2026 Filings Just Got Even More Interesting
CMS just issued a few bulletins on Friday about 2026 rate filings. The first reaffirms a 2018 brief CMS had previously issued around off exchange only silver plans. The second was a bit more interesting. These briefs add a further wrinkle to carrier strategies, and we’re going to try to unpack them here. However, to explain these changes and what they mean, we need to define a few different terms and share a bit of history.
Cost Sharing Reductions
As written, the ACA created two different subsidies for individual market plans: Premium Tax Credits (PTCs) and Cost Sharing Reductions (CSRs). PTCs are structured as a tax credit, but most people choose to get an “Advanced” form of it, where an estimated amount is paid to the insurance company each month, and then at tax time, the consumer reconciles it against what their calculated amount is and pays the difference – thus Advanced PTCs, or APTC.
APTCs are relatively straightforward: they lower the cost of premiums, so if your health plan is $600 a month and you receive a $500 per month subsidy, you’ll only have to pay the insurance company $100 per month. This subsidy is based on the second lowest cost silver plan in a given market. This will come up later, but for now, we can just be satisfied with the fact that once calculated, the subsidy is pretty straightforward. The amount of the subsidy scales based on your income, but it’s fairly linear.
CSRs are more complicated. CSRs are designed to address the problem of high “cost-sharing” e.g. deductibles, copays, coinsurance, out of pocket maximum, etc. Under the original design of the ACA, a carrier prices a silver plan with silver-level benefits, but then for individuals who are lower income (less than 250% of the federal poverty limit or FPL), the plan they actually enroll in would have more generous cost-sharing provisions (lower out of pocket / deductible). For someone enrolling in the “standardized” plans in 2025, here’s what those look like at different income ranges:
The premiums for each of these plans are exactly the same – even though the plan for someone making between 100-150% of the FPL is much more generous. Prior to 2017, insurance carriers got paid by the federal government for the difference in claims cost between the more generous plan and the plan they priced.[1]
Determining how much this costs the carrier is not a straightforward endeavor. If a member was healthy and used none of their coverage, then it costs the carrier nothing to provide the more generous benefits – since if you filed no claims, it makes no difference whether your deductible was $0 or $5,000; the insurance company paid $0 in claims. If a member had ongoing health issues and thus had a lot of claims, it might cost the carrier as much as $6,000 to provide the more generous coverage – the difference between the $2,000 out of pocket maximum under the CSR variation of the plan and the $8,000 out of pocket maximum under the “standard” variation of the plan. To calculate this, carriers had to re-adjudicate all the members’ claims to see what the member would have paid if the member had been enrolled in the standard version of the health plan. The member is blissfully unaware of all of this – all they know is that they had a health plan with a $0 deductible and a $2,000 out of pocket max. For example, if a member enrolled in the 100-150% FPL plan had one specialist visit in the year and they paid a $10 copay; if they had been on the base plan, their specialist copay would have been $80. Thus, the plan provided $70 in cost sharing reduction for that member. After calculating this for every claim and every member, the carrier would submit a bill to the federal government for the difference, a process known as CSR reconciliation.
CMS paid the subsidies to insurers from 2014 through September of 2017, but Congress had never explicitly appropriated the funds for these subsidies. CMS’s decision to pay the subsidies without an explicit appropriation was the subject of a lawsuit from House Republicans during the Obama administration, but the lawsuit became moot in October of 2017, when President Trump decided to unilaterally end funding for CSRs. Carriers then had to figure out a way to make up the difference, and in most states, silver loading[2] was born.
Silver Loading
Health plans in the ACA are community-rated, meaning you can only vary pricing based on some very specific variables – and whether a member is on a CSR plan is not one of them. So, most carriers ended up raising just their silver premium plans to compensate – a typical silver load is between 20 and 40%.[3] Some states mandate a silver load – for example, Texas mandates a 35% silver load across the board. This can mean that silver plans can sometimes be more expensive than gold plans in a given market. Although silver being more expensive than gold looks incorrect at first glance, this actually makes sense, because the average enrollee on this silver plan will be receiving benefits that are more generous than the average gold plan.
