For Immediate Release:
SAINT PAUL, MN – As Minnesota consumers start planning for their insurance needs in time for Open Enrollment and the opening of Minnesota’s health insurance marketplace, MNsure, on October 1, 2013, the Minnesota Department of Commerce urges consumers to take a look at the options to make the best fit. Understanding the difference between a health insurance premium and a rate will help consumers find health insurance that fits their financial and health needs.
Often, the terms “rate” and “premium” are used interchangeably when discussing insurance, which makes comparing prices confusing to the average company. To simplify the process, the Commerce Department reminds consumers that:
What factors go into my rate?
Individual and small group health insurance rates are determined for a particular plan of benefits from a particular network of doctors and hospitals based on the combined medical costs of everyone in that company’s market for a particular age, tobacco use, and geographic area. This is called community rating– the rates are based on the costs of the entire community.
What factors affect my premiums?
In general, how much a health plan company charges depends on the following:
The Commerce Department reviews all health plan rates and policy forms and a company cannot use a rate until it is approved. This allows the Commerce Department to ensure the rates reflect the true cost of the benefits included in each health plan. These rates are the basis for the premium you pay, which can only be based on your age (and the age of your family members), where you live, and whether you smoke.
Your insurance company must spend at least 80 or 85 percent of the premiums they collect on health care claims or quality improvement. If they don’t, the company must send a rebate to the policyholder or employer that bought the plan. These rebates are issued each year, and in the last two years, over 132,000 Minnesota consumers received nearly $10.5 million in rebates, or an average of $254 per family.
It is important to remember that the cost you pay may vary under different policies. When shopping for a new plan, consumers will want to consider the deductible and the copay or coinsurance you would pay when you use your health care, as well as the premium you pay each month.
The Minnesota Department of Commerce is here to help.
Call our Consumer Response Team at 651-539-1600 or toll-free at 1-800-657-3602 (in Greater Minnesota) if you have any questions about your insurance or if you believe you have been a victim of a scam or fraud.