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Consumer Guide

What Factors Go Into a Rate Filing?

Health insurance companies develop rates by examining claim costs for all policyholders, administrative expenses (such as the salaries of its employees) and the needed level of reserves which are used to pay for claims and administrative expenses for the years plans do not collect enough premiums to cover claims costs. 

The Affordable Care Act (ACA) requires that proposed rate increases on health insurance plans are examined, analyzed and justified. Specifically, the ACA safeguards consumers against proposed rate increases at 10 percent or above on individual and small group plans. To do this, insurance companies must provide a justification to thoroughly demonstrate and quantify their proposed increase, and provide clear and easy to understand information for the rate increases. 

Recognized as a leader in health reform and rate review, the State of Minnesota has a federally-certified, “effective rate review” process. This means that Minnesota’s rate review process protects and ensures that consumers are paying premiums that reflect the value of their health plan.

The rate review process in Minnesota has a recommended set of criteria that the insurance companies must include in their rate filing. The Department of Commerce reviews the rates to ensure the filings meet the criteria set by law. The rates must be sufficient to cover expected claims and expenses; and they must provide a reasonable value to the consumer. All of the factors and processes are in place to make sure that insurance companies are offering fair and equitable benefits in their health plans at a reasonable cost for Minnesotans.

Rate Review

Rate review is the process that Minnesota uses to evaluate proposed health insurance rates and rate increases. 

A rate is the amount an insurance company charges for a specific health plan. For health plans effective January 1, 2014, under the Affordable Care Act (ACA), your rate can only be based on the following factors:

  1. Your age,
  2. Where you live, and
  3. Whether you use tobacco 

When rates are under review for individual and small group health insurance plans, they are “community rated.” This means that rates are determined by the costs of everyone in a community.

Minnesota’s rate review process means that all proposed health insurance rates must be reviewed and approved by the Department of Commerce prior to being sold to consumers.

According to Minnesota state law, Minnesota Statute 60A.08, subd. 15., the proposed rates are nonpublic data until they are approved and effective. The purpose of this law is to allow companies to file their rates without revealing trade secret information and to ensure a fair and competitive marketplace during the rate review process.

What is Minnesota’s Rate Review Process?

  1. Health plan companies that would like to sell plans in Minnesota must submit all proposed rates or rate changes to the Commerce Department for review. 
  2. The Department reviews each carrier’s submissions to ensure they meet the standard requirements. The Minnesota Department of Health has authority over rates used by HMOs, so they must agree with the Commerce Department's recommendation on HMO rate filings.
  3. The Commerce Department reviews each filing to determine whether the proposed rate is complete and the carrier provided proper justification for the proposed rates.
  4. If the Commerce Department actuaries determine that the rate filing does not include proper justification for the rate the company filed, an objection letter is sent to the insurance carrier requesting more information to support their proposed rate or to adjust the rate.
  5. When more information or an adjusted rate is submitted, the Department will review the filling again to ensure the rate is justified and meet the requirements of Minnesota Statutes, section 62A.02.  If the rates are not justified, an additional letter will be sent requesting more information. However, if the rates are properly justified, the rate or rate increase is approved and will become effective on the date listed.

The Department of Commerce welcomes comments on approved and effective filings.  You can contact us by emailing