10 Reasons Health Insurance Premiums Increase

Every policyholder dreads this scenario. Your health insurance company sends a letter in the mail, informing you that your premiums have gone up for yet another year. You thought you’ve been using your policy modestly (but still getting use out of it), so why does this happen?

• Age – Insurance companies may charge older policyholders three times more than younger members.
• Locations – Policies take local regulations and the cost of living into account.
• Smoking and Tobacco – If you have this habit, expect to pay at least 50 percent more.
• Family – Family policies tend to have greater premiums.
• Your deductible – If your policy has a lower deductible, your monthly premiums go up.
• You took it out before the ACA – Insurance companies now must justify increases over 10 percent. However, older plans haven’t been grandfathered in, so the old rules still apply.
• Medical spending – Insurance companies look at physicians’ and laboratories’ costs, how much you request services, and the price of any drugs. These factors affect your premium, and if one or more go up, so will your rates.
• The company’s financial situation – Not within your control until you drop the policy, the insurance company may find itself in a difficult financial situation. To compensate, the company may raise the premiums, while still falling within the 80/20 rule, to cover projected claims and administrative costs.
• The number of claims – Your premium is based on the number of claims within your pool – not just from your own policy. In response, if those within your pool start filing more claims, all premiums will increase.
• Inflation – Premiums should match the rate of inflation. So, if inflation increases just slightly year to year, your monthly amount will reflect such a change.

Keep in mind that, even if you have an older policy, insurance companies can’t discriminate against certain health conditions and cannot refuse to cover pre-existing conditions. Nevertheless, premiums may increase to the point that the policy is no longer worth having. Should that be the case, explore your options with Ion Insurance.