The Department of Health and Human Services (HHS) issued a final Rule on Thursday, May 19, 2011 that provides for review of “unreasonable” premium rate increases and requires that: (1) insurance companies to provide consumers with information about the reasons for such rate increases, and (2) states provide an opportunity for public input in the evaluation of rate increases subject to review. Combined with other protections under the Affordable Care Act, these new rules will help lower insurance costs by moderating premium hikes and provide consumers with greater value for their premium dollar. Starting September 1, 2011, the Rule requires independent experts to scrutinize any proposed increase of ten percent for most individual and small group health insurance plans. States will have the primary responsibility for reviewing rate increases, and while most states will take on this responsibility, HHS will serve as a back-up to states that do not have the resources or authority to review rates. Beginning in September 2012, the ten percent threshold will be replaced by state-specific thresholds that reflect the insurance and health care cost trends in each state. The final Rule clarifies that HHS will work with states in developing these thresholds.

This Rule should help assure consumers that any increase in their premium is reasonable and that their premium dollars are being spent on their medical care.