Well anyone paying attention has heard that Health Insurance companies will be raising their premiums, some significantly this fall. It is natural to ask “Why?”
Why Are Health Insurance Costs Increasing?
The short answer is the insurance companies are still losing money on individual health plans. No company can continue to operate if they are losing money. If companies continue to lose money, they become financially unstable and must be sold or simply close as recently happened to several companies nationwide.
Locally, Community Health Alliance closed up shop in 2015. United Healthcare recently announced they will not be offering new individual health plans for sale in Tennessee in 2017 due to unfavorable financial conditions.
That leaves just (3) companies offering plans here:
- Blue Cross Blue Shield of Tennessee
- Humana
- CIGNA
When health insurance companies lose money, they must take steps to regain profitability. One way to do this is to raise premiums.
Most people do not realize it, but unlike other industries, insurance companies that want to raise rates must submit their request & documentation to the Tennessee Insurance Commissioner’s office for approval prior to implementing. The Commissioner’s office has a vested interest in making sure companies are able to make money.
Nobody wins if a company becomes financially unstable.
Will My Insurance Subsidy Go Up as Premiums Go Up?
For those that currently receive subsidy to help pay your premiums, the good news is that when premiums go up, so do the subsidies. So if you are receiving subsidy, the premium hikes will be easier to absorb. For those who do not receive subsidy, get ready to pay more or shop around to find a more affordable plan.
Lowering your premium will likely mean your deductible, co-pays, and out of pocket max will go up.
If you need help reviewing your options, let us know. We’re not magicians but are experts and can help you find a plan that fits your budget. In our next post, we will look at some of the other ways insurance companies are cutting costs to regain profitability and how these steps may affect you.