Division of Insurance Health Insurance Geo Ratings

12/4/2013Division of Insurance Webinar• Wednesday, December 4, 2013, 6 p.m.• Slides and other handouts available at www.dora.colorado.gov/healthinsurance – “12/4 Webinar Slides” – “Fact Sheet: Colorado Geographic Rating Requirements” – “Factors Affecting Health Insurance Premiums for 2014” 1

12/4/2013DOI as a Regulator• Part of the Dept. of Regulatory Agencies• Regulate all types of insurance, the companies and agents to ensure they follow state laws• Review new health insurance plans and changes to existing ones offered by companies• Work with consumers to answer their questions and investigate complaintsHow did we get here?• Health care costs directly influence health insurance premiums and vary by geography.• Two large factors affect healthcare costs: – Direct costs – cost of healthcare services (doctors, hospitals, diagnostic imaging, prescriptions, provider contracts) – Utilization – Frequency of use of the healthcare system 2

12/4/2013How did we get here?• Previous geographic rating structure – Small group (50 or fewer employees) – 9 areas established by DOI, based on population – Individual Market – carriers set areas with DOI approval• Structure did not work – Too much variation / too many requests for exceptionsRating Factors• To ensure fair insurance premiums, ACA limits the number of rating factors allowed. – Geography – Age – Smoking – Family size – Design of the benefits in a plan.• Insurance companies can vary rates based only on these factors 3

12/4/2013Determining Geographic Areas• ACA mandated DOI determine geographic areas for 2014 in both markets.• ACA requirements to approve areas: – Actuarially justified – Not unfairly discriminatory – Reflect significant differences in health care costs – Lead to stability in rates over time – Apply uniformly to all insurers in a marketColorado’s Analysis• Reviewed data from 4 sources – Colorado All Payer Claims Database – Colorado Hospital Association Report on Hospital Charges & Avg. Length of Stay – Commercial database for non-MSA counties of Colorado – U.S. Census Bureau Data (population, not income) 4

12/4/2013Geographic Rating Areas Rate Factor VariationGEOGRAPHIC PLANTOBACCOAGE 2.0 3.0 0.0 1.0 1.0 = No impact on premium 5

12/4/2013Rating Factor VariationAdvance Premium Tax Credits(APTC)• Purpose of the tax credit is to help “fill the gap” between what a family is expected to contribute to health insurance and the cost of an average plan in their service area.• Areas with higher premiums can receive higher tax credits to offset the price difference.• APTC applies to incomes below 400% of Federal Poverty Level (FPL) – Indiv - $45,960 / Family of 4 $94,200 6

12/4/2013Advance Premium Tax Credits• APTC allows consumers to only pay a certain percentage of their household income for health insurance. – Consumers are expected to contribute between 2.0% and 9.5% of income toward health plan premiums. – This percentage is based on a sliding scale (the more you make, the more you pay, up to 400% of the FPL).Advance Premium Tax Credits• The APTC is only available to use toward plans purchased through Connect for Health Colorado (The Exchange)• Eligibility is based on multiple factors, including household income, family size and tax filing status. 7

12/4/2013Example: 55 Year-old Non-smoker withAnnual Income of $45,000 * APTC is calculated based on the second lowest silver plan premium in the areaGoing forward• Deadline to submit changes to federal government for 2015 is January 1, 2014.• Will continue collect input and ideas, and review possible changes.• Top goal is to ensure a healthy insurance market with a variety of choices for consumers. 8

12/4/2013When DOI Can Help• When comparing plans and benefits• When you need information on health insurance• When you believe: – Your insurance company is not meeting its obligations – Your insurance company is not providing the benefits for which you paid – Your premium increases more than expected – Your benefits changeKey Contact Information• Division of Insurance – 1.800.930.3745 – dora.colorado.gov/healthinsurance• Connect for Health Colorado – 1.855.752.6749 – connectforhealthco.com 9

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