How Cost Sharing Subsidies Can Make Using Health Insurance More Affordable

Ross Quade | Insurance | 29 May, 2014 | No Comments

There is no point of having a health insurance policy if you are unable to afford to put it to use because you are unable to afford the co-pays, coinsurance or deductibles of your plan. However, the good news is that if you have a low income but have to pay a large deductible then you may be able to use cost sharing subsidies in order to help you afford your health insurance.  This cost-sharing health insurance subsidy was designed by Obama’s Affordable Care Act to ensure that your health insurance can be used. This subsidy is not the same as the subsidies provided that lowers your monthly health insurance premium but essentially lowers the cost that is associated with your health insurance such as coinsurance, co- pays and deductibles. In an article written by Inc.com, the goal of cost sharing is clearly stated—to expand the health care coverage to those who are uninsured and to lower the ever-rising cost of health care.

How Does the Cost-Sharing Subsidy Work?

The cost-sharing subsidy works to lower the cost of health insurance, however it doesn’t actually affect the price of the actual health insurance. Instead, the cost-sharing subsidy is like getting a no-cost upgrade on the health insurance that you already have. Many health insurance plans don’t actually pay a substantial amount towards the cost of medical care; instead they force customers to pay unaffordable high copayments, coinsurance and deductibles. Due to the fact that the cost-sharing subsidy significantly lowers these types of payments, you pay less of your health care costs, and so in effect you are essentially receiving a higher amount of coverage while paying a lower cost.

The Two Parts of Cost-Sharing Health Insurance Subsidy

There are two components of the cost-sharing health insurance subsidy. The first part lowers the maximum for your health insurance’s out-of-pocket costs. The second part lowers the cost-sharing part of your insurance such as the co-pays, deductibles and coinsurance. The out-of-pocket maximum is the maximum amount of money that you will have to pay in extra costs every year before your health insurance coverage begins to pay all of your health care costs.

Are You Eligible for This Subsidy?

Due to the fact that this subsidy is specifically designed to help those who have a low income use their pre-existing health insurance, the eligibility of this subsidy depends mostly on your income level. If your income is less than 250% of the poverty level set by the federal government then you will be able to benefit from this subsidy. On top of the income requirements, you will also need to legally reside in the US in order to gain access to the cost-sharing subsidy. Keep in mind that if you are married then you must also file your income taxes under the status of married and filing jointly.

Cost-Sharing Subsidy and the Affordable Care Act

It is also important to note that this subsidy is only for those who take advantage of the Affordable Care Act health insurance exchange. Additionally, it is only available to those who have purchased a silver health plan, and so if you purchased a bronze, platinum, or gold health insurance plans, you will not be able to use the cost-sharing subsidy. This is true even if you meet all of the other requirements for eligibility.

Cost-Sharing Subsidy and the Premium Health Insurance Subsidy

It is important to know that if you meet all of the eligibility requirements for the cost-sharing subsidy then you will most likely also be eligible to receive the premium health insurance subsidy. This subsidy will lower your monthly health insurance expenses. You can receive both these subsidies from your state’s health insurance exchange.




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