Guest post by Kyle Brittingham, Director of Small Business Assistance Program, Community Service Society of New York

Yesterday the Department of Financial Services posted insurance rate applications on their website. These are applications that insurers submit to request a change in their rates as part of New York’s rate review or “prior approval” process. What is prior approval you ask? Below, Kyle Brittingham of Community Service Society gives us a rundown on the annual process, including how you can get involved either as a consumer or an advocate.

Each year, health insurance carriers want to change premiums (i.e. the monthly rates) they charge their customers for health insurance. Sometimes (but rarely), carriers may want to decrease the cost of premiums because it turns out that they have more healthy people enrolled in coverage than they expected. More typically, the carriers want to increase the premiums to keep pace with the rise in medical costs. In order to raise rates, the carriers request approval of their new rates by the government body set up to regulate them, New York State’s Department of Financial Services (DFS).  DFS has to approve all rates before they can go into effect for the upcoming year.  This approval process is called “Rate Review” or, here in New York, “Prior Approval.” And it’s just getting started for 2014.

The process is laid down by the legislature in the law, and it goes like this.  First, the carriers send out notices to their clients to let them know how much they are asking to increase the premiums. In 2014, many customers have already started receiving these notices from their plans. Notices will outline the current year’s premiums, the desired rate change, and the percentage increase or decrease that is being proposed. Next, the carrier will outline some of the reasons for this increase. Here is an example from one of the notices that has already gone out to consumers this year: “The age of the population that choose to enter the Individual market was older, and consequently more costly, than anticipated.” Finally, the notice will inform the consumer of their rights during this process. This is most important part because this is how consumers, and consumer advocates, can work with DFS to keep insurance rates as low as possible.

On DFS’s website, all carriers have to post their requested rate changes and give a detailed explanation of why the carrier thinks this is justified.  Advocates and consumers then get 30 days to respond to the DFS about why they think carriers should or should not be allowed to increase or decrease premiums by the amounts they’ve proposed.  Comments are accepted directly through the website. Comments can explain why the increase would hurt you or consumers in general, they can dispute the carrier’s explanations, or the simplest ones can say you disagree with the increase. Any comment, especially from consumers about their plan, is important.

Each year, HCFANY monitors the prior approval and submits comments to defend consumers in New York State and ensure and preserve affordability of health insurance. You can learn more about our past efforts and read past comments on our website. We hope you will join us this year! To learn even more about how rate review/prior approval works, take a look at this new blog series from our friends at Families USA.