Health Rates FAQ Answers to Frequently Asked Questions What plans does the Division of Insurance regulate? The Alaska Division of Insurance regulates rates for small employer, some large employer, and individual health insurance plans. Small employers are those with 50 or fewer employees. Individual health plans are for the self-employed and others who are not covered through an employer and buy a plan on their own. This can be for one person or a family. The state does not regulate rates for most large employers or public entities, such as a school district or the State of Alaska. What is the Division of Insurance’s role in the rate review process? An insurance company submits a rate increase request to the division. During the premium rate review process, consumers will be provided an opportunity to submit comments on specific rate increases proposed by the insurance companies. What is the timeline for reviewing 2017 proposed rates? Insurers filed their proposed rates by July 15, 2016 to sell small employer and individual health insurance plans for 2017. The Center for Medicare Services posted information on all proposed rate filings on August 1. The division will make decisions on proposed rates by August 23, 2016 for plans sold through the marketplace and October 7, 2016 for plans sold outside the marketplace only. Does the Division of Insurance set insurance rates? No. That is a common misconception. Proposed rate changes by insurers must be filed with the division at least 45 days prior to the effective date. We have broad authority to review how the rate is distributed among insureds according to factors that might predict future losses, but we cannot disapprove an overall rate unless it is “excessive, inadequate or unfairly discriminatory.” “Excessive.” A rate becomes excessive when the loss ratio (losses divided by premiums paid) drops to a point which results in the insurance company earning an excessive amount of profit. “Inadequate.” A rate is inadequate if it will lead to solvency problems immediately or has the potential for long-term solvency implications in that it may not provide sufficient fund to pay future claims, the costs of adjusting those claims and operating the business. “Unfairly Discriminatory.” All insurance discriminates among various risks. There is “fair,” i.e., “legal” discrimination, and “unfair,” i.e., illegal discrimination. Cross-subsidies encourage risky behavior in some risk categories. Therefore, allocating the premiums among risks tends to discourage risky behavior. “Unfair” discrimination basically means not treating similar risks the same in rates and coverages. How does rate review affect my premium? Rate review approves a "base rate" for insurance company health plans plus the factors that determine the actual rate you pay. Your personal cost for health insurance may be more or less than the base rate. It depends on your age, how many family members are on the plan, where you live, and whether you use tobacco. Does the public have an option to submit a comment regarding the rate review? Per 45 CFR 154.301(b), the division provides an email address, email@example.com, to accept public comments on the proposed rate increases. Last year, the division received zero comments. However, we received a few phone calls inquiring about the rate review process. What determines how much you'll pay in premiums? your age and the age of any family member on your plan whether or not you smoke the size of your family (how many people you want to cover) where you live the plan you select How are health insurance rates set? Rates must cover the cost of benefits plus the insurance company’s costs to operate without being overpriced. What protects me from overpricing? Companies must pay rebates to individual and small-group policyholders if they fail to spend at least 80 percent of premiums on medical care and quality improvement versus administrative costs. They must spend at least 85 percent of premiums on these activities in the large group market or pay a rebate. The division does not approve rate requests that anticipate rebates. How can I afford coverage? Many people qualify for financial help to pay the costs of private insurance sold through the federal exchange. Learn more at healthcare.gov. If you wish to speak to a local person to help you with your application, the federal exchange has designated local individuals you can meet with. How do rates affect my premium? The increase of health insurance rates can affect the cost of your premium. A rate is a base price for health benefits. A premium is the specific amount you pay as a policyholder. The actual premium you pay may be higher or lower than a rate based on factors such as your age and where you live. When a company submits a request for a health insurance premium increase at or above the 10% threshold for individual or small employer health plans, consumers may access pending and disposition of rates changes through our website. What is an insurance premium? A premium is the amount paid for your health insurance or plan. You and/or your employer usually pay monthly, quarterly, or yearly. Why do my premiums go up? Medical costs are driven by everything from increases in hospital and doctor charges to greater use of medical care due to new technologies and increased usage of prescription drugs. This is commonly referred to as the medical trend. What if I feel my health insurance premium increased incorrectly? First you should contact your insurance agent or the company through which you purchased your plan. If they are unable to answer your question about your premium, contact our Consumer Services section at 907-269-7900 or 800-INSURAK in-state, outside Anchorage.