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Covered California Silver Plan’s May Receive a Rate Increase for 2018

by Wendy Barnett

Covered California Silver Plan’s May Receive a Rate Increase for 2018

Be on the watch for Covered California announcements in October or November 2017 regarding rate changes on the Silver Plans, or more specifically the “cost-sharing-reduction (CSR) surcharge.” Covered California already announced their proposed rates for 2018 which will have a weighted average increase of 12.5%. However, in addition to this rate increase, there may be a surcharge on all Silver Plans. This has to do with whether or not the federal government will make an annual commitment to funding CSR plans as was done since the Affordable Care Act (ACA) was passed.

Cost Sharing Reduction (CSR) Surcharge

Because of the ACA, health insurance companies must offer CSR plans to consumers with income 138%-250% of the federal poverty level. In California, these plans are called Enhanced Silver Plans. These plans help offer affordable costs for medical services (think lower deductibles and copays). In 2014 when the healthcare marketplaces began to offer CSR plans across the nation, the federal government footed the bill and paid for these costs directly to insurance companies. For 2018, the federal government has only committed to pay for these costs monthly and not for the whole year. Covered CA stated that if the Federal Government does not commit to providing funding for CSR Plans for the whole year in 2018, they will have to add a surcharge to all their Silver Plans.  See Covered California Executive Director Peter Lee’s letter to the Department of Health and Human Services and the Centers for Medicare and Medicaid Services dated Aug. 1, 2017.

What’s the bad news? The CSR surcharge would be an estimated average of 12.4%

The CSR surcharge would be on all Covered CA Silver Plans and would be in addition to the 2018 rate increase of 12.5%.  So potentially, Covered CA Silver Plan enrollees could experience an average 24.9% increase in their premiums! Members who do not qualify for any tax credits would be hit the hardest.

Is there any good news?

There is good news if you qualify for Advanced Premium Tax Credit (APTC). The APTC that low to middle income Californians receive is based on the second cheapest Silver plan in their area, so if the CSR surcharge is put into place, then consumers who receive tax credits should have more help in paying their premiums with an increased APTC. Covered CA anticipates that these consumers would see very little net change in their monthly costs.

What Should Covered CA members do?

  • Watch for further Covered CA news announcements in the fall of 2017.
  • Check your health insurance renewal packet this fall for your new rate information.
  • Shop around – Covered CA offers easy plan comparisons on their exchange and you will want to optimize your options this year if the surcharge goes into effect.
  • Keep in mind if you do not qualify for a subsidy, Off Exchange Silver plans will be cheaper as they will not be adding the surcharge.
  • Call your Health Insurance Agent for free assistance