Individual plans are health plans you buy through an insurance agent, broker or the Exchange. Small group plans are health plans offered by employers with 1-50 employees.
What we do when a health insurer submits a rate increase
Health insurance companies can't change rates more than once a year unless state or federal law requires a new health benefit. Our actuaries scrutinize the company's projections and what they're based on, including the last three years' rates, enrollment and claims.
- To see if the rate change is reasonable based on the plan's benefits, we also examine:
- The rates, claims and administrative costs to ensure they're consistent with what the company reported in its financial statement
- The actual vs. projected medical and prescription drug costs
- The assumptions used to project the medical and prescription drug costs, including changes in costs and benefits
- Administrative costs, including expenses such as agent commissions, taxes, salaries, case management activities, claims and appeals processing costs and customer services
- How much profit the company expects to make
If we believe the rate request is justified, state law requires us to approve the increase.
If we don't believe the rate increase is justified, we deny the increase. The insurer can then revise its rate-increase request, or it can request a hearing.
Executive and CEO salaries are part of the health plans' administrative costs. They grab a lot of headlines but actually make up a tiny portion of the company’s rates. In general, the amount of premium going to CEO salaries is less than $1 per member per month.
How health insurers determine what you pay for coverage
Your premiums, the amount you pay for health insurance coverage, are determined by taking the base rate and applying rating factors specific to you.