This silver load has two important side effects:
1) Members who enroll in an on-exchange silver plan but aren’t eligible for CSRs are overpaying for their premium, since they’re paying for the 20-40% silver load but getting the benefits of the base plan.
2) Overall APTC amounts are increased. Recall above that APTCs are benchmarked according to the second lowest cost silver plan. Since silver plan rates are being increased but other metal levels aren’t, the purchasing power of APTCs increases – even if you aren’t buying a silver plan.
For example, let’s assume that the subsidy math for your income level means you’ll pay $100 a month for the second lowest silver plan (SLCSP). That means if the SLCSP is $515 a month, you’ll receive an APTC subsidy of $415 per month. If a bronze plan is $430 and the gold plan is $600, then the bronze plan will cost you $15 a month and the gold plan will cost you $185. If the silver plan price gets increased but the others remain the same, though, the subsidy becomes a lot more powerful. Let’s assume a 25% silver load gets applied, so the SLCSP is now $644. This means your APTC is now $544 – so a bronze plan is now free (since $544 is greater than the $430 per month premium), and the gold plan is only $56 (and, incidentally, cheaper than the silver plan which still costs $100). This is the scenario we currently live under – where silver plan premiums are inflated due to the lack of CSR funding.
You can imagine the confusion this creates. I recall working with a health plan when gold was cheaper than silver and trying to figure out why people who didn’t get CSRs might still be buying silver, so I asked some brokers. One told me that some people were convinced that the health plan had to be pulling a fast one on them and there’s no way the cheaper gold was actually better than the more expensive silver plan – so they bought the silver plan that had inferior benefits.
Nowadays, most experienced brokers are familiar enough with this dynamic to properly guide their clients, but this creates some very strange distortions in terms of market dynamics, pricing strategies, and risk adjustment which are worth their own series of posts and which others like Greg Fann have discussed in more detail.[4]
It also leads to something a bit paradoxical: Trump’s decision to defund CSRs in 2017 actually cost more than funding them, because the increase in APTC more than offset the savings from not funding CSR. This leads us to the second rating bulletin from Friday.
Multiple Filings and the Funding Dilemma
I don’t pretend to know anything about the conversations happening in the House and Senate right now. However, we do know that they want to cut taxes while dealing with the constraint of budget reconciliation, which limits how much the deficit can increase. So, anything that can save money is going to be on the table. There’s been a lot of digital spilled on the question of extending ARPA subsidies (enhanced APTCs provided under the American Rescue Plan Act (ARPA) and extended by the Inflation Reduction Act), but the memo from CMS talked about another scenario: the possibility that CSR subsidies get funded. This might be an appealing option to Senate Republicans, since this would reduce the deficit and provide funds for some of the other policy preferences of the GOP.[5]
The memo from CMS directs issuers in all states to include in their actuarial memorandum the amount of CSRs provided in plan year 2024 as well as the amount projected to be provided in plan year 2026. In other words, carriers have to do the work of re-adjudicating claims to determine what the member would have paid had CSRs been in place.
CMS also directs issuers in states where CMS does the rate review work[6] to submit two rate filings. The two filing scenario is one carriers are used to, and many states have already asked carriers to submit two filings: one assuming ARPA subsidies continue, and one assuming they expire at the end of 2025. CMS’s ask for dual filings, though, is slightly different: carriers are directed to provide for one filing under current law (ARPA subsidies expire, and CSR remains unfunded), and one under a scenario where ARPA subsidies expire, but CSR subsidies are funded.
I suspect that this represents knowledge of some pending / possible congressional action, and carriers should pay attention, because if CSR is funded, several things happen:
1) Subsidies become less generous. This will further exacerbate the enrollment effects of the enhanced subsidies going away.
