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Questions and Answers about Florida Health Insurance Premiums

Questions and Answers about Premiums

Why Do Companies Raise Premiums?

Insurance companies often raise premiums when the cost of claims they must pay increases.

Medical-cost inflation, a major factor that contributes to premium increases, measures the increased cost of a particular procedure each year.

Medical utilization, or the number of times doctors perform a procedure each year, also causes premium increases.

Cost shifting occurs when hospitals raise their rates for services to offset the cost of caring for nonpaying or indigent patients. In addition, new technologies, tests and medical malpractice claims can contribute to cost shifting and increase the cost of health insurance.

What Do Your Premiums Pay For?

Premiums help pay policyholders' claims and other expenses, such as agent commissions, premium taxes and administrative expenses.

How Do Insurance Companies Determine Premiums?

An insurance company considers many factors when setting premiums, such as:

• medical-care costs,
• coverage,
• age of the policyholder (both current age and the age at which the policy was issued),
• gender,
• lifestyle habits (such as smoking),
• geographic area and
• riders purchased.

One example from the last category, called a waiver-of-premium rider, would require you to pay higher monthly premiums if selected. In return, the company would pay your premium if you became sick and couldn't pay it.

Consumer Alert

A recent legislative change provides that companies offer up to a 10 percent annual premium rebate for participation in wellness programs. You should inquire about this rebate with your company.

Also, a Florida law rewards individuals who ind improper charges on their health care bills. The law attempts to help contain the ever increasing costs of insurance and health care. You should carefully review the charges when you receive a bill from your hospital, doctor or other health care provider. You should verify that your bill covers only procedures you actually received. This will also help you to watch out for "double billing," or being charged twice for the same procedure. If you see a mistake, you should notify your insurance company in writing. You may receive 20 percent of the reduction amount, up to $500, for an incorrect bill that merits a reduction.