Do Claims Cause Health Insurance Premiums to Increase?

I get calls all the time from people looking for new health insurance because they claim one of two things:

  1. "I don't understand why my rates keep going up, I haven't had any claims"
  2. "My rates went up significantly at renewal because I filed a few claims last year"

Let's examine this.  First off, individual health insurance carriers by law CANNOT raise your rates due to claims.  Whether you filed a $100 claim or a $100,000 claim this will NOT effect your rates. Auto and homeowners insurance rates can and do increase based on rates...don't get them confused. 

Rates do typically rise every year for health insurance.  However, due to health care reform laws recently inacted we are seeing much lower annual rates increases than in the years past.  So, why did your rates go up? Let's look at the main reason for rate increases:

  1. Cost of living increase.  In other words...inflation.  Everyone in the entire area would get this rate increase.
  2. Age.  Most carriers have age brackets for rates.  If you happened to age into a new age bracket (example 55-59 bracket to the 60-64 bracket) you can see a significant jump...typically between 10-20%.
  3. Claims based on the block of business.  Carriers will look at the premiums in versus claims out for a geographical area.  If a trend is seen then they will adjust rates for everyone in that area.  This could be critical if you are with a lesser known carrier that has a very small block of business.

Those are typically the reasons why individual health insurance rates will increase annually.  You should contact your agent when your plan renews to make sure that you are still in the best plan that meets your needs.

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