2016 Individual Health Insurance rate Submission

The individual health insurance companies have submitted their 2016 rates for Indiana. Each health insurance company must submit a very detailed rate submission to the department of Insurance (IDOI). The IDOI then reviews the submission and then approve the filling if the math behind the submission makes sense. Making sense of the filling can be very difficult.

The IDOI will go back to the insurance companies and ask for explanations on certain aspects of the filings. This gets very interesting because the carriers may submit conflicting data.

Numbers that were very conflicting were the expedited medical trend for 2016. Some carriers had medical trend at 4.5% and other had it at 10%. This is where the IDOI will drill down the carriers on how they came up with the medical trend.

The IDOI plays a very important role in keeping the insurance companies honest.

Each company has requested rate increases or rate decreases. Then those requests must be approved by the state. As you can see, some carriers are asking for significant decreases. These requests also have to go through state approval.

For policies sold on the exchange here in Indiana, the rate reductions are going to have a huge impact on tax credits. The tax credits for Indiana are based on the 2^nd lowest costing silver plan. When you review the chart, we are only seeing state averages. The averages do not show the true impact of ratings in each Indiana County.

Tax credits are based on county, income and age. Certain Indiana counties have lower premium rates. This is because they have less risk from claims. If we look at a carriers that has 22% decrease on a Silver plan in a county, now the tax credits have just gone down 22% for the entire county. If you have a health insurance policy with Anthem, and they give no rate increase for your plan, but you live in the county where another carrier had a 22% decrease. If you are receiving a tax credit, then your portion of the premium just went up 22%. Thus this can have a destabilizing impact on the plan in that county. The other issue with the unusual decreases, the insurance company may want to build up their membership, so they can bid for a Medicaid contract. This is where the IDOI will make sure the decrease makes sense.

When we look at the two off the exchange carriers, Humana and UHC, the avg. rate is very different. Humana has an avg. premium of $574 while UHC has an average rate of $462. Again the average does not tell the entire story. Humana’s premium may be much higher because of claims. Since they offered the PPO plans in 2014, they may have picked up high risk business. When Indiana Compressive Health Plan (HIGH RISK POOL) shut down, Humana picked up a lot of those members. This segment of Hoosiers have very high claims and I think this has led to Humana’s double digit rate increase for the 2^nd year in a row.

Time Insurance also known as Assurant is exiting the market for 2016. The company is closing the individual health division down and sold off the rest of the employee benefits.

The rate increase that have been submitted may not be what the IDOI allows. So we will have to wait and see.