Save on Obamacare With This Overlooked Cost-Sharing Subsidy

I saw a study that said a lot of people who qualify for the Obamacare cost-sharing subsidy aren’t taking advantage of it. How do I know if I qualify?

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If your household income is less than 400% of the federal poverty level (for 2015 plans, that’s $46,680 if you’re single or $95,400 for a family of four), you qualify for a government subsidy to help pay your health insurance premiums if you buy coverage through your state’s health insurance exchange. If your household income is less than 250% of the federal poverty level ($29,175 if single or $59,625 for a family of four), you can get an extra break: a cost-sharing subsidy that reduces your deductibles, coinsurance and co-payments when you receive care. You can get the extra cost-sharing subsidy only if you buy a silver-level policy on the exchange; you won’t get the break if you buy a bronze-, gold- or platinum-level policy.

The study you saw, by Avalere Health, discovered that more than 2 million people who bought coverage on the exchanges and are eligible for the cost-sharing subsidy aren’t receiving that extra benefit because they didn’t sign up for a silver policy. They may have chosen a bronze-level policy during open enrollment because the premiums were lower, but if they have even a few medical expenses, they could end up paying less out of pocket by the end of the year by choosing a silver plan with cost sharing.

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You generally can’t switch policies until open enrollment in the fall unless you’ve experienced certain life changes (such as getting married, having a baby, losing other health coverage, moving, or experiencing changes in income that affect your eligibility for a subsidy). See the Special Enrollment Period tool for more information. But the cost-sharing subsidy is important to keep in mind when picking a plan for 2016 during open enrollment, which runs from November 1 through January 31. Don’t just compare premiums; compare your out-of-pocket costs for your typical drugs and medical care, and factor in the value of the cost-sharing subsidy if you qualify for it.

Insurers automatically apply the cost-sharing subsidy if you qualify. They can use the cost-sharing subsidy to reduce the deductible or limit co-payments or coinsurance rates for medical care and prescription drugs. Insurers must limit the maximum amount you can spend out of pocket for the year to $2,250 to $5,200 for individual plans (the limit is based on your income) or $4,500 to $10,400 for family plans. (Without the cost-sharing subsidy, the out-of-pocket maximum for policies sold on the exchanges can be up to $6,600 for individual coverage and $13,200 for family plans.) Compare each plan’s details at your state exchange Web site. You can find links at www.healthcare.gov.