Health insurance companies make money by charging more in premiums than the pay out in claims. The company has to project claims expenses 12 months into the future when setting premium rates. Most plans change premium rates only once per year.
The Affordable Care Act requires that insurers spend 80% to 85% of premium dollars on direct medical care. If the ratio falls below that figure then the difference must be refunded to policyholders.
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The Affordable Care Act requires that insurers spend 80% to 85% of premium dollars on direct medical care. If the ratio falls below that figure then the difference must be refunded to policyholders.