The difference between rates and premiums
Insurance rates are the base cost that an insurance company charges for the risk of a possible claim, such as a visit to the emergency room or paying for prescription drugs. It’s the basic building block that goes into determining premiums. Insurance companies take this base rate and apply their rating factors to determine your monthly premium.
How we review health rates
Health insurance companies can request rate changes once a year unless state or federal law requires them to add a new health benefit. When these companies submit their rate filings, our actuaries scrutinize the company's projections and what they're based on, including the rates for the last three years, enrollment, and claims.
We review the rate change to see if it's reasonable based on the plan's benefits by looking at:
- Claims and administrative costs to see if they're consistent with what the company reported in its financial statement.
- The actual vs. projected medical and prescription drug costs.
- The assumptions used to project the medical and prescription drug costs including changes in costs and benefits.
- Company expenses such as agent commissions, taxes, salaries, case management activities, claims, appeals processing costs, and customer services.
- How much profit the company expects to make.
If we think the rate increase is justified, state law says we must approve it.
If we don't find the rate increase justified, we will deny it. The insurer can then either change its request or ask for a hearing.
You can use our health rate transparency tool to search rate requests from insurers in Washington or to comment on proposed rate increases.
Search health insurer rate requests
Large employer and self-insured plans
We also review policies for large employer health plans (51 or more employees), but most employers in this category negotiate the rates with their insurance company.
Some large employers self-insure, which means they pay for their employees' health coverage and likely only use an insurance company to administer the plan. We do not review those rates.
How your premiums are determined
How much you pay for your premium depends largely on these factors:
- Your age and the age of any family members in your plan.
- Your family size.
- Whether or not you smoke.
- Where you live.
- The type of plan you choose.
The health of you and your family will not impact the amount you pay for health insurance.
Why premiums increase
Rates for individual and small group health plans are based on the total claims from all members. This is why your premium can go up even if you haven't made a claim. Also, rising medical costs, hospital bills, doctor visits, and prescription drugs can lead to higher premiums.