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Each new year brings with it the promise of mproved prosperity, enhanced relationships, and the annual health insurance rate increase!
In the health insurance industry, it is very common for policyholders to receive a rate increase at least once, ( and in some cases up to four) times per year. The two largest factors for these increases are the Attained Age and Area Rating methodologies.
With an Attained Age based company, policyholders receive a new rate simply because they attain a new age. As our bodies age we become more likely to suffer a catastrophic medical event and insurance companies are more at risk for a large claim.
The alternative to an Attained Age health plan is to find a company that operates on an Issue Age basis. This pricing technique protects against the annual rate increases by charging the same rate for the age bracket the policyholder is in when they purchase the plan for the life of the policy. Unfortunately, there are very few Issue Age based companies in the industry.
Area Rating is a technique where insurance companies measure all the claims against the premiums collected in a particular geographic area and determine if they made a profit for that area. If not, they will usually implement rate increases to balance the ledger.
Major illnesses certainly impact the claims, but the general public underestimates the significance of doctor's office visits that are covered under a co-pay system. Co-pays show up in the actuarial tables as claims and although the amount the insurance company pays a doctor for each visit is relatively small, when multiplied by the number of patients a doctor sees throughout the year, the amount can represent a fairly large payout for the insurance company.
These are a few facts about the health insurance industry that many people are not aware of. More articles will continue to be posted on Texomaland.com so keep checking this website for more tips!