Save on Obamacare With This Overlooked Cost-Sharing Subsidy

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Q. 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?

A. If your household income is less than 400 percent 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 percent 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.

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 Jan. 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 website. You can find links at
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