State RegulationsNY specificDifficulty 2/5
Under the Affordable Care Act, how does a cost-sharing reduction affect a silver plan's actuarial value for an eligible enrollee?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under the Affordable Care Act, a cost-sharing reduction works by enriching a silver plan: deductibles, copayments, and coinsurance are cut for the eligible enrollee, which raises the plan's actuarial value so it pays a larger share of covered costs. The monthly premium itself is not reduced by this subsidy - that is the premium tax credit's role. The plan remains silver, simply in a more generous version for that enrollee.
Why the other options are wrong
- A) The reduction makes the plan richer, not poorer; actuarial value rises rather than falling below bronze.
- B) Actuarial value is exactly what changes; the monthly premium is unaffected by cost-sharing reductions.
- D) No plan-type conversion occurs; the enrollee keeps a silver plan with improved cost sharing.
Memory hook
CSR pours value into the silver plan - the plan pays more, you pay less.