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Prese n ted by the I l linois Departm e nt of In s ura n ce Andrew Bor on, Director

OC T OBER 2013. Prese n ted by the I l linois Departm e nt of In s ura n ce Andrew Bor on, Director. This Guide Will Expl a in H o w:. 2. Let’s G et S t a r ted … the ba s ics. Be f ore w e c an disc u ss the r a te r e vi e w p r oc e ss,

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Prese n ted by the I l linois Departm e nt of In s ura n ce Andrew Bor on, Director

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  1. OCTOBER2013 Presentedby theIllinoisDepartmentof Insurance AndrewBoron, Director

  2. ThisGuide WillExplainHow: 2

  3. Let’s GetStarted…thebasics Beforewe candiscussthe ratereviewprocess, itwillfirstbehelpfultohitsomebasics. 3

  4. Let’sGet Started…thebasics Until January1,2014,YourPremiumMayBeHigher orLowerThanTheBaseRate, Becauseof Your: Age Where youlive Premium Gender Policy duration Health status 4

  5. OnorAfter January1,2014,YourPremium MayBe Higher or LowerThanTheBaseRate,BecauseofYour: Age No-onewillbe denied coveragebased on pre- existing conditions, currenthealthstatus, andno-one willbe chargedmore basedon theirgender. Where youlive Premium Tobacco Use Individual vs.family enrollment 5

  6. WhatDoesa RateCover? Claims for medicalcare(hospitals,doctors, pharmacy,labs, andotherpatientcare) Insureradministrativecosts (e.g.claims processing,caremanagementprograms,staff salaries,marketingcostsandtaxes) Insurer’sprofits Reservesto coverhigherthanexpectedclaims 6

  7. Nowthatwe havetouched onthebasics,thenext questionis…“Why DoRatesContinueTo Increase And Why DoesIt MatterTo Me?” Therecanbe manyreasonsthat yourratescan increase. Thefollowingare a few commonreasons: Increaseinusageof medical careand services Higher drugcostsandmoreprescriptions Increaseinnewtreatmentand technology Agingpopulation Unhealthylifestyles Treatingtheuninsured These higher health careclaimcostsarethen reflectedin theratesinsurerscharge forhealth insurancecoverage. 7

  8. Why Is My PremiumDifferentfrom OtherIndividuals Whohave The SameTypeOf Policy? • …theanswer: • Onceyourpolicy isissuedand yourpremium rate established,you areplacedin apoolwithother individuals whohave thesame typeof policy. • Anyrate increaseis not determined by yourindividual claims,butbythe claims experienceof theentire pool. Youmay bewonderingwhy yourrates have goneup even though you and your covered familymembers are healthyandhave had only minorclaims.

  9. Rate Review in Illinois…nuts &bolts WhichHealthInsuranceRatesAreSubjecttoDepartmentReview? Acompanyselling health insurance mustsubmitall health rate filingstotheDepartment prior tousingthem.This includes changesinratesforexisting productsas wellas ratesfornew products.

  10. Rate Review in Illinois…nuts &bolts • The following typesof plans donothave to file theirratesbeforeusing themintheState ofIllinois: • Accidentinsuranceanddisabilityincomeinsurance,or any • combinationof thetwo • Liabilityinsurance,includinggeneralliabilityinsuranceand automobile liabilityinsurance • Asupplementto liabilityinsurance • Workers’ compensation • Automobilemedicalpayment insurance • Othersimilarinsurancecoveragewhere benefits formedicalcareare • secondaryto other insurancebenefits

  11. HowDoes Rate Review inIllinois Work …step1 An insurancecompanymustsubmittheirrequest tofile bothnewand renewal rates to theIllinois Departmentof Insurance.

  12. HowDoes RateReview inIllinois Work …step2 • ExpertswithintheDepartmentreviewthefilingto • ensurethatitiscomplete,accurateand consistent. • Ifinformationismissingor incomplete,theDepartment requeststhemissinginformationfromtheinsurance carrier. • Theratesare thenfurtherreviewedand postedon the Department’swebsite.

