CSR Loading Returns to the 2027 ACA Actuarial Memorandum

CMS finalized the 2027 Notice of Benefit and Payment Parameters on May 15, 2026, and folded a narrow but consequential duty into its overhaul of the Unified Rate Review Template: issuers that load silver premiums to cover unreimbursed cost-sharing reductions, a practice that has pushed load factors above 40% of the silver premium in some states (KFF, 2026), must now document that arithmetic in the actuarial memorandum for every filing year CSRs go unfunded, beginning with plan year 2027 (CMS, May 2026).

What CMS Actually Requires in the URRT and Actuarial Memorandum

The requirement is specific rather than aspirational. Issuers filing 2027 rates must report their actual 2025 CSR costs, an estimate of their 2027 CSR costs, and an estimate of the additional revenue their rates will generate through CSR loading in 2027, then explain how the loading was developed and compare expected loading revenue against expected CSR costs (Georgetown Center on Health Insurance Reforms and State Health & Value Strategies, May 2026). CMS layers a substantive constraint on top of the disclosure: expected revenue from loading "must not materially exceed" expected CSR costs for the year (CMS rate filing guidance, cited in Georgetown CHIR/SHVS analysis, May 2026). That is a narrower standard than what issuers worked with for 2026, when CMS's PY2026 rate filing instructions explicitly permitted issuers to submit estimates of CSR costs rather than reconciled figures, a flexibility CMS has now withdrawn for PY2027 filings.

The 2027 rule pairs this loading disclosure with a separate risk adjustment change that compounds the reconciliation problem it is meant to solve. CMS recalibrated the HHS-HCC risk adjustment models for benefit year 2027 using enrollee-level claims data drawn from the 2021, 2022, and 2023 benefit years (AHA News, May 2026). Those three years predate the 2026 enrollment contraction and the resulting shift toward a smaller, sicker residual pool, so the risk scores that determine an issuer's 2027 transfer receivable are calibrated to a healthier population mix than the one actually enrolling this year. An issuer reconciling its CSR load against actual 2025 costs, as the new memorandum requires, is squaring one part of its 2027 rate to current experience while the risk adjustment transfer meant to offset that rate still reflects a three-to-five-year-old risk distribution, a timing mismatch the memorandum disclosure documents around but does not resolve.

The mechanism by which CMS is enforcing this matters as much as the requirement itself. CMS did not finalize new regulatory text codifying the CSR loading standard; it imposed the reporting duty and the "materially exceed" test through sub-regulatory guidance, the same PY2027 rate filing instructions that carry the URRT template changes (Georgetown CHIR/SHVS, May 2026). That approach raises an open question about how much judicial deference the standard would receive if an issuer challenged an enforcement action, since sub-regulatory guidance does not go through notice-and-comment rulemaking the way the rest of the Payment Notice did. It also means state insurance regulators, not just CMS, carry new exposure: CMS has told states that failing to ensure silver loading is not excessive could jeopardize a state's status as an Effective Rate Review State, the designation that lets a state's own regulator determine rate reasonableness rather than defer to CMS (Georgetown CHIR/SHVS, May 2026).

The Silver-Loading Arithmetic Behind the New Line Item

Cost-sharing reductions lower out-of-pocket costs for enrollees between 100% and 250% of the federal poverty level who buy silver plans, and federal law requires insurers to provide that benefit whether or not the government reimburses them for it. Since a 2017 Department of Justice opinion concluded the ACA's permanent appropriation could not fund CSR reimbursement, insurers have had to recover that unfunded cost somewhere in their rate structure, and most states either required or permitted them to concentrate the load onto silver-tier premiums specifically rather than spreading it across all four metal tiers (KFF, 2026). The logic is structural, not arbitrary: only silver plans carry the CSR cost-sharing obligation, so only silver premiums need to absorb it to remain actuarially sound relative to the benefit being priced.

