At its 2023 Agent and Broker Summit, the Centers for Medicare and Medicaid Services (CMS) shared a number of priorities they would like agents to focus on throughout the Medicaid unwinding and Open Enrollment Period. Many of these priorities, like preventing data matching issues and maintaining compliance with Marketplace regulations, are fairly standard fare. But, one in particular sticks out, especially in light of the unwinding – helping consumers eligible for cost-sharing reductions (CSRs) apply for the most frugal option. Presumably, silver plans; the only CSR-friendly plans.

Enrollment data from plan year 2023 might prove the contrary, though. It shows that agents steer CSR-eligible consumers into bronze plans more frequently than those individuals who chose bronze plans on their own. For example:

CMS saw the data and spoke on it at that summit. We all heard the implication: Agents enrolling clients in bronze plans don’t understand all costs of bronze plans in comparison to CSR savings, leaving money on the table for their clients.

But, after crunching some numbers of our own, we think you have a pretty good grasp on the differences.

If premiums are the only concern, CSRs might not make sense

Let’s try a fairly standard scenario. Charlie, 30, has an income of $20, 200. Money’s tight for him—he needs to spend the least amount possible on his health insurance, hands down. CSRs seem to be the no-brainer solution, but he wants to see an expanded bronze plan, too. Away we go:

Charlie would need to spend $219.21 per month ($2,630.52/year) to access the CSRs – about 13% of his income. Since Charlie has no medical issues, he sees the $85.91 ($1, 030.92/year) for the expanded bronze plan as the much more palatable option. An optimist looking to stretch every dollar – despite staring a monstrous deductible and out-of-pocket max in the face—he opts for the lower premium. Put simply, Charlie simply can’t afford the cost-sharing reductions; they’re too expensive.

But let’s say Charlie gets a raise and now makes $30,000 per year. He’s still eligible for CSRs. This time, we’ll look at the same PPO plan with an 87% actuarial value.

In this case, the yearly premium for the silver plan with CSRs is $2966.52, or about 12% of Charlie’s income. Compare that with the bronze plan, costing him $1,367.64 per year, or about 5.5% of his income. Since Charlie is only concerned with premiums, it again may be too expensive for him to access those cost-sharing reductions.

Let’s run it back, but this time with our expanded bronze plan, and a CSR-eligible Silver PPO plan with 73% actuarial value. Both plans cover some services prior to the deductible.

With Charlie’s $30,000 annual income, a monthly premium of $289.21 adds up to $3,470.52 per year. That’s about 13 percent of his income swallowed up by premiums – before he even addresses housing, food, and other necessities.

In every case, the math doesn’t add up if we look at it from the perspective of a consumer living hand to mouth. They might save money overall if they reach their out-of-pocket max, but just like Charlie, many are hoping (or at least, feeling forced to bet) they won’t reach that out-of-pocket max in lieu of saving themselves money in the short term.

Do CSRs make more sense if consumers access care regularly?

Conventional wisdom says that it could be worth paying more in premiums to save money at the checkout desk. Let’s add a bit of drama to Charlie’s story.  Charlie starts taking a preferred generic to help control a condition. He visits his doctor once a quarter for lab work (complete blood count with differential) and a medicine check. The chart below compares estimated costs across the four plans we’ve discussed so far.

Assuming that these episodes are the only medical care he needs in a year, there’s not a single instance where enrolling in a CSR-eligible silver plan is a better deal in terms of the total cost. The silver plan with a 94% actuarial value comes close, though.

Here’s what that means.

Were we to include another doctor’s, urgent care, or ER visit, the scales probably tilt in favor of taking a Silver 94 over an expanded Bronze plan. If that same event (or series of events) would meet the $800 deductible under the Silver 87 plan, that could also come into play.

But, comparing the Silver 73 to the expanded Bronze? The Silver 73 only makes sense if the consumer expects they’ll hit their out-of-pocket maximum. Check this out.

On the whole, if the consumer enrolls in a Silver 73, and if they hit their out-of-pocket maximum, they’ll be better off by $200. But, it takes a catastrophic event or series of events to get there. And, you’ve already helped protect against this possibility by talking about ancillary products, right?

Does CMS have a valid critique of agents here?

Well, yes and no. Plans and member experiences will vary, so we encourage you to keep doing your own math. But, we can comfortably say this: It’s probably a good idea for folks who are eligible for plans with 94% actuarial value to enroll in those. However, it’s not always a given that consumers eligible for plans with 73% or 87% actuarial value should enroll. As the examples above bear out, they have to reach a certain threshold of medical spending for the higher premiums to make sense.

But, these numbers tell us you are doing your own math.

And that means you’re providing better value for your clients, even if you’re going off the beaten trail. Bravo.