This is a very important question that we are asked frequently when premiums increase. It's important to understand the concept of health insurance and also what affects your particular rates. Let us first take a look at what drives Individual and Family plan rates.
Age
and Area
effect
on
health
insurance
rates
Your
individual
health
insurance
is based
on your
age and
the zip
code you
live in.
Zip code
can
swing
rates
but your
age is
really
the
driving
factor.
Average
health
care
costs
double
with
each
decade
of a
person's
life.
Typically,
you are
grouped
together
with
people
in your
area and
a
certain
age
band.
For
example,
if you
are 43
years of
age and
live in
Los
Angeles,
you will
be
grouped
together
with
people
in the
same
general
area
within
the
40-44
age
range.
All
these
individuals
form
their
own
"risk
pool"
which
means
that you
share or
average
your
medical
costs
and
claims
among
the
entire
group.
This is
essentially
how
health
insurance
works...it's
spreads
an
individual's
risk
among
many
people.
If you
undergo
a
catastrophic
health
condition
that
costs
$100,000
in a
single
year,
you do
not
directly
feel
that
yourself
and your
individual
rates do
not go
up in
proportion
to this
claim.
This is
very
different
from car
insurance
where
your
premiums
can go
up if
you
submit a
claim.
The
rates
typically
go up
each
year but
if there
are
$100,000
people
in your
risk
pool,
your
individual
premiums
will go
up $1 as
a result
of the
large
claim.
In a
nutshell,
you now
understand
the
entire
purpose
of
insurance
with
this one
example.
$100,000
can put
one
person
into
bankruptcy
but it
has very
little
effect
on
100,000
people.
As for
area,
the
medical
costs of
a given
area
tend to
be
different
from
other
regions
of the
State.
This is
pretty
reasonable
as many
other
economic
factors
vary by
area
such as
real
estate
prices
and
other
basic
living
expenses.
It used
to be
that LA
county
and the
larger
metropolitan
areas
were
more
expensive
but
rural
areas
have
crept up
if not
surpassed
them as
their is
a lack
of
competition
among
medical
providers
in those
areas.
If your
county
only has
one
hospital,
there is
not much
incentive
for them
to keep
the
rates
competitive.
A few important notes about individual family health insurance plan rates in California.
If two adults are on one policy, the rates is typically based on the age of the younger spouse. This can have a big impact the age difference between two spouses is significant.
For a young child, the newborn to age one rate is almost double the rates from age 1 to age 18. The first year of life is typically accompanied by more frequent visits and well baby check-ups which start to settle down after age 1.
At the time of underwriting (initial enrollment), the carrier can increase your rates based on pre-existing conditions and/or their underwriting guidelines. The increases or higher "tiers" tend to run 25%, 50%, 75%, 100% higher than the standard rate you will find when you request a California individual health insurance quote. If time passes from the given situation or the medical conditions lessens or is successfully treated, we may be able to request a tier review and eliminate the higher tier. Once the tier has been reduced, your tier will not increase as a result of claims that happen afterwards.
Health insurance rates in California increase on the month or the 1st following your birthday when you enter a new age band. It is not like life insurance where your rates are based on the age you originally purchased the coverage on.
All of the plans have seen increases on an annual basis but the richer plans (HMO's and richer PPO plans) will likely increase at a faster clip and tend to be more expensive. Find out more information on how to gauge the benefits of high deductible health plans such as the HSA (Health Savings Accounts).
Costs associated with maternity coverage is not going to affect an individual in their 50's and 60's and to a lesser extent, people in their 40's. It will impact costs for people in their 20's and 30's if the plan covers maternity.
California Small Group health insurance rates
For companies in California with 2-50 employees, your rate is partially based on the health or claims history of the company. A carrier is allowed to increase or decrease a specific company's rates by 10% from the standard rate. This RAFF or Risk Adjustment Factor is typically re-indexed at anniversary date (12 months from initial effective date) each year. Some carriers will automatically give the highest tier (1.1 RAFF) for smaller companies (under 5 lives). California health carriers will typically give RAFF guarantees for larger groups (usually 10+). It's important to quote the correct RAFF when running your California group health insurance quote to make sure you have correct information. This is especially important when you are looking at a program like Blue Cross of California's Employee Elect where your employees are choosing their own plan based on a company participation.
We hope this is a good explanation to what your rates are based on. You can find additional information on trends and the basis of health insurance rates below.
Other
important
concepts
to help
you
understand
your
California health
insurance
quote
are:
Individual
health
insurance
underwriting
Small
Group
RAFF
rates
The
concept
of
health
insurance
A quick
introduction
to
California
health
insurance
history
Understanding
health
insurance
costs
To
run your
instant
health
insurance:
California
Individual
Family
health
insurance
quote
California
group
health
insurance
quote
