Covered California and ACA related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the ACA and Covered California knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.

What is Cost-Sharing Reduction for?

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Question: What is cost sharing reduction for?

Answer: The reason for the cost-sharing reductions is to make the overall cost of health care coverage more affordable for low and moderate income individuals and families. In addition to premiums, private health insurance has other costs referred to as “out-of-pocket expenses”. These expenses include deductibles, copays, and coinsurance for covered medical expenses. Policies include an annual limit on these costs called the annual out-of-pocket maximum or sometimes it’s called the annual copay maximum. Covered California will require health plan issuers to reduce out-of-pocket cost-sharing for individuals in families with incomes between 100% and 250% of FPL who purchase silver level coverage through the Exchange. The cost-sharing reductions will lower the maximum out-of-pocket limits and then reduce other cost-sharing components, such as deductibles, copays, and coinsurance. Reductions in cost-sharing also increase the actuarial value of the silver plan coverage for those affected. The federal government will pay for the value of the cost sharing reductions to the health plan issuing the coverage to the individual whose cost sharing was reduced.

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