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Reversing course, the White House protects an Obamacare subsidy from sequester cuts

Some people won't have to shake the piggy bank as much for their health care costs. (Flickr/CC)

The Obama administration is shielding from the sequester an Obamacare subsidy program helping low-income people with out-of-pocket insurance costs.

The cost-sharing subsidies differ from the better-known federal subsidies helping people to afford premium payments. These cost-sharing subsidies are only available to people earning less than 250 percent of the federal poverty level (about $29,000 for a single person, or $59,600 for a family of four) who purchase silver-level plans on Obamacare exchanges.

In silver plans, insurers cover about 70 percent of health care costs. The cost-sharing reductions are automatically applied to the plans to help with out-of-pocket costs, so people purchasing them might not even notice they're getting the subsidy.

The cost-sharing subsidies were supposed to be cut by about $290 million in 2014, according to estimates from the Office of Management and Budget. However, the administration says those automatic cuts won't apply to cost-sharing subsidies in 2015, according to a sequester report issued Monday by OMB. However, it wasn’t noticed until yesterday by the Committee for a Responsible Federal Budget.

An administration official confirmed the move last night, writing:

“I can confirm that the payments are not subject to sequester. Why? To improve the efficiency in the administration of these payments for both insurers and the federal government, it was determined that the cost-sharing subsidy payments would be made as advance payments and thus would be paid out of the same account used for the premium tax credit portion of the advance payments.”

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.



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