History and Explanation of Silver Loading
We will be the first to admit that this gets a little complicated. After many discussions, here is our attempt to explain how this all began and where we are now. First things first, you need to understand CSR payments.
1. What Are CSR Payments?
Cost-Sharing Reductions (CSRs) are subsidies under the Affordable Care Act (ACA).
They lower out-of-pocket costs (deductibles, co-pays, etc.) for low-income enrollees (100%–250% of the Federal Poverty Level). For example, a plan with a $5000 deductible could drop to $0, depending on income level.
These CSRs are only available on Silver level Marketplace plans.
Insurers are required by law to provide them to eligible enrollees.
The federal government reimbursed insurers for the cost in benefits differences until 2017.
2. The Trump Administration Ends CSR Payments
Trump frequently called these payments "bailouts" or "insurance company giveaways" and claimed ending them would force Democrats to negotiate changes to the ACA.
On October 12, 2017, the Trump administration argued that Congress never appropriated the money to fund CSRs, so paying them was unconstitutional and stopped paying insurers for the cost differences.
3. Insurer Dilemma: Still Legally Required to Offer CSRs
Even though funding stopped, insurers were still legally required to offer CSRs.
This created a significant financial burden. In 2017, CSR payments were worth about $7 billion nationwide.
4. The Solution: Silver Loading
In response, insurers and state regulators developed a workaround:
"Silver loading": Insurers increased premiums only on Silver plans to recover the lost CSR payments.
Because CSRs only apply to Silver plans, it made sense to target the cost increase there.
Other plans (Bronze and Gold) were not directly affected.
5. Why Silver Loading Worked
Premium tax credits (subsidies) for everyone on a Markeplace plan are based on the cost of the second-lowest-cost Silver plan.
When Silver premiums increased (because of silver loading), premium subsidies also increased.
This created unexpected benefits:
Everyone’s Markeplace subsidies increased.
Many people got free or low-cost Bronze plans.