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  5. Video: What is the Affordable Care Act Cost-Sharing Subsidy (Obamacare)?

Video: What is the Affordable Care Act Cost-Sharing Subsidy (Obamacare)?

Updated for Tax Year 2022 • December 1, 2022 09:01 AM


OVERVIEW

The Affordable Care Act cost-sharing subsidy is designed to lower you out-of-pocket health care costs when you purchase health insurance from the Marketplace. Learn who qualifies for the Affordable Care Act cost-sharing subsidy, how to claim it, and how it's different from the Premium Tax Credit.


TABLE OF CONTENTS

Video transcript:

The Affordable Care Act provides a cost-sharing subsidy designed to lower your out-of-pocket health care costs. You may qualify for a cost-sharing subsidy if:

  • You're lawfully present in the U.S.
  • You aren't able to get employer or government sponsored insurance
  • And you meet certain household income requirements

Although the health insurance marketplace offers a variety of plans, cost-sharing subsidies only apply to Silver Plans from the Marketplace.

When you apply for health care coverage through the Marketplace, your cost-sharing subsidy will be calculated based on your income and family size. In general, the lower your household income, the higher your subsidy.

The subsidy lowers the amount you're expected to pay for out-of-pocket health care costs. For example, a typical Silver Plan might cover 70% of your health care costs, while you're expected to pay the other 30%, out of pocket. With a cost-sharing subsidy, the amount you're expected to pay is lowered, while the subsidy covers the difference.

That means lower costs for things like:

  • Co-payments
  • Deductibles
  • Co-insurance
  • Prescription drugs

The cost-sharing subsidy is not the same as the Premium Tax Credit.

  • The subsidy lowers the amount you're expected to pay for out-of-pocket health care costs.
  • The Premium Tax Credit can lower your monthly heath insurance premiums.
  • However, if you qualify for a cost-sharing subsidy, you may be able to claim the Premium Tax Credit, as well.

Affordable Care Act Cost Sharing Subsidy

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