Changes in How California Health Insurance Rates Applied

With all the talk in the media on whether California health insurance rates will go up or down, there is a fair amount of forecasting which we all know is prone to mistakes.

There are some key aspects of how health insurance rates will change that we do know about so let's take a look at those and then explore how they might affect your monthly premiums as individuals or companies.

California health rate tiers are going away

In both the California group and individual markets, by State law, carriers were allowed to adjust an individual person, family, or companies rate by a certain amount based on the health history of the individual or group at the time of enrollment (and at annual renewal for groups).

On the individual market, these were called "tiers" and generally, they would apply a percentage increase (25%, 50%, 75%, etc) to the base rate for individuals that had more serious health issues/histories.

With time away from the situation, we could have the increase removed or reduced.

On the group market, the change to the rate was called an RAF (risk adjustment factor) and the carrier was allowed to increase or discount the standard rate by 10% (.90 to 1.1).

Smaller companies and those with more health claims would likely see the 10% bump while larger companies would generally get a lower RAF and carriers even used discounted

RAF's to attract new business.

So how will the removal of rate tiers and RAF's affect you?

If you are currently rated up, you will probably not see a big change unless you have a really high tier (75% or 100%, MRMIP, etc).

If you're healthy, the average rate will go up since you will essentially be subsidizing those with higher tiers all on one rate. There are many more standard tiers versus higher tiers so the increase will be offset by this numbers game but expect 10%+ as result of the removal of tiers.

For companies, larger companies and those with healthy employees might see an increase of approximately 3-5% as a result of the change while smaller companies or those with health issues will not see a net change from this aspect of the reform law.

Individual family members are now rated

The individual family California health market has already made large moves towards this with the acceleration speeding up in the last 12 months since the law was on the books.

California group health insurance will see big changes as result however.

Originally, health insurance rates for multiple people on one policy (spouse, child, children, family) was based on a basic family make-up type. For example, there was one rate for a family of three or a family of seven.

That will no longer be the case.

The bigger impact will result for spouses which were in different age bands. For example, if we had a 35 year old person married to a 45 year old spouse, we could use the younger spouse's age for the basis of the insurance (big difference in cost) and on the group market, the rate would be based on the employee's age regardless of any age difference (good or bad depending).

That is going away. Now, each family member will essentially have his or her own applied rate based on that person's age.

So what does that mean?

If you have larger families, you're likely to see your premium go up.

If you have smaller families, you probably won't see much of a change as a result. If you've been able to have older spouses as dependents and receive an essential discount, you will likely see rates go up. The increase can be considerable depending on the age disparity since age has such a big impact on rates.

So what do we do with all this information?

You need to re-evaluate our current plan rates versus the available options on the market through our Health Exchange Quote page below.

You will have access to plans both in and out of the Exchange from one page which is key to getting the best rate. It's definitely not a time to disconnect as a lot of money is at stake with coming changes.

You can run your California Health Exchange Quote Comparison to view rates and plans side by side from the major carriers...Free.

Again, there is absolutely no cost to you for our services. Call 800-320-6269 Today!