Washington State also jumps on the Premium Alignment bandwagon to mitigate tax credit expiration

I just finished writing up a deep dive into the Arkansas Insurance Dept's move from laissez faire-style Silver Loading to fully-regulated & maximized Premium Alignment in an attempt to mitigate the massive net premium damage about to be caused if the enhanced ACA premium tax credits expire at the end of 2025.

(Read the first half of the post for a general explanation of Silver Loading, Silver Switching and Premium Alignment)

However, it's not just Arkansas which has finally seen the light and joined about a dozen other states in putting full-bore Premium Alignment (PA) pricing into place to help reduce the financial burden on ACA individual market enrollees in 2026.

Other states which have already done so in the past include Texas, New Mexico, Maryland, Pennsylvania, Illinois, Vermont and Wyoming (and I'm sure I've left out a few).

It turns out Washington State is also doing so...and unlike Arkansas, which seemed to be keeping their PA move out of the public eye until I just wrote about it, Washington has been pretty open about it for several months now.

From a Rule-Making Order on June 29th:

The ACA also establishes that health plans must offer Cost-Sharing Reduction (CSR) plan variations to individuals with income up to 250% of the federal poverty level. Since 2018, the federal government has ceased funding the CSRs directly, instead allowing insurers to compensate for this cost through on-Exchange silver plan premium adjustments called CSR silver loading. For eAPTC-eligible individuals enrolled in a non-silver plan, this “silver loading” practice has reduced net premiums and increased enrollment, while leaving the net premiums of silver plans unchanged.

Current federal rules allow state insurance regulators to make rate development adjustments [Notice of Benefit and Payment Parameters 2026 Final Rule, CMS-9888-F, amending 45 CFR Parts 153,156, and 158]. Multiple states have adopted similar rate development adjustments.

OIC is adjusting insurer rate development components in three ways:

• Uniform CSR Silver Load Adjustment: Sets a uniform CSR silver load adjustment for the individual on-Exchange health plans.

• Standardized Induced Demand Factors (IDFs): Sets induced demand factors for individual and small group market health plans.

• Pricing Actuarial Value (AV) Guardrails: Establishes restrictions on AV pricing value to ±3% of the plan’s Federal AV metal value for individual and small group market health plans.

OIC expects these adjustments to lessen the negative impact of the eAPTC expiration. Overall, OIC expects these adjustments to result in a higher level of premium tax credits (APTCs), thereby reducing net premiums for HBE consumers enrolled in a silver plan and mitigating negative impacts on consumers who choose to enroll in non-silver plans.

HBE consumers enrolled in a non-silver plan represent about half of all HBE enrollees, according to HBE data shared with OIC in 2024. OIC expects these changes to have the overall effect of keeping more enrollees covered by lessening the premium increases that consumers would otherwise experience in 2026 and beyond. This in turn will result in better health outcomes for up to 80,000 Washingtonians, promote individual health insurance market stability, and reduce potential increased uncompensated care demands for health care facilities and providers.

The specific requirements include:

WAC 284-43-6810 Standardized induced demand factors and AV pricing value guardrails. This section applies to all nongrandfathered individual and small group health plans for plan year 2026.

• (1) The allowed underlying rate development components of the "actuarial value and cost-sharing design of the plan" adjustment are:
  • (a) AV pricing value;
  • (b) Induced demand factor;
  • (c) Cost-sharing reduction silver load (if applicable); and
  • (d) Exclusion of funds for abortion services per 45 C.F.R. §156.280(e) (if applicable).

• (2) To ensure consistency in the rate development, align the rating methodology with the federal risk adjustment model and development of CSR silver load, and to promote fair competition, the induced demand factors used in the individual and small group health plan rate filings may vary by plan design but must be consistent with the federal risk transfer formula published by Centers for Medicare and Medicaid Services (CMS).

• (3) Except to the extent provided otherwise in this subsection, to promote fair competition by ensuring consumers can compare plans based on consistent metal level categories and pricing methodologies, the AV pricing value must be within ±2% of a plan's designated AV metal value. The allowable range of AV pricing value may be increased or decreased by 1% and must not result in a total adjustment exceeding ±3%, if the plan has significant features that are not considered in the AV metal value calculation. Applicable plan features may include, but are not limited to, an embedded pediatric dental benefit, aggregate family deductible, or significant out-of-network utilization. The actuarial memorandum in the rate filing must include the following information related to AV metal value and AV pricing value:
  • (a) Each plan's AV metal value, AV pricing value, and the method used to develop AV pricing values.
  • (b) The methodology used to develop the AV pricing value be based on a standardized population. The carrier must identify all material changes in the AV pricing value development and their impacts.

