Cost Sharing Reduction

A Cost Sharing Reduction (CSR) is an ACA subsidy that lowers the deductibles, copays, coinsurance, and out-of-pocket maximum on Silver-tier marketplace plans for enrollees with household incomes between 100 and 250 percent of the federal poverty level. The lower a person's income within that range, the richer the CSR benefit. The subsidy is separate from the premium tax credit — CSR reduces cost-share at the point of care, while the premium tax credit reduces the monthly premium.

The CSR benefit levels are meaningful. A standard Silver plan might have a $5,000 deductible and $9,000 out-of-pocket max; the same plan with a CSR at 150 percent FPL might have a $200 deductible and a $2,500 out-of-pocket max — dramatically better cost protection at the same premium (after the premium tax credit). CSR only applies to Silver plans, which is why brokers and enrollers should always steer CSR-eligible enrollees toward Silver rather than the higher-metal-tier Gold or Platinum. Since 2018, the federal government has stopped directly paying insurers for CSR benefits, but insurers still must provide them — they've responded by loading the cost into Silver premiums (called "silver loading"), which paradoxically makes premium tax credits larger for many enrollees.

The takeaway: if you're helping someone shop the individual marketplace and their income is under 250 percent of poverty, always start with Silver plans. The CSR benefit is often worth thousands of dollars a year in reduced cost-share and doesn't apply on any other metal tier.