Consumer Disclosure

Consumer Disclosure about Proposed Health Insurance
Rate Increase
Status: This proposed rate increase is currently under review.

The ABC Health Insurance Company
Green Earth products sold in Indiana
•The ABC Health Insurance company has requested a rate increase above the 10%
threshold for review.
•The law requires a review of these proposed rate increases by States, or if a State
does not have an effective review program, by the federal government, to determine
if the proposed increase is unreasonable.
• The Indiana Department of Insurance will review this proposed rate increase.
• This posting does not mean that the proposed rate increase is too high

or that it is unreasonable. That can be determined only after the rates
have been reviewed. When the review is completed, you can see the
result here.

ABC Health Insurance Company Is Asking to Increase
The Health Insurance Rates It Charges to Policyholders

How large is the proposed rate increase?
•If this proposed rate increase goes into effect , the average new rate for
The ABC Health Insurance Company’s Green Earth products [link] sold in
Indiana will be $235.05 a month. This is up $24.82 from last year’s
average rate of $210.23 a month.
•Expressed as a percentage, this proposed increase is an 11.8% increase
on average.

How will this rate increase affect the premiums people pay?
• A “rate” is a base price for health benefits – a “premium” is the
specific amount charged to groups and covered individuals. The actual
premium groups and covered individuals may pay could be higher or
lower than the $235.05 average rate, based on rating factors like their
age and where they live or, in an employer group plan, based on the
make-up (age, family sizes, etc.) and health experience of the group.
•The 11.8% is an average rate increase for all covered groups or
individuals. The insurance company has stated that the minimum rate
increase for this product will be 5% and the maximum will be 13.6%.
The premiums may be higher, based on an individual’s rating factors, or
in an employer group plan, based on the ages, family structure, and
health experience of the group members.

When will this take effect?
• If this increase goes into effect 900 covered individuals will pay the
new premium on their first renewal or anniversary date that falls on or
after September 2, 2012, or on a different date determined by the
insurer (if state law allows).

How will I know if this increase has taken effect?
• If this increase goes into effect, ABC Health Insurance Company will
notify its covered individuals and employer groups of their premium
increases.

Section 1: What Is Causing the Proposed 11.8% Average Rate
Increase?
The insurance company is asking to increase rates because it believes there will
be increased costs for the three factors that make up an insurance rate: medical
services costs, administrative expenses, and the part of the premium the
company keeps after paying for medical services and administrative expenses.

The Proposed 11.8% Increase Adds $24.82 to the Average Monthly Rate
Here’s the breakdown:

The Average Monthly Rate Increase consists of
the following:

$24.82

Medical Services – Cost of providing
healthcare services to policyholders

$19.91

80%
[hyperlink to p. 4]

Administrative Expenses – Marketing, claims
processing, and other costs to the company

$2.42

10%

Underwriting Gain/Loss – Amount the
company keeps after paying claims and
administrative expenses

$2.49

10%

Section 2: Rates and Medical Costs
What Is Included in Medical Services Costs?
The cost of medical services -- what the insurance company pays doctors, hospitals,
and other providers when covered individuals need their services -- are the biggest
part of a rate. The insurance company believes that 80% of the 11.8% average
proposed rate increase will be caused by higher medical service costs next year. The
next table shows how much medical services costs are expected to increase.

Many Types of Medical Service Add to the $19.91 Average Proposed
Increase for Medical Services Costs
Hospital Inpatient
Care in a hospital

$1.97

10.4%

Outpatient
Care in a hospital or other facility that doesn’t require an
overnight stay

$3.05

18.0%

Professional Services
Payments to doctors and other healthcare professionals

$5.51

22.4%

Prescription Drugs
Medicines you need a prescription to buy

$5.24

26.9%

Ancillary Services
Medical supplies, ambulance fees, etc.

$0.30

1.5%

Capitation
A fixed per person payment the insurer pays to a
provider or provider network to cover a person’s care.

$1.50

8%

Other Costs*

$2.35

12.8%

Total Medical Service Cost Changes

$19.91

100%

What’s Causing These Medical Service Costs to Increase?

Cost of Services

How Much People Use
Medical Services

Other Costs*

60%

30%

10%

*This category includes several factors that may apply to the insurance company’s rates:
1) Changes in how much the company charges in cost sharing , which is the covered group’s or
individual’s share of the costs of covered medical services, for example, a co-pay;
2) Changes in the benefits that are covered; and
3) Correction of prior net claims estimate.

Section 3: New Rate
How Are Rate Dollars Spent by This Insurance Company?
If this proposed rate increase goes into effect, the average new rate for this health
insurance plan will be $235.05 a month. This is up $24.82 from last year’s rate of
$210.23 a month.
This chart shows the costs that will make up this average rate.
A covered group’s or individual’s premium may be higher or lower than this rate.

$10.19

Cost of Medical
Services: 76.2%

$45.75

Administrative
Expenses: 19.46%

$179.12

Profit or Retained
Earnings: 4.34%
The $179.12 cost of
medical services is
made up of…

2%
4%
25%

Hospital Inpatient

15%
16%

Outpatient Facility
Professional Services
Prescription Drugs

38%

Ancillary Services
Other Costs

Section 4: Past Rate Increases

What Is ABC Health Insurance Company’s
Recent Rate History
For Green Earth Products Sold in Indiana?
You may want to see how the requested rate increase compares to rate increases that
ABC Health Insurance Company has requested in the past for the policies covered by
the disclosure.

Year

Increase The Company
Asked For
(Average)

Actual Increase
(Approved or
Implemented)

2008

First Plan Year

First Plan Year

2009

8%

8%

2010

10%

7%

These increases were approved before this review process was in place

Section 5: Other Information for Consumers

Which Products and Plans Are Affected by This Rate Increase?
The proposed rate increase that ABC Health Insurance Company is asking for will
affect the list of products and plans that appears in the chart below.
[hyperlinked from p. 2]

Product Names

1. Green Earth
Health Insurance

Market

Individual

Plan Names

Product
Types

Accepting
New
Enrollees

1. Green Earth Plus

HMO

Yes

2. Green Earth
Savers

Other Information
If you have questions about this proposed rate increase, or any other questions
about this plan, you should contact your state insurance regulator. The
information below is commonly used by insurers to report rate increases to
state insurance regulators. This information may be helpful if you want to ask
your Department of Insurance about this plan.
1. NAIC Company Code

GE43785

2. SERFF Rate Filing Tracking
Number or State Tracking
Number

INGE-12346705

3. Policy Form ID

25574