Rate Review

The Affordable Care Act creates a Rate Review program in your state to help protect individuals and small businesses from unreasonable health insurance rate increases. Starting on September 1, 2011, health insurers must justify any rate increase of 10% or more before the increase takes effect.

What This Means for You

  • Your insurance company can’t raise rates by 10% or more without first explaining its reasons to your state or federal Rate Review program. All explanations will be posted on HealthCare.gov and your Rate Review program will give you a chance to comment on them.
  • Your Rate Review program will determine if the rate increase is unreasonable. A rate hike is unreasonable if, for example:
    • It is based on faulty assumptions or unsubstantiated trends.
    • It charges different prices to people who pose similar risks to the insurer.
  • Your state regulator can approve or reject an unreasonable or excessive rate increase, if your state laws give the regulator this authority.

Some Important Details

  • The Rate Review rules apply to new plans in the individual and small group markets.  (If you are in a health plan that existed on March 23, 2010, your plan may be a grandfathered plan, which is exempt from the Rate Review rules.)
  • Starting September 1, 2012, each state may have its own minimum premium increase that requires a review, based on the state’s unique premium trends, health care cost trends, and other factors.
  • If your state doesn’t have a Rate Review program, or has a Rate Review program that is ineffective, the federal government will conduct Rate Reviews in your state.

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