What does "cost-sharing reduction" refer to in the context of health insurance?

Cost-sharing reduction refers specifically to financial benefits designed to lower out-of-pocket expenses for individuals who qualify based on their income. These reductions help make healthcare more accessible by decreasing the amount that individuals need to spend on deductibles, copayments, and coinsurance when they access medical services. This support is particularly targeted at those who purchase insurance through the Health Insurance Marketplace and have incomes that fall within certain federal guidelines, ensuring that coverage is more affordable for low-to-moderate income individuals.

The other options do not accurately describe cost-sharing reductions. Full coverage of medical expenses does not apply, as cost-sharing reductions only lower individual payments rather than eliminating all costs. Fixed monthly payments relate to premiums rather than out-of-pocket expenses, and increased costs for higher tier plans imply the opposite of what cost-sharing reduction aims to achieve. Thus, the concept fundamentally aligns with providing discounts on out-of-pocket costs for eligible individuals.