Cost-Sharing Reduction may substantially reduce your out-of-pocket expenses when you need medical care.