The Effects Of ‘Silver Loading’: How Locals Are Reconciling Changes To ACA Subsidies

Dec 6, 2017

The open enrollment period for people buying insurance through the Affordable Care Act marketplace ends next Friday.

Last year, nearly 80 percent of Pennsylvania consumers selected silver plans. It’s a middle-of-the-road option people tend to pick if they’re relatively healthy but don’t want to risk getting slammed by high deductibles.  

Premiums across the board continue to rise, but this year, costs for silver plans in particular have rocketed, due in part to the end of cost-sharing subsidies paid to insurance companies by the federal government. That’s created a pretty bananas situation on the Obamacare insurance exchange.

Silver Loading

Ali Shapiro and Carlos Queirós, both in their late 30s, live at the edge of Shadyside and Larimer. On a Saturday night in early November, they sat at their vintage Formica kitchen table and scrolled through HealthCare.gov, looking at their insurance options for 2018.

Like many people, Shapiro and Queirós will pay a higher premium for health insurance next year. But they'll also be switching from a silver plan to a gold plan.

“The gold is less,” said Shapiro as they examined their options online. 

Ali Shapiro scans the insurance marketplace on her laptop.
Credit Sarah Boden / 90.5 WESA

“That’s interesting,” Queirós said. “Why would it be less?”  

The monthly premiums for more generous gold plans looked to be roughly $20 less than silver plans. Shapiro and Queirós were pleasantly surprised, as they're planning to make the most of their health insurance in 2018: Queirós is overdue for a colonoscopy and Shapiro is hoping to get pregnant soon.

“We've got to get a baby in,” she said.

“It will be our gold baby,” Queirós said, joking. “We’ll always remember it as, ‘Remember, that was the year we had the gold plan?’”

The reason for this peculiar pricing is due to something called “silver loading.” In October, less than three weeks before open enrollment was set to begin, President Donald Trump decided to end payments to insurance companies on the Obamacare exchange.

The federal government had paid cost-sharing reduction subsidies to offset the expense for the silver plans that insurers are legally obligated to sell to low-income people. These special silver plans have lower deductibles and co-pays for people earning up to 250 percent of the poverty level.

But now, insurance companies are on the hook to sell these cheap plans without the subsidies. To compensate for the loss, companies hiked up the cost of silver plans, sometimes making the gold plan the more affordable option.

Ballooning Tax Credits

Silver loading has impacted consumers in different ways. It’s hurt some, but others who receive tax credits have actually benefited from this situation.

New Kensington resident Kim Jedlowski is one of the winners. The retired accounting clerk also just switched to a gold plan. But unlike Shapiro and Queirós, her monthly premiums in 2018 will be lower.

Kim Jedlowski and her husband Darryl sit on their coach in their New Kensington, Pa. home.
Credit Sarah Boden / 90.5 WESA

“We were totally surprised,” said Jedlowski. “We expected it initially to be even higher than our $145 that we’re currently paying. So, we were totally shocked.”

Jedlowski's costs are dropping from $145 to $87 a month. The reason? She receives a tax credit which covers a large portion of her premium, and next year that credit is increasing so much she'll actually save money, even with higher premiums.

“My tax credit this year is $692 … last year it was $526.67,” explained Jedlowski. “Right there, that’s my savings.”

Jedlowski’s bigger tax credit is tied to silver loading.

This credit is based both on her income and on the price of silver plans, regardless of which plan she selects. When insurers ballooned silver premiums to compensate for the lack of cost-sharing subsidies for plans they were legally obligated to sell, it triggered an increase in tax credits to low-income consumers.

High Premiums, No Help

For consumers who don't qualify for tax credits, 2018 will be a more expensive year, which can leave them with a tough choice to make: pay more for better insurance, or take a gamble on a bare bones bronze plan with a higher deductible?

Jason Miller, 30, of Bairdford is an accountant for a small real estate developer. He’s young and healthy and tries to stay active by spending time outdoors and taking his dogs Evie and Penny for walks. 

Accountant Jason Miller takes his dogs Evie (left) and Penny on their evening walk.
Credit Sarah Boden / 90.5 WESA

Miller earns just a little bit too much to receive a tax credit; the cutoff is roughly $48,000 a year for an individual. If he were sticking with a silver plan for next year, Miller said he’d pay about $100 more per month.

To contain insurance costs, Miller said he plans to buy a bronze plan.

“I just feel like the wrong person is footing the bill, I guess,” he said.

In fact, he said he's so annoyed by the situation that he plans to buy insurance off-exchange this year as a sort of protest.

"I'm mandated by law to buy something," he explained. "To see that something go up much as it does, it's frustrating and there's definitely an element of shock."

There is some bipartisan support in Congress to pass legislation reinstating subsidies to insurance companies. But with rates already set for 2018 and the enrollment deadline quickly approaching, such a move would likely have little effect on what consumers pay for insurance next year.