It’s no secret that the the Florida health insurance market has had a giant question mark over its head since the Affordable Care Act was signed into law in 2010. Benefits have increased almost straight across the board with every health insurance carrier in the United States, and as a result, prices have risen steadily. If you give more benefits, you have to charge a higher premium. However… is it possible that the cost of health insurance in Florida has actually dropped in some cases?
Every health carrier uses its actuaries to determine the risk-to-price ratio in order to determine its premiums. What most consumers do not know is that rates can actually fluctuate from year to year based on their calculations, and they don’t always just go up. Our Orlando insurance office has had cases where rates have actually decreased this year with certain health insurance carriers despite the benefits rising. How is this even possible?
Health insurance rates are determined by zip code – yes, that’s right. Different zip codes have different rates. An insurance company will look at an overall snapshot of that zip code and factor things such as how many claims that zip code has had and how much the insurance has been used, basically tallying up when they have had to pay out for the policyholders of that zip code. For this reason, if one policyholder in any given zip code gets a rate increase based on utilization, that means everyone in the zip code will get the same percentage rate increase even if that person never used their health plan! It goes both ways however… If a zip code has had a particularly good year (i.e. not many insurance claims), the rates can experience a drop.
To put it very simply – the overall health and claims of your fellow policy holders in your local zip codes will directly affect YOUR health insurance rates weather you’ve used it or not.
Now, I’m going to tell you something that the insurance companies do not want you to know. If the risk profile in your local area drops, the company will not lower your rate. If someone were applying for new coverage they would get the better rate, but a current policyholder will almost NEVER see a decrease in their health insurance rates, even if the numbers are favorable. So, what can you do about it? Talk to your broker, and ask them to re-quote you at this year’s rates. If you don’t have a broker, you can talk to one of our brokers, and we’ll be glad to help. Many times, a carrier will not re-rate you even if your new rate is lower, so at that point it might be time to get a free health insurance quote and look for a better deal elsewhere. We are not condoning switching health insurance carriers every year, but if you have had a plan for 3-5 years, it might be a good idea to do a little shopping for a better rate. 4 out of 5 times, you will probably find one.
Staying on top of health insurance can save a family a lot of money over time. Don’t wait until its too late or you may find yourself stuck somewhere you don’t want to be. Review your policy carefully and make sure you’re getting the right coverage for the right price. Ask questions, demand answers, and don’t ever let anyone rush you into buying a plan.