Rate request: 13.5 percent increase
Decision: Disapproved, approved lower increase of 11.1%
On September 30, 2014, ConnectiCare Insurance Company, Inc. filed a request to increase rates approximately 13.5 percent on certain individual Point of Service (POS) insurance policies, which were sold before March 23, 2010 when the federal health insurance law was enacted. As a result, these policies are considered “grandfathered” and exempt from many of the benefit mandates associated with the federal law.
There are approximately 1,600 individuals covered under these plans in Connecticut.
ConnectiCare said the requested increase accounts for inflation of the cost of medical services and heightened demand for those services, a factor known as “trend.” The company estimated the impact of “trend” at 10.6 percent for medical and 13.5 percent for pharmacy benefits. The company has indicated in its filing that it is capping pharmacy co-payments at $5 to comply with Insurance Department guidelines.
The company also calculated the impact of charges and fees associated with the federal law. ConnectiCare estimates it will have to pay about $15 per member per month.
After an actuarial review, the Department determined that the company overestimated the impact of medical inflation, or “trend.” The Department ruled that more appropriate trend factors should be 9.04 percent for medical and 12 percent for pharmacy benefits.
As a result, the Department disapproved the rate request as submitted, and instead, approved a lower rate increase of 11.1 percent on November 10, 2014.
The new rates take effect on policies renewing on January 1, 2015.