WAC 284-43-6820 Uniform cost-sharing reduction silver load adjustment factor.

• (1) This section applies to all individual silver level plans offered on the Washington health benefit exchange (WAHBE) during plan year 2026.
• (2) The following assumptions are used in the cost-sharing reduction (CSR) silver load calculation:
  • (a) Actuarial values: Based on federal risk transfer formula factors published by Centers for Medicare and Medicaid Services (CMS).
  • (b) The actuarial value for limited cost-share silver variant is 70 percent based on qualified health plan application instructions.
  • (c) Induced demand factors: Based on federal risk transfer formula factors published by CMS.
  • (d) Membership distribution and enrollment assumptions: For plan year 2026 CSR silver load adjustment factor, the membership distribution and enrollment assumptions are based on the prior year experience, provided by WAHBE, and with the following adjustments for WAHBE plan mapping procedures.
    • (i) Members ineligible for CSR subsidies will not enroll in silver plans. These members will be mapped to a lower-cost gold plan with a higher AV metal value.
    • (ii) Members eligible for the silver 73 percent CSR variant subsidies will not enroll in silver plans. These members will be mapped to a lower-cost gold plan with a higher AV metal value.
• (3) The methodology and formula used to calculate the CSR silver loading factor for plan year 2026 is as follows:
  • (a) For each exchange silver plan variant, compute the enrollment-weighted product of the plan's actuarial value and induced demand factor.
  • (b) Sum the results from the step in (a) of this subsection.
  • (c) Divide the result from the step in (b) of this subsection by the product of the actuarial value and induced demand factor for the base silver plan (i.e., values for the 70 percent AV metal level plan).
  • (d) The result in step (c) of this subsection is the final CSR silver load factor for the plan, which applies only to exchange silver plans. The result must be incorporated into premium rate development as a component of the "actuarial value and cost-sharing design of the plan" adjustment.
• (4) Based on the calculation in subsection (3) of this section and the assumptions in subsection (2) of this section, the final CSR silver loading factor for plan year 2026 is 1.435.

What does all of this actually mean?

Via the Washington Health Benefit Exchange:

On Sept. 11, the bipartisan Washington Health Benefit Exchange Board certified 86 health and nine dental plans which will be offered on wahealthplanfinder.org for plan year 2026, and available to customers to purchase through the open enrollment period starting on Nov. 1.

“Steep rate increases this year reflect ongoing health care inflation and market uncertainty related to major federal policy changes,” said Ingrid Ulrey, CEO of the Exchange. “And marketplace customers across the country risk further harm if Congress does not extend the enhanced premium tax credits by Sept. 30.”

In the face of these harmful federal actions, our state is working to reduce painfully high prices through Cascade Care Savings state premium assistance, and through a premium alignment program designed to maximize federal tax credits and help customers identify the highest value plans for them.

Customer impacts will vary based on income range:  

• Lowest-income customers: People now in Silver plans may find the best value by switching to a Gold plan this year.

• Middle income range customers: People who fall into the 200% – 400% of the federal poverty level income band ($31,300 – $62,600 per year for a single-person household) may see the same price or better this year.

• Higher income customers: customers who earn above this range risk losing access to any tax credits and will face steep price increases if Congress does not act.

I'm actually a bit confused by the way they've worded these bullet points, since generally speaking, Silver Loading/Switching and Premium Alignment should result in something more like the following:

• Lowest-income customers (138 - 200% FPL): Enroll in (or remain in) high-CSR Silver plans for the best value

• Middle-income customers (200 - 400% FPL): Switch to either Gold or Bronze plans for the best value

• Higher-income customers (over 400% FPL): Switch to an OFF-exchange plan to avoid as much of the premium hike as possible

I'm still skeptical that even full-bore Premium Alignment can completely cancel out the negative impact of the eAPTC expiring (even for those below 400% FPL), but Washington is the second state to make this claim, so I could be wrong.