You probably heard news coverage over the weekend about the federal government’s announcement that it would suspend Cost Sharing Reduction (CSR) payments to insurance companies for individual plans purchased through Healthcare.gov. As when any complex issue gets reported, some of the most important facts can easily be lost in the story. Here are some answers to the questions that could affect you.
Does this mean the subsidy is going away?
No. Up until now, the federal government has used two separate components in the Affordable Care Act (ACA, or “Obamacare”) to lower the cost of individual plans through Healthcare.gov. The first is the Advance Premium Tax Credit, commonly referred to as the “subsidy.” This credit helps pay the premium amount for individuals and families who have no other coverage available to them (through employers, etc.) and who have a household income of less than 400% of the federal poverty level. This subsidy is not going away.
The CSR is a separate component of the ACA which gave further aid to those families in the lower end of that spectrum if they chose a Silver level plan; in addition to receiving the subsidy, those families also had their deductibles, office visit and/or prescription drug copays, etc. reduced by contributions to insurance companies from the government. These are the payments that the federal government has announced it will no longer pay.
Why are these CSR payments being eliminated?
When the ACA was originally drafted and passed, it spelled out the terms and amounts of these CSR payments, but it failed to include an appropriation for those funds—in other words, it did not spell out where this money would come from. Under the Obama administration, the federal government assumed it had the power to appropriate this money directly from the Treasury; however, that was legally contested at the time and since, as Congress alone has the Constitutional authority to appropriate funds, not the Executive branch. The current administration decided that it could no longer defend requisitioning those funds from the Treasury absent legislative authority to do so. This is not a capricious move by the current administration, but a reaction to a flaw which has been present in the ACA since it was originally passed in 2010 and has not been fixed by Congress.
When does this change take place?
To the best of anyone’s knowledge, your 2017 coverage will continue as it has up until now, provided you do not have any change in status which would affect your eligibility for assistance through Healthcare.gov (for instance, income changes or changes in your household size). Open enrollment for individual 2018 coverage begins November 1, 2017, and continues through December 15, 2017. As in previous years, if you apply through Healthcare.gov, your eligibility for an APTC subsidy will be calculated from the information you supply, and your final premium options will take into account the subsidy for which you are eligible. If you were also eligible for the CSR in 2017 or prior years, the only change you will see is that there will not be a further reduction of the deductible or co-pay amounts in the Silver plan options available.
Is my premium going to increase?
Almost certainly, but not necessarily because of the suspension of the CSR. Insurance companies across the nation have incurred expenses on behalf of individual enrollees who have serious, chronic health conditions for which they would previously have been denied coverage, and have raised their premiums in order to cover the added medical expenses incurred.
However, because the CSR was specifically applied to Silver level plans, insurance companies have calculated 2018 premium rates for those plans which show the effect of the CSR suspension; therefore, the Silver plans generally will show the greatest premium increase. In many cases, 2018 Silver plans may actually be more expensive than some Gold plans. We would be happy to help you examine the options available to you and find the right combination of benefits and costs for you and your family.
As always, we recognize the importance which adequate healthcare holds for your family, and we are dedicated to helping you navigate the ever-changing options and conditions of the insurance market. We look forward to helping you make decisions for 2018 during the Open Enrollment period from November 1 to December 15.