youtube thumbnail

How to save on out-of-pocket costs with a Silver plan

After you fill out an application with the Health Insurance Marketplace and provide household and income information, you’ll find out if you qualify for a premium tax credit that lowers your monthly health insurance bill.

You’ll also find out if, in addition, your income qualifies you for “cost-sharing reductions.” If it does, you can save money a second way: By paying less out of your own pocket each time you get medical services. This can really reduce your total health care costs for the year.

IMPORTANT If you qualify for these extra savings on out-of-pocket costs, you get them only if you enroll in a plan in the Silver category. You can use a premium tax credit for a plan in any metal category, but you’ll get cost-sharing reductions only if you pick a Silver plan.

  • While a Silver plan may have a monthly premium that’s higher than a Bronze plan’s, be sure to consider the total cost of your medical care. Your total costs include not just monthly premiums but the payments you make when you get care.
  • If you have a Silver plan and qualify for out-of-pocket savings, the deductible is thousands of dollars less than a typical Bronze plan’s. So you may end up spending less on health care overall if you enroll in a Silver plan.

Will you save on out-of-pocket costs?

Use this quick tool to see if your 2016 income estimate falls in the range for cost-sharing reductions.

  • If it does fall in the range, the amount you’ll save on out-of-pocket costs depends on your specific income estimate. The lower your income within the range, the more you’ll save.
  • You’ll find out exactly how much you’ll save only after you apply and shop for Silver plans in the Health Insurance Marketplace.

How out-of-pocket savings work

If you qualify for savings on out-of-pocket costs and enroll in Silver plan:

  • You’ll have a lower deductible. This means the insurance plan starts to pay its share of your medical costs sooner. For example, if a particular Silver plan has a $750 deductible, you have to pay the first $750 of medical care yourself before the insurance company pays anything (other than free preventive services). But if you qualify for cost-sharing reductions your deductible for a Silver plan could be $300 or $500, depending on your income.
  • You’ll have lower copayments or coinsurance. These are the payments you make each time you get care – like $30 for a doctor visit. If a Silver plan’s copayment is $30 for a doctor’s visit, if you enroll in the plan and qualify for cost-sharing reductions you may pay $20 or $15 instead.
  • You’ll have a lower “out-of-pocket maximum.” This means the total amount you’d have to pay in a year if you used a lot of care, like if you got seriously sick or had an accident, will be lower. Instead of $5,000, your out-of-pocket maximum for a particular Silver plan, if you qualify for cost-sharing reductions, could be $3,000.

Important: The above are just examples to illustrate how cost-sharing reductions work. Plans in all categories have a wide range of deductibles, copayments/coinsurance, and out-of-pocket maximums. You'll know exactly how much you save on out-of-pocket costs only when you shop for Silver plans in the Marketplace.

American Indians and Alaska Natives and cost-sharing reductions

Learn about special cost-sharing reduction rules for American Indians and Alaska Natives.

More answers: Savings on out-of-pocket costs

How will I find out if I qualify for savings on out-of-pocket costs?

After you apply for Marketplace coverage, check your Eligibility Determination Notice. If it says “Can choose a health plan with lower copayments, coinsurance, and deductibles” and is followed by (04), (05), or (06), you qualify for income-based savings — but only if you pick a Silver plan.

If I choose a Catastrophic plan will I qualify for savings on out-of-pocket costs?

No. Cost-sharing reductions apply only to Silver plans. (Catastrophic plans are also not eligible for a premium tax credit, no matter what your income is.)