Cost Sharing Reduction Payments - Fight Breaks Out
Many questions are being asked regarding what will happen in California with Cost Sharing Reduction payments (CSRs) ending. President Trump announced October 12, 2017, that his administration will not be making any more CSRs payments. There had been discussions with Congressional leaders regarding a one- or two-year extension and fade out of CSRs as part of a number of the repeal and replace efforts. Nothing came of the discussions by the end of September 2017. As background, CSRs are payments designed to help health insurance plans offer lower co-pays and deductibles for low-to-middle income individuals and families when they buy health care coverage through the Covered California marketplace.
Now 17 states, including California, are suing the Trump Administration regarding that policy. The states are seeking a temporary restraining order, preliminary injunction and permanent injunction requiring the cost-sharing reduction payments be ongoing. CAHU will provide more information on this lawsuit as it becomes available.
Covered California Reaction to the CSR Elimination
Over the past several months, Covered California has been issuing alerts to the health insurance world, including agents, that there may be a 12.4 percent (Cost Sharing Reduction Pament) CSR surcharge on silver plans purchased through the Exchange marketplace if nothing at the federal level occurred to stabilize CSR payments to plans.
The warning became reality when Covered California announced on October 11, 2017, that they are officially adding the 12.4 percent surcharge due to failure at the federal level to provide certainty regarding the future of CSRs. Covered California Silver plans were already looking at a 12.4 premium increase for 2018 policies. With the additional 12.4 percent, Covered CA Silver Plan premiums will increase 25 percent overall.
It is important to note that the surcharge only impacts silver-level plans sold by Covered California or their mirror silver health plans are required to offer if they wish to sell some products in the Exchange. The surcharge does not affect other Covered California metal tiers and plans offered outside of Covered California.