Cost sharing

In health care, cost sharing occurs when patients pay for a portion of health care costs not covered by health insurance.[1] The "out-of-pocket" payment varies among healthcare plans, and also depends on whether or not the patient chooses to use a healthcare provider who is contracted with the healthcare plan's network. Examples of out-of-pocket payments involved in cost sharing include copays, deductibles and coinsurance.

In accounting, cost sharing or matching means that portion of project or program costs not borne by the funding agency. It includes all contributions, including cash and in-kind, that a recipient makes to an award. If the award is federal, only acceptable non-federal costs qualify as cost sharing and must conform to other necessary and reasonable provisions to accomplish the program objectives. Cost sharing effort is included in the calculation of total committed effort. Effort is defined as the portion of time spent on a particular activity expressed as a percentage of the individual's total activity for the institution.[2]

Cost sharing is auditable and must be allowable under cost principles and verifiable to records.

An example of cost sharing is any personnel listed on the project budget (showing % effort) for whom no salary is requested in the budget, or if salary is requested, it is less than what is needed to pay for the entire % effort. In this instance, the individual's portion of salary equivalent to that % effort not in the budget, in addition to the fringe benefits and indirect costs associated with those costs, would be considered cost sharing.[3]

There are two types of cost sharing that must be documented and tracked: Mandatory cost sharing is required by sponsor as a condition of obtaining an award. It must be included or a proposal will receive no consideration by the sponsor. Voluntary committed cost sharing represents resources offered by the university (documented and quantified in the proposal) when it is not a specific sponsor requirement. It becomes a binding commitment which the university must provide as part of the performance of the sponsored agreement.[4]

Further reading

References

  1. ↑ Braithwaite RS, Omokaro C, Justice AC, Nucifora K, Roberts MS (February 2010). "Can broader diffusion of value-based insurance design increase benefits from US health care without increasing costs? Evidence from a computer simulation model". PLoS Med 7 (2): e1000234. doi:10.1371/journal.pmed.1000234. PMC 2821897. PMID 20169114.
  2. ↑ "What is Cost Sharing". UC Davis Accounting and Financial Services.
  3. ↑ "What is Cost Sharing". UC Davis Accounting and Financial Services.
  4. ↑ "What is Cost Sharing". UC Davis Accounting and Financial Services.


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