The arithmetic matters beyond the silver tier because premium tax credits are calculated against the second-lowest-cost silver plan in a rating area, the benchmark plan. When silver premiums rise from loading, the subsidy calculated off that benchmark rises with it, which mechanically lowers net premiums for subsidy-eligible enrollees who shop bronze or gold instead of silver. KFF's tracking shows benchmark silver premiums rose roughly 17 percentage points more than bronze premiums between 2017 and 2018, the first full year silver loading was widespread, and some states have instructed issuers to build load factors exceeding 40% into silver-tier rates since (KFF, 2026). That is the arithmetic CMS now wants shown on the page rather than embedded in a rate that regulators and competitors alike cannot decompose.

A Wider De Minimis Band Lands, Then Gets Enjoined Two Days Before It Applies

The 2027 rule also expands the actuarial value latitude available to bronze plan designs, the "wider de minimis band" provision that drew as much attention as CSR loading during the comment period. The final rule permits insurers to offer bronze plans with a maximum out-of-pocket limit up to 130% of the standard annual limitation, or $15,600 for self-only coverage in plan year 2027, provided the same insurer simultaneously offers at least one bronze plan within the standard limit; catastrophic plans get the same 130% allowance starting in plan year 2028 (State Health & Value Strategies analysis of the final rule, May 2026). CMS's stated rationale is that actuarial values have crept upward as medical costs outpaced the statutory out-of-pocket cap, pushing bronze plan designs closer to silver-level generosity than the metal tier is meant to reflect.

That provision did not survive intact. On July 16, 2026, Judge Brendan Hurson of the U.S. District Court for the District of Maryland issued a preliminary injunction in City of Columbus v. Kennedy blocking eight provisions of the 2027 Payment Notice, including the bronze and catastrophic out-of-pocket expansion, an expansion of hardship-exemption eligibility for catastrophic coverage, a new pathway for non-network plans to qualify as marketplace coverage, and a rollback of federal network adequacy standards, on the grounds that plaintiffs were likely to succeed on their Administrative Procedure Act claims (AHA News and HFMA, July 2026). The injunction's effective date, July 20, 2026, was the same day those provisions were otherwise set to take effect. The CSR loading documentation duty was not among the eight enjoined provisions. Because CMS implemented it through rate filing instructions rather than the codified regulatory text the plaintiffs challenged, it currently stands as operative for PY2027 filings independent of how the AV-band litigation resolves.

That split matters for anyone assembling a 2027 filing this quarter. Actuaries who were counting on the wider bronze de minimis band to redesign a plan around a higher out-of-pocket limit should treat that flexibility as unavailable while the injunction stands, not as a settled input to 2027 plan design. The Department of Justice has a template for what happens next: when a Maryland court similarly stayed the actuarial value provisions of the 2025 Marketplace Integrity rule in August 2025, DOJ filed a notice of appeal within days and sought emergency relief specifically on the AV provision, a pattern that suggests the current injunction is a first step in ongoing litigation rather than a final word (Thomson Reuters and State Health & Value Strategies, 2025).

Pricing a Shrinking, Older, Sicker Pool

The CSR loading calculation actuaries must now document is being run against a pool that looks materially different than it did a year ago. ACA marketplace enrollment fell 5% to 23.1 million in 2026 after enhanced premium tax credits expired at the end of 2025, with healthier and higher-income enrollees leaving disproportionately (KFF, 2026). Preliminary 2027 rate filings from 77 insurers across 16 states and Washington, D.C. show a median proposed increase of 14%, with most issuers requesting increases between 10% and 20% and 20 insurers requesting more than 20%, which would make 2027 a second consecutive year of double-digit marketplace premium increases (Peterson-KFF Health System Tracker, July 2026). Insurers attribute roughly four percentage points of the 2026 increase to the sicker residual risk pool and expect the same pool effect to add another four points in 2027 (Peterson-KFF, July 2026). If those filings hold, typical marketplace premiums will have risen more than one-third between 2025 and 2027 (KFF, 2026).

