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
The state does not regulate rates for most large employers or
public entities, such as a school district or the State of Alaska.
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.
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.
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,
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
“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.
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.
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.
Rates must cover the cost of benefits plus the insurance company’s costs to operate without being overpriced.
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.
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.
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.
A premium is the amount paid for your health insurance or plan. You
and/or your employer usually pay monthly, quarterly, or yearly.
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.
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.