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Why is health reform not stopping health insurance rate increase

Ernie Shannon's picture

The popular online source of medical coverage, ehealthinsurance, said today that health insurance costs are poised to rise this year despite the passage of health care reform nearly two years ago.

In a published question and answer release today, the internet-based company suggested that 2012 will bring many changes to the world of health care – some of which will surprise Amercians.

Question: Doesn’t health reform prevent rate increases from happening?

Answer: Unfortunately, no. While the 2010 health care reform law includes provisions designed to help reduce the costs of medical care and health insurance, it does not ban rate increases. It does, however, allow for public review of some rate hikes. Regulations released by the Department of Health and Human Services require that rate hikes of 10 percent or more be reviewed to determine if the increase is reasonable. Contact your department of insurance to learn more about the rules that may apply in your state.

Question: It’s frustrating to get rate increases when you’re trying to live on a budget. Is there anything I can do to lock in a premium for a period of time?

Answer: In most states it’s possible for insurance companies to raise your rates at any time, though most of insurers limit increases to once or twice a year. Unless the plan you purchase offers a rate guarantee period (and relatively few do), you’re going to run the risk of getting a rate hike. But it’s better to run that risk and have health insurance than to go uninsured and leave yourself open to even greater financial risk if you get seriously ill or need hospitalization.

Question: Should I search for similar plans from other carriers in my state?

Answer: As with any product or service, it’s a good ideal to look around every few years to see if you’re still getting a good deal. People who buy health insurance on their own sometimes assume they’ve got to stay with the same insurance company in order to have access to their same personal physician or local area hospital, but that’s not always the case.

One thing to keep in mind: If you bought your current plan before March 23, 2010 (when health care reform was signed into law) it may have "grandfathered" status. That means it's not required to meet certain coverage guidelines. If you like your current plan, that's great, but keep in mind that a new plan may allow you to receive certain kinds of preventive medical care without any out-of-pocket cost to you. Compare your options to see what makes the most sense. If you do find a cheaper plan, be sure to wait for an approval before you cancel your existing plan. If you have developed a medical condition while on your current individual plan, you may not qualify for a new policy with another carrier.

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Question: "In order to find affordable coverage, I'm looking at plans with higher deductibles and more restricted benefits. Are there dangers in cutting too much out of my plan?"

Answer: Maybe. Do your homework and make sure you know what you're getting. Be sure you understand how costs are shared between yourself and the insurer under any new plan. Look at the deductible and make sure it's something you could afford in an emergency. Look at the annual maximum out-of-pocket amount, too. That's the most you'll have to pay in a single year (including your deductible and other charges like coinsurance, but not counting your monthly premium) before the insurance company takes over all other covered expenses.

There may be certain benefits you can do without. For instance, if you don't use brand-name prescription drugs, you may be able to save money with a plan that limits coverage to generics. Some people may be happy to go without chiropractic care. And single men may not need a plan offering generous maternity benefits.

Question: "If a pre-existing medical condition is preventing me from changing insurers, what should I do?"
Answer: Look at other options from your current insurance company. Often, when informing you of a rate increase, your insurance company will also offer you alternative coverage options. These options typically don't require a new application or a review of your recent medical history. Less expensive options may require greater cost-sharing (higher deductibles), but they'll allow you to maintain your coverage and access to discounted rates for medical care.

If your insurer did not offer you an alternative plan when notifying you of a rate increase, you still have the option to contact them and attempt to get yourself moved onto a policy with a lower monthly premium. Work through your licensed agent for help. Note that such a move will frequently require you to increase your deductible.

Question: "Do I have to keep everyone in my family on the same health insurance policy?"

Answer: Not necessarily. If your family is on a shared policy that has increased its rates, it may be less expensive to place different family members on different plans, or even with different insurance companies, based on their needs.

For example, if one member of a three person family has a pre-existing condition, you may be able to keep that person on the original plan and shop around for a different, less expensive option for the others.

Two things to be aware of: First, insurers don't always allow you to change the number of family members on a policy, so make sure you don't cancel coverage until you've cleared the medical underwriting requirements for your new policy. Second, depending on the products available and the rules in your state, you may have to wait for a state-sanctioned open enrollment period in order to enroll a child in a new individual plan of his or her own.

Question: "What if I can no longer afford my premiums and I'm unable to qualify for a cheaper policy?"

Answer: Don't go without some form of health insurance coverage. Most people are unaware of all of the free or low-cost public programs available to them. If private insurance is no longer an option for you, contact the non-profit Foundation for Health Coverage Education (FHCE) at coverageforall.org and find out what free or low-cost health care options are available to you in your area. The federal government has also created a resource site for people with pre-existing medical conditions: www.pcip.gov .