My last post in the health care reform primer was on tax credits to help individuals and families buy health insurance. Closely related to that is today's topic: Cost-sharing reductions.
Individuals with incomes between 100 and 400 percent of the poverty line for their family size, and who enroll through an exchange in a plan providing the silver coverage level are eligible for reduced cost-sharing. Legal aliens who are ineligible for Medicaid are considered to have household income equal to 100 percent of the poverty line. The federal department of Health and Human Services must notify the plan issuer that the person is eligible. The amount of the cost-sharing reduction varies by income level and works like this:
| Income compared to poverty line is — | Cost-sharing is reduced by — | Plan's share of total allowed cost of benefits cannot exceed —— |
| 101 to 150% | Two-thirds | 90% |
| 151 to 200% | Two-thirds | 80% |
| 201 to 300% | One-half | 70% |
| 301 to 400% | One-third | 70% |
The plan must notify HHS of the reductions. HHS will make "periodic and timely payments" to the plan equal to the value of the reductions.
Additonal notes:
- Cost-sharing reductions do not apply to benefits that are over and above the essential health benefits, other than pediatric dental benefits.
- Individuals of American Indian descent with household incomes of 300 percent of the poverty line or less have no cost-sharing at all. Plans cannot reduce their payments to designated Indian health providers by the amounts of the eliminated cost-sharing.
- Illegal immigrants are ineligible for cost-sharing reductions. For purposes of determining income eligibility, family size does not include household members that are illegal immigrants. The family's household income is calculated by reducing it to reflect the presence of the illegal immigrant.
- The law considers a person to be in the U.S. legally if he is, and "is reasonably expected to be" for the enrollment period for which cost-sharing reduction is claimed, a citizen, national, or alien lawfully present in the U.S.
The next post will be about how the government will determine whether someone is eligible to participate in the exchanges, receive the tax credits and cost-sharing reductions, and claim an exemption from the individual mandate.
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