Definition of 'Cost-Sharing Reductions'
A type of federal subsidy distributed as discounts that help reduce out-of-pocket costs for health-care expenses, including:
Investopedia explains 'Cost-Sharing Reductions'
To qualify for Cost-Sharing Reductions, you must be ineligible for public coverage (Medicaid and Children’s Health Insurance Plan - CHIP), be unable to get qualified health insurance through an employer, and have a modified adjusted gross income that falls between 100% and 250% of the federal poverty level (FPL), as shown in the following table (as of 2014):
As an example, assume you visit the doctor and are charged $100 for the visit. With your particular Silver plan, you have a $25 copayment. Because of the Cost-Sharing Reduction that you qualify for, you might only have to pay a $5 copayment. Likewise, if your plan normally has a $3,500 deductible, it may be reduced to only $500 because of Cost Sharing Reductions.
To qualify for Cost-Sharing Reductions (and/or the Advanced Premium Tax Credit, the second federal subsidy designed to help lower costs for health insurance coverage), you must purchase a Silver level plan through the Health Insurance Marketplace.