Officials warn expiration of enhanced premium tax credits could raise state share of Virginia reinsurance program

State officials told the Health Insurance Reform Commission that Virginia’s Commonwealth Health Reinsurance Program (CHRP) depends on federal pass‑through funding tied to premium tax credit savings and that changes in federal policy could increase the state’s fiscal share.

Brad Marsh of the Bureau of Insurance described CHRP mechanics: the program reimburses carriers for a portion of very high individual claims within a defined attachment and cap (BOI proposed an attachment starting at $45,000 and a cap at $170,000 for benefit year 2026, with a 65% coinsurance rate for the band). Marsh said the program’s aim is to reduce premiums, with BOI targeting a 15% reduction when setting parameters.

Rebecca Allen, the bureau’s chief policy advisor, briefed commissioners on the federal premium tax credits and related cost‑sharing reductions (CSRs). She said enhanced premium tax credits first expanded under the American Rescue Plan Act and were extended through 2025 by the Inflation Reduction Act. Allen said a House budget measure passed early in the morning did not include continuation of the enhanced credits and that, if the enhanced credits or CSR funding are not continued, federal pass‑through funding for reinsurance will likely fall.

‘‘Fewer or smaller premium tax credits means there’s going to be less federal savings available to realize from the reinsurance program, which means there’s going to be reduced federal pass‑through funding,’’ Allen told the commission. She added that resuming direct federal funding for CSRs would eliminate so‑called ‘‘silver loading’’ and lower benchmark premiums, which paradoxically could reduce premium tax credits even if CSRs were funded directly.

Marsh provided historical award figures: benefit‑year awards included approximately $332 million (BY2023) and $482 million (BY2024) in federal pass‑through funds; BOI’s actuary estimated total CHRP program cost for BY2024 around $365.77 million. Marsh said BOI is awaiting the federal pass‑through estimate letter for BY2025 and would provide updated numbers when available.

Commissioners and staff discussed timing: the CHRP payment parameters for benefit year 2026 are being set now but the payments to carriers for that benefit year occur in state fiscal year 2028. Allen said rate filings currently underway are being prepared with alternate scenarios (with and without EPTC extension) as CMS has instructed carriers to do, and BOI will analyze those filings and provide an updated estimate to the commission when possible.

No formal action was taken. BOI and commission staff said they will return with updated actuarial estimates after the federal pass‑through letter and once the market rate filings are complete.