Will volatile individual market premiums impact you?
Everyone is concerned about obtaining the right insurance and how much it will cost. But like any insurance policy, it can be confusing to understand the link between what our premiums cover and our personal health care needs, and overall health costs. Minnesota, like other states, is still adjusting to all the changes created by the ACA. The individual market is a small insurance pool and by far the most volatile. All indications suggest that it will be a while before enrollment and prices are more stable.
Striking a balance among ensuring all the new laws are following and everyone’s costs for health care are covered, and protecting you as an individual consumer is the job of federal and state regulators. Below are some of the factors that go into striking that balance and setting insurance rates.
When will I know if my premiums are increasing?
Some preliminary information is released by the federal government in early June and its useful if, and only if, you by an individual health insurance and your plan is recommending a rate increase of more than 10 percent. The requested premium increases shown are not relevant if you buy Medicare, group insurance or are part of an employer plan. Actual rate increases for individual plans are not set until fall when you are contacted by your health plan. Typically, all rates are posted on October 1.
What drives the premiums for an individual plan are the estimates of medical spending in the coming year. If medical spending is growing, people in your plan have increased health care needs, or if premiums are not covering current costs, there is going to be pressure to increase rates. If these factors are in decline, rates would have downward pressure. Over time, insurance premiums have to balance out with the health care needs and benefits covered for the group being covered.
What drives insurance rates?
How and where you get your coverage will influence your costs. People who are under age 65 and buy coverage on their own are in the market segment undergoing the most change. About 6 percent of Minnesotans in this volatile group known as the individual market. The rest of Minnesotans get coverage through their employer, state programs or Medicare. The cost of your insurance depends on largely on the costs of who you are buying insurance with—the people in your pool. Several factors are influencing 2016 rates, as described here.
Can I get help paying the premium?
Once premiums are final, you’ll be able to see if you are eligible for federal tax credits. Estimating the help is as easy as entering your zip code and income into a calculator. Even if you didn’t qualify for help paying your premium in the past, you may qualify now. How much help you qualify for depends on the cost of insurance where you live and your income.
How premiums are set?
About eight months before health insurance takes effect, health plans send the Minnesota Department of Commerce proposed premium rates. Commerce reviews the information to ensure rates are neither too low nor too high to meet expenses. Details include a description of how the health plan arrived at the proposed rate and changes in the mix of who is enrolled now and expected to enroll in the future. Some of the questions health plans answer are:
- How much and what kind health care services are being used?
- What does the research tell us about how much and what kind of care will be needed in the future?
- Do the premiums charged and benefits covered comply with all federal and state rules?
- Where do people in the group live? What’s are their ages? How much does care cost in their communities?
- How much will it cost to administer the coverage? What are the costs to the health plan to serve customers and answer questions; run disease management, prevention and wellness programs; provide nurse hotlines; work with provider to improve care; prevent fraud and abuse; invest in cyber security; pay claims and health care premium taxes.