---
kind: "section"
citation: "42 C.F.R. § 600.605"
title: "42"
number: "600.605"
heading: "BHP payment methodology."
url: "https://uscodex.org/cfr/42/600.605"
---

# §600.605. BHP payment methodology.

- (a) **General calculation.** The Federal payment for an eligible individual in a given Federal fiscal year is the sum of the premium tax credit component, as described in [paragraph (a)(1)](#a-1) of this section, and the cost-sharing reduction component, as described in [paragraph (a)(2)](#a-2) of this section.
  - (1) **Premium tax credit component.** The premium tax credit component equals 95 percent of the premium tax credit for which the eligible individual would have qualified had he or she been enrolled in a qualified health plan through an Exchange in a given calendar year, adjusted by the relevant factors described in [paragraph (b)](#b) of this section.
  - (2) **Cost-sharing reduction component.** The cost-sharing reduction component equals 95 percent of the cost of the cost-sharing reductions for which the eligible individual would have qualified had he or she been enrolled in a qualified health plan through an Exchange in a given calendar year adjusted by the relevant factors described in [paragraph (b)](#b) of this section.
- (b) **Relevant factors in the payment methodology.** In determining the premium tax credit and cost-sharing reduction components described in [paragraph (a)](#a) of this section, the Secretary will consider the following factors to determine applicable adjustments:
  - (1) Age of the enrollee;
  - (2) Income of the enrollee;
  - (3) Self-only or family coverage;
  - (4) Geographic differences in average spending for health care across rating areas;
  - (5) Health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments had the enrollee been enrolled in a qualified health plan through an Exchange;
  - (6) Reconciliation of the premium tax credit or cost-sharing reductions had such reconciliation occurred if an enrollee had been enrolled in a qualified health plan through an Exchange;
  - (7) Marketplace experience in other states with respect to Exchange participation and the effect of the premium tax credit and cost-sharing reductions provided to residents, particularly those residents with income below 200 percent of the FPL; and
  - (8) **Other factors affecting the development of the methodology as determined by the Secretary.**
- (c) **Annual adjustments to payment methodology.** The Secretary will adjust the payment methodology on a prospective basis to adjust for any changes in the calculation of the premium tax credit and cost-sharing reduction components to the extent that necessary data is available for the Secretary to prospectively determine all relevant factors, as specified in [paragraph (b)](#b) of this section.

## Notes

### Authority

Authority: 42 U.S.C. 300gg, 1395, and 18051.

### Source

Source: 79 FR 14140, Mar. 12, 2014, unless otherwise noted.