Certified Application Counselor Practice Test

What type of financial assistance can consumers use to lower their monthly premiums when enrolling in a Marketplace?

1. Cost-sharing reductions

2. Premium tax credits

3. Medicaid benefits

4. Tax deductions

The correct answer is: Premium tax credits

Premium tax credits are designed to help lower the cost of monthly premiums for individuals and families who qualify based on their income and household size. These credits are available to consumers who enroll in a health insurance plan through the Marketplace and typically cover those earning between 100% to 400% of the federal poverty level. By reducing the amount consumers pay out-of-pocket for their monthly premiums, these tax credits make health insurance more affordable and accessible. Cost-sharing reductions, while beneficial for lowering out-of-pocket costs like deductibles, copayments, and coinsurance, do not directly lower the premium itself. Medicaid benefits provide coverage for low-income individuals, but they do not apply to those who purchase plans through the Marketplace. Tax deductions can reduce taxable income, but they do not directly decrease the premium costs for health insurance in the same way that premium tax credits do. Thus, the focus on how to reduce monthly premiums through specific financial assistance clearly highlights the importance of understanding premium tax credits within the context of the Marketplace.