That shrinking pool has a direct, mechanical effect on the CSR loading calculation CMS now wants documented. Unreimbursed CSR cost is a function of how many CSR-eligible enrollees a plan carries and how much cost-sharing assistance each one draws; the premium base over which that cost gets spread is a function of total silver enrollment. As healthier, price-sensitive enrollees exit the pool and total enrollment contracts, the CSR cost is being loaded across a smaller and increasingly CSR-concentrated denominator, which pushes the load factor itself higher even before accounting for medical trend. An actuary rolling forward a 2026 load factor as a flat trend adjustment, rather than rebuilding it from the smaller 2027 enrollment base CMS's own rule projects, will understate the load the new memorandum disclosure is supposed to reconcile against.

Metal-Level Shopping Distortions Feed Back Into the Pool

Silver loading's premium effect does not stay confined to the silver tier, and that spillover is itself a pricing input CMS's new documentation requirement indirectly puts under scrutiny. Because the premium tax credit is set against a loaded silver benchmark, subsidized shoppers routinely find bronze or even gold plans priced below or near zero net premium relative to their silver alternative, a distortion that has been steering enrollment away from silver and into bronze plans broadly across the market. Unsubsidized shoppers, whether above 400% of the federal poverty level or purchasing off-exchange, get none of that offset and instead face the full loaded silver premium, which pushes the healthiest, most price-sensitive segment of that population toward bronze, toward off-exchange alternatives, or out of coverage entirely.

That exit is the same mechanism driving the enrollment and morbidity trend the prior section describes, which makes the metal-tier distortion self-reinforcing rather than a one-time pricing quirk. Fewer unsubsidized, price-sensitive silver buyers means a smaller and sicker silver-tier population bearing the CSR load in the coming year's arithmetic, which raises the load factor for the following year's filing, which further inflates the subsidized bronze incentive and further discourages unsubsidized silver purchase. An actuary documenting a 2027 CSR load in isolation from the metal-tier mix shift is pricing one link in a loop that the new memorandum disclosure does not itself require modeling, but that materially affects whether the disclosed load factor will hold through the rating year.

The Filing Checklist This Creates for 2027

For health actuaries assembling 2027 rate submissions, the practical change is that CSR loading moves from an assumption embedded in a rate development exhibit to a standalone, auditable disclosure that regulators and, in principle, competitors reviewing public rate filings can compare issuer to issuer within a state for the first time. Building an explicit CSR loading methodology exhibit, reconciling actual 2025 CSR cost experience against the 2027 estimate rather than trending a prior load factor forward, and stress-testing the loading revenue figure against the "materially exceed" standard before submission are no longer optional documentation hygiene; they are what the actuarial memorandum is now required to show. Issuers in states where CMS performs or reviews rate filings, and issuers in states CMS has flagged around Effective Rate Review State status, have the most direct exposure to how strictly that standard gets enforced in this first PY2027 filing cycle.

Consider an illustrative case to see what the "materially exceed" test actually weighs. If an issuer's URRT shows $40 million in actual 2025 CSR costs and the filing projects $42 million in 2027 CSR costs against $46 million in expected loading revenue, the roughly 10% gap between projected cost and projected revenue, not the raw dollar totals, is what a regulator applying the standard will scrutinize. CMS has not published a numeric threshold for what counts as material, and because the standard arrived through sub-regulatory guidance rather than a defined rule, issuers have an incentive to document the judgment calls behind the estimate, incurred-but-not-reported claims timing, enrollment mix assumptions, provider payment trend, rather than simply asserting a bottom-line loading percentage and hoping it clears review.

The bronze de minimis question is a separate track that filing teams should not conflate with the CSR loading duty. The wider out-of-pocket bands remain enjoined as of this writing, and a plan design built around the 130% MOOP allowance is not currently available for PY2027 regardless of what a filing's CSR loading exhibit shows. Actuaries should treat the injunction, and the DOJ appeal it will likely draw, as a separate risk to track on its own timeline, while proceeding with the CSR loading documentation duty as settled law for the current filing season.