2) Renewals will need even more work. Members will auto-renew to their current metal level. If the pricing slopes change, that auto-renewal may not make sense, and even fewer auto-renewals will result in a $0 net premium, even at the bronze level. This will mean retention is likely to be lower and carriers and brokers will need to make intentional efforts to outreach to members who now owe a premium.
3) Carriers need to operationalize CSR reconciliation. This is where my shameless plug comes in: Evensun has helped several health plans with CSR reconciliation recently as they dealt with the lawsuits against CMS for unpaid CSRs and with audits related to 2014-2017. A lot of vendors who were in the CSR reconciliation space exited once the recon process became optional. If you need help developing your reconciliation process or calculating how much CSRs provided in 2024 for your rate filing, reach out to me. If you provide us with a clean data set, the cost is $100,000 per HIOS ID for up to 200,000 lives. If the data is messy, our team can clean it up under a consulting engagement.
Carriers also need to think about their strategy if CSR is funded. Pricing strategies will need to change. If you price your gold less than your silver under current regulation, the kind of member you are attracting to a gold plan could be very different than the kind of member you’d attract to a gold plan if pricing went back to “normal.” Even if you’ve applied a smaller silver load and gold pricing is higher than your silver pricing, your silver premiums will come down relative to other options, and this will change the membership distribution. Additionally, the way you price your silver plan might look different – if you know the federal government is paying for the difference between the base plan and the CSR variant, then your primary focus in pricing a plan is in what you expect to spend under the base plan. When CSRs are not funded, you’re likely pricing based on what you expect “average” CSR silver spending to look like.
There could also be changes to competitive landscapes – for example, in Texas, where the mandated silver load is applied, Centene chose not to sell bronze plans at all beginning in 2024, and if CSR becomes funded again, they might change this strategy. There will also be risk adjustment impacts – in states like Texas and New Mexico that mandated silver loading, the metal level distribution has trended toward enrollment in gold plans – which affects statewide averages used to calculate risk scores. Issuers could see impacts in their risk transfers as a result.
More Guidance, more uncertainty…
However, the bulletin discussed above was not the only guidance CMS issued on Friday. CMS also issued a separate bulletin that would only be relevant if CSR remains unfunded. In this bulletin, they specifically encouraged a strategy that many plans have already been implementing since 2018: offering an off exchange only silver plan. This means that if silver-loading continues, someone buying directly from a carrier can still buy a silver-level plan but at silver-level pricing. Of course, they can’t get any subsidies, but it could be used as part of an ICHRA, for example. If CSR gets funded again, this strategy is irrelevant. Given that CMS issued two bulletins that point toward opposite policy outcomes, issuers should still plan for many possibilities.
This filing season has more uncertainty than ever in the ACA, so it’s not surprising that some carriers like Aetna are choosing to exit. As carriers are developing multiple filings, they should work with their regulator to determine what kind of optionality they can have in the multiple scenarios. The rates themselves are only one input – other key drivers like plan design offerings, network, and service areas could be just as important in an uncertain policy environment.
If you want to discuss further, comment below, or reach out to me at wesley@evensun.com
A PDF version of this brief is available here.
[1] There are also special variations for Alaska Natives and American Indians that have zero cost sharing, but enrollment in this tends to be rather low, so we’re going to focus on the silver CSR variants available to most low-income Americans.
[2] I recognize there are controversies over whether silver-loading as a term should be used at all, but for simplicity’s sake I’ll use it here.
[3] There’s also the question of whether a carrier tries to offer an off exchange only silver plan. Doing so lets them offer a silver plan without the silver load, since only on-exchange enrollees get CSR.
[4] The Cost-Sharing Reduction Paradox: Defunding Would Help ACA Markets, Not Make Them Implode – Axene Health Partners, LLC
[5] Appropriation of Cost-Sharing Reduction Subsidies | Congressional Budget Office
[6] Oklahoma, Tennessee, and Wyoming