Summary - Cost Saving Reductions (CSRs) are discounts that reduce the amount you pay out of pocket for deductibles, copay, and coinsurance. They are only available for plans in the silver metal tier. Catch can make sure you get these and other subsidies to lower your healthcare premiums.
The government has set billions of dollars aside to subsidize the cost of healthcare for those who buy their own insurance. One of these subsidies is called Cost Saving Reductions (CSRs), which lower your out of pocket healthcare costs. Examples of these costs are deductibles, copayments, or coinsurance.
A quick refresher on those terms:
Deductible: the amount you must pay in covered healthcare before your insurance begins to pay
Copayments: the flat fee you pay every time you get care like going to the doctor or filling a prescription, often around $30, also known as copay
- Coinsurance: the percentage of costs you pay after having exceeded your deductible
Not every plan includes all three of the above costs, but most include at least one. CSR benefits can help reduce the amount you pay for each.
If you’ve explored healthcare.gov, then you may also see CSRs referred to as “extra savings.” The savings you might get from a CSR benefit are different than those you might get from other subsidies like premium tax credits. Unlike CSRs, premium tax credits lower the cost of your monthly health insurance payment. Premium tax credits are also available for all types of marketplace plans.
CSRs, on the other hand, are only available for those enrolled in a silver tier plan. (See this overview of metal tier plans). Silver plans fall on the lower-cost side of the spectrum for monthly premiums, but they provide more coverage than Bronze and catastrophic plans, which offer lower premiums but higher costs for care.
You might ask yourself whether it’s worth applying for a silver plan in order to qualify for CSRs? While there’s no answer that applies to everyone, two factors you can consider in the decision are (1) income and (2) expected healthcare needs.
If your income is under 250% of the Federal Poverty Level and you expect to have a fair amount of medical needs (access to prescriptions, doctor appointments, ongoing care), then a silver plan could be a great choice, and you’d likely qualify for CSRs. If you’re healthy and don’t expect much medical care, then a bronze plan might be ideal, because it would be less expensive overall, even though you wouldn’t receive CSRs.
In short, silver plans offer slightly more coverage than bronze plans, but they also generally cost more. CSRs help offset that higher price for silver coverage. If you expect regular medical needs, a silver plan with CSRs can offer you the best coverage at the best price.
It’s a popular option. In 2021, almost half of marketplace enrollees received CSRs, which amounted to over 5.4 million people.
One more difference between premium tax credits and CSRs is that if you happen to underestimate your income and actually earn over 250% of the Federal Poverty Level, then you won’t have to pay back the CSR benefit on your tax return. Of course, that’s not a reason to provide inaccurate estimates. There are other consequences to underestimating income, such as larger tax bills at the end of the year and potentially having to pay back premium tax credits.
If your income changes during the course of the year, that can also change your eligibility for CSRs. If you lose your job or find yourself making less than you anticipated, it’s possible that you qualify for new or increased CSR benefits.