Study: Administration Proposal to Change Reference Plan for ACA Subsidies Could Substantially Lower Premium Costs for Consumers

FOR IMMEDIATE RELEASE: February 26, 2021

FOR MORE INFORMATION: Jeff Van Ness, (202) 204-7515,



WASHINGTON—A new report developed by Wakely, a leading actuarial consulting firm, and commissioned by the Association for Community Affiliated Plans (ACAP), analyzes the effect of a proposed change to the Affordable Care Act (ACA) which would change the benchmark plan used to calculate subsidies in the individual market from a silver to a gold plan. It finds that such a proposal could save a 27-year-old earning three times the Federal poverty level $120 per month in a typical market. The potential savings are higher for older consumers, or those with higher incomes.

Changing the benchmark plan used to calculate subsidies was one of the key Biden campaign proposals. Subsidies are currently calculated by capping the premium a consumer would pay for the second-least-expensive silver plan in a given rating area. Consumers can choose a less-expensive plan and pay less out of pocket, or choose a more-expensive plan and pay more.

Generally, gold plan premiums are typically more expensive than silver plan premiums. Accordingly, the proposal would reduce out-of-pocket premium costs for most consumers and increase uptake of Marketplace plans. This would expand the risk pool and put downward pressure on premiums across the board.

“Affordability is still one of the steepest challenges still facing the individual insurance market, and it’s keeping a number of working families from getting the comprehensive coverage they need,” said ACAP CEO Margaret A. Murray. “Changing the reference plan for subsidies is one way to improve affordability; this report fills out the conversation with some much-needed data models.”

However, the report finds that there are areas where premiums for silver plans are higher than those for gold plans. These are areas where the effect of “silver loading” is most pronounced. “Silver loading” refers to an increase in premiums intended to offset the effects of the Trump administration defunding cost sharing reduction reimbursements for health plans. In those areas where gold plans are cheaper than silver plans, the shift from a silver to gold benchmark could reduce, not increase, premium subsidies.

“To some degree, the distortions of the market that are present today are a direct response to the efforts of the past four years to sabotage Obamacare after the failed campaign for its repeal and replacement,” added Murray. “The Biden Administration has some work ahead of it to iron out these distortions. Over time, the market will become more consistent and predictable, and straightforward proposals such as changing the reference plan for subsidies will have more consistent and predictable outcomes.”

Read the full report at

About ACAP:

ACAP represents 78 health plans, which collectively provide health coverage to more than 20 million people. Safety Net Health Plans serve their members through Medicaid, Medicare, the Children’s Health Insurance Program (CHIP), the Marketplace and other publicly-sponsored health programs. For more information, visit

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