State RegulationsTX specificDifficulty 3/5
Which statement correctly distinguishes the two forms of Marketplace financial assistance available under the federal Affordable Care Act Exchange provisions?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under ACA Section 1321 the Marketplace delivers two distinct subsidies, and mixing them up leads a client to the wrong plan. The premium tax credit may be paid in advance to reduce the enrollee's monthly premium, while cost-sharing reductions lower the enrollee's deductible, coinsurance and copayments at the point of care. Reversing the two, or describing cost-sharing reductions as a Medicare benefit, misdescribes how the assistance actually works and can leave a client with affordable premiums but unaffordable out-of-pocket costs.
Why the other options are wrong
- B) The two are reversed; the tax credit is the premium subsidy and the cost-sharing reduction is the out-of-pocket subsidy.
- C) Cost-sharing reductions are a Marketplace feature for eligible enrollees, not a Medicare benefit.
- D) They work at different points, one against the premium and one against cost sharing, not by the same method.
Memory hook
Credit cuts the premium; cost sharing cuts the bill at the doctor.