No, but Carriers may change their rates annually, quarterly or monthly. Since there are changes to the rates of at least one carrier every month the rate tables are updated monthly.  The rates for a given month are the rates charged for all consumers buying a policy during that month.  If a consumer already has a policy a change to the rate may not immediately apply to the existing policy. 

Some carriers guarantee the rate charged to a policyholder for a period such as 12 months, but this is not a requirement of the law. Some carriers do not guarantee rates meaning a new rate may immediately apply to an existing policy.  

Yes. All individual policies issued in New Jersey contain a provision that states carriers will provide IHC policyholders at least 30 days’ advance notice of a rate change.

No. DOBI has no authority to set rates in the IHC market. Instead, IHC carriers are required to submit an informational rate filing to DOBI before charging new rates to consumers. DOBI does not need to officially approve these rates before the carriers can begin using them. As a result, the process is sometimes referred to a “file and use.” 

Yes. There are several reasons given in the law for disapproval. DOBI can disapprove rates if the carrier’s filing is incomplete meaning it does not contain all the information required by law.  Rates can also be disapproved if they do not comply with a specific provision of the law.  For example, one provision requires that rates only vary by specific rating factors, so if a filing seeks to use an impermissible factor, such as occupation, the filing would be disapproved.  Another provision requires that rates meet New Jersey’s minimum loss ratio requirement.  If a filing states the minimum loss ratio will be 75% which is below the 80% minimum loss ratio required by law, the filing would be disapproved. 

Rating factors are the indicators which determine differences in rates for the same plan of benefits such as age, gender, or geographic area. The range of variation can be 3.5 to 1 which means that the premium rate for the highest cost bracket may not be more than three and one-half times the rate for the lowest rate bracket for the same plan.

For Standard, or comprehensive benefit IHC plans, rates can only vary by age.  Gender and location are prohibited as rating factors. Although age is permitted as a rating factor, it is not used by all carriers for all plans.

Under New Jersey law, the overall rate level is considered reasonable if at least 80% of the premiums are paid in benefits.  This is New Jersey’s 80% minimum loss ratio requirement.

The loss ratio requirement is a significant part of DOBI’s review.   However, DOBI also verifies that the rates charged for different plans are reasonably related to one another; confirms that the rating factors (such as age) satisfy the limitations (3.5 to 1 from highest to lowest) in the law; and that rates satisfy overall caps.  (See a later question for information on the caps.) 

DOBI carefully reviews the calculations provided by the carrier to evaluate whether the rates meet all the requirements imposed by law.  As part of its review, DOBI actuaries consider whether the carrier’s assumptions about the growth rate of medical costs is appropriate. Once the calculations confirm that the proposed rates meet the law’s 80% requirement, and assuming the filing meets all the other legal standards, DOBI would then conclude that the proposed rate filing is justified.

Yes.  Effective September 1, 2011, Federal law requires carriers to inform the U.S. Department of Health and Human Services of all requested rate increases of 10% or more.  For the latest information on this reporting requirement, please visit: http://companyprofiles.healthcare.gov/states/NJ/rate_reviews?search_method=rate_reviews