What is Cost-Sharing Reductions

Cost sharing reductions are a type of federal subsidy distributed as discounts that help reduce out-of-pocket costs for health-care expenses, including:

  • Deductibles – the amount you owe for covered services before insurance kicks in;
  • Copayments – a fixed amount you pay for covered health-care services; and
  • Coinsurance – your share of the costs of covered health-care services.

The cost-sharing reduction subsidy was a provision in the Patient Protection and Affordable Care Act, signed into law on March 23, 2010 by President Barack Obama.

BREAKING DOWN Cost-Sharing Reductions

To qualify for cost-sharing reductions under Obama's Patient Protection and Affordable Care Act, applicants must have been ineligible for public coverage (Medicaid and Children’s Health Insurance Plan, or CHIP), unable to get qualified health insurance through an employer and have a modified adjusted gross income that falls between 100 percent and 250 percent of the federal poverty level (FPL), as shown in the following table (as of 2014):


Family Size



100% FPL



250% FPL



1



$11,490



$28,725



2



$15,510



$38,775



3



$19,530



$48,825



4



$23,550



$58,875



5



$27,570



$68,925



6



$31,590



$78,975



7



$35,610



$89,025



8



$39,630



$99,075


Legal Challenges to ACA Cost-Sharing Reductions

House v. Price, was pending at the time of President Donald Trump's decision to end the payments.