  13. HowDoes RateReview inIllinois Work …step3 If the proposedrateincreaseis10%or more, Department is requiredtoperforma morein-depth reviewto determinewhether such ratesare“unreasonable”. Underthe federalAffordableCareAct, rateincreases whichexceed10% maybe deemed unreasonableif the insurer wouldbespendinga lowpercentageof premium dollarsonactualmedicalcareand quality improvements, and if the ratefiling reliedon dataof a questionable nature.

  14. HowDoes RateReview inIllinois Work …step4 • Starting September2011,insurersproposing rate increases foran individualpolicyof an averageof10% or more must submit a “RateJustification”as partof itsrate filingtotheDepartmentand tothe U.S. Departmentof Health and Human Services(HHS). • A “RateJustification”is a standardizedform for consumers toseethe insurancecarrier’sreasonsfor a proposedrateincrease.It ispostedon www.healthcare.gov.

  15. HowDoes RateReview inIllinois Work …step5 • Wherea rate increase is10% or more, the Department • considersmanyfactors,including: • Enrollmentpatterns • Medicalusagetrends • Administrativeexpenses • Profits • Reserves • Benefitchanges • Thecompany’s historyofratechanges • MedicalLossRatio* • Consumer comments submittedto theDepartment • Other factorsdriving therateincrease • Recent andprojectedfuturecostsofmedical careand prescriptiondrugs

  16. HowDoes RateReview inIllinois Work …step5 cont. NOTE-TheDepartmentdoesnothavetheauthoritytoapproveordisapproveproposedrateincreases. Therefore,itis possible thata rateincreasemaygo into effect evenifthe Departmentdeterminesthattherateincreaseis“unreasonable”. 16

  17. Rate Reviewin Illinois…MedicalLossRatio(MLR) • MLRrefers totheportionofinsurancepremiums an insurer spendsonhealthcareandactivitiesthatimprove health carequality. • Thenewhealth reform law requiresthat a minimumof 80%(in theindividualandsmallgroupmarket)and85% (inthelargegroupmarket)ofeachpremiumdollar is spent onhealth careservicesandhealth carequality improvement andnotoncompanyoverhead and administrativecosts. • Startingin2012,aninsurernotmeetingtherequired MLRpercentage must giverebatestopeopleenrolledin the planortheemployerthatpurchased it. 17

  18. HowDoes RateReview inIllinois Work …step6 • TheDepartmentprovidesitsfinaldeterminationon the reasonablenessofan increaseof 10%ormoretothe insurancecompanyand toHHS. • A linkis providedontheDepartment’swebsite to • this informationonwww.healthcare.gov. 18

  19. HowDoes RateReview inIllinois Work …step7 • Whenthe Departmenthas issued itsfinal determination, summaryinformationonthe ratefilingis postedtothe chartof proposedratechanges on ourwebsiteathttp://insurance.illinois.gov/hiric/rate-filings.asp • Note: a ratechange that ispostedisalwaysanaverage • rate, and yourindividualpremiummaybedifferent.

  20. Rate Review in IllinoisWork… yourrole Your Participationin theRate ReviewProcessis IMPORTANT: TheDepartmentacceptsquestions,concernsandcommentsrelated torate filings. Whensubmittingyourcomments, pleaseidentifyboththecompanyandthe policy number.TheDepartmentcannot respond tosubmittedcommentsbutwill respond toquestionsconsistentwithourCommentPolicy.

  21. Federal Grantsand Reports… • AspartofthefederalAffordableCareAct (ACA), thefederal governmenthasprovided grantfundstoIllinoisandother statesto enhancetheratereviewprocessandincrease consumereducationandoutreach. • Grantrequests andquarterlyreports submittedbytheDepartmenttothefederal government(HHS)areavailableonour website:http://insurance.illinois.gov/hiric/premium-rate.asp 21

  22. ADDITIONALFEEDBACKONTHE RATEREVIEWPROCESSIN ILLINOIS? TheDepartment of Insurance welcomes comments atanytime. Feedbackcanbe sentto doi.healthreform@illinois.gov Presentedby theIllinoisDepartmentofInsurance AndrewBoron, Director

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