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On October 3, 2012, Celtic Insurance Company filed a request to increase annual rates by an average of 15.2 percent on its individual health plans that provide major medical and prescription drug coverage. Celtic said it sought the higher rates because it expected to pay out more in claims over the next year due to higher medical costs and increased use of services from members. Those increases combined are called “trend” and are expected to impact the rates by about 11.5 percent. 

 

After an actuarial review, the Department determined that Celtic’s estimate of “trend” was overstated by 1.5 percent. The Department also disagreed with the company’s estimate of its “incurred claims,” which is the actual cost of what the company has already paid out in claims plus the estimate of the cost of pending claims.  Additionally, the Department noted that the experience of this particular plan in Connecticut was too small to be credible in the company’s cost estimates. There are fewer than 650 individuals covered under this plan.

 

As a result, the Department disapproved the request as submitted and reduced the rate increase to 13.5 percent. The new rates will take effect January 1, 2013.