Blog: Many forgo ACA's cost-sharing subsidies

More than 2 million Americans are missing out on reduced deductibles, copayments and coinsurance rates because they aren't choosing the right exchange plan, according to a study from Avalere Health.

The Affordable Care Act is most known for premium subsidies, the income-based tax credits that survived the U.S. Supreme Court and reduce the monthly price of health insurance for millions of people. But the law also provides cost-sharing reductions, which help enrollees afford the cost of care at the time of service.

People who make between 100% and 400% of the federal poverty level are eligible for premium subsidies, but the cost-sharing subsidies have tighter parameters. They are only available for people who earn between 100% and 250% of the poverty level, and they have to buy a silver-level plan on the exchanges to qualify. Enrollees with bronze or catastrophic plans are out of luck, even if they qualify based on their income.

Consequently, 2.2 million people with exchange plans are paying more in copays and other out-of-pocket expenses than they otherwise would, according to Avalere. That's more than a quarter of the 8.1 million Americans who are estimated to be eligible for cost-sharing reductions this year. Many people are enrolling in bronze plans due to their low premiums, but they are paying more out of pocket when they go to their doctor or hospital.

The cost-sharing reductions also haven't been advertised nearly as well as the premium tax credits, and many people therefore might have no idea the subsidies exist, Avalere said.

House Republicans are fully aware of their existence. A lawsuit against President Barack Obama contends the administration is illegally spending $175 billion in cost-sharing subsidies to insurers over the next decade because Congress never appropriated the funds.