California’s Obamacare exchange will add a 12 percent surcharge to certain Obamacare plans to make up for the federal government’s lack of a long-term commitment to paying insurer subsidies.
Covered California, the state-run exchange, said Wednesday it hopes to soften the blow of the surcharge by pegging it only to silver plans. The goal is to ensure that people who get federal subsidies will be the only customers to pay the surcharge, as federal subsidies to lower the cost of insurance rise with any premium hikes.
Covered California said the surcharge of 12 percent on silver-tier plans, the most popular of Obamacare’s three tiers, is necessary because the Trump administration has not committed to paying cost-sharing reduction payments in 2018.
The state’s exchange has 1.4 million enrollees, with about 689,602 who buy plans on the Obamacare exchange.
Covered California has about 65,000 silver plan customers who don’t receive income-based federal subsidies. Those people can avoid paying the surcharge by switching to a different tier or buying nearly identical silver coverage away from the exchange.
Covered California estimated that the state received $800 million in cost-sharing reduction payments this year.
The exchange said the surcharge is its way of limiting the damage if the cost-sharing reduction payments are eliminated. The exchange’s open enrollment period will run from Nov. 1 to Jan. 31, six weeks longer than the period for the federal healthcare.gov.
It is not clear if the surcharge would be be levied if the Trump administration or Congress decides to make the payments next year.
The Trump administration has not decided whether it wants to make the payments in 2018, but it has been making them month-to-month. The Senate is working on a bipartisan deal to make the payments for two years in exchange for greater state flexibility to waive Obamacare regulations, but so far no deal has been reached.
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