Renewals9 minute read
When the benchmark moves, your whole book moves with it
The second-lowest-cost Silver plan is a number almost nobody watches, and it silently repriced every subsidised household in the rating area.
Senior agent, Philadelphia · NPN 19022458
Every agent with a subsidised book has had this call. A client who has held the same plan for four years, who did nothing at all in November, opens their January bill and finds it seventy dollars higher. Their plan did not change. Their income did not change. Their household did not change. What changed was a plan they have never heard of, sold by a carrier they have never considered, in the same rating area.
The number that repriced your book
The premium tax credit is not a percentage of your premium. It is a fixed dollar amount, computed once from the second-lowest-cost Silver plan available to your household, and then applied to whatever you actually bought.1 That plan is the benchmark, and it is chosen by the market rather than by you.
So when a new carrier enters a rating area with an aggressive Silver price, or an existing carrier cuts one, the benchmark falls. Your expected contribution does not move - that is set by a percentage schedule against your income. The credit is the gap between them, so the credit falls by exactly as much as the benchmark did. Every subsidised household in that rating area pays more, including everyone who never looked at the benchmark plan.
A cheaper plan arriving in your county can raise your client's premium. This is not a bug in the subsidy formula; it is the formula.
One household, one benchmark shift
A household on a Gold plan, income steady, no changes made. The benchmark Silver in their county fell fifty-six dollars because a new carrier filed.2
| Measure | Prior year | New year | Change |
|---|---|---|---|
| Benchmark Silver premium | $448 | $392 | -$56 |
| Expected contribution | $128 | $128 | No change |
| Advance credit | $320 | $264 | -$56 |
| Their plan's premium | $529 | $544 | +$15 |
| Net premium paid | $209 | $280 | +$71 |
The household did nothing. Their own plan rose fifteen dollars; their credit fell fifty-six. The bill moved seventy-one.
Why renewal season is the whole job
This is the argument against alphabetical renewal outreach. Sorting your book by surname treats a household whose credit fell seventy-one dollars exactly the same as a household whose plan and credit are unchanged. The second call is a courtesy. The first is the difference between keeping a client and reading about them on a competitor's testimonial page.
Rank by exposure. In practice that means four queues, in this order:
- Households whose plan was discontinued and who will be crosswalked into something else.
- Households whose benchmark moved more than twenty-five dollars, whichever direction, because both directions need an explanation.
- Households whose carrier exited the rating area entirely.
- Everyone else, in whatever order you like.
What to say on the call
Not "your premium went up". The useful sentence is: the plan you are on is roughly what it was, but the subsidy is calculated from a different plan than it was last year, and that plan got cheaper. Then show the four rows. Households accept a formula they can see. They do not accept a number that arrived without one.
And frequently the right move is to switch tiers rather than to absorb the increase, because a benchmark that fell means the Silver market got cheaper, and the Silver market is where the cost-sharing reductions live.
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