NY Announces Record Low Individual, Small Group 2021 Premium Rates

New York has announced 2021 premium rates and the state appears to be following CMS’s lead for 2020 rates by keeping 2021 rates low.

The New York State Department of Financial Services announced that it cut payers’ proposed 2021 rate increase by 85 percent in its final rate decision for the Affordable Care Act’s individual health insurance market and 63 percent for small businesses.

The rate for the state’s individual health insurance market will be 1.8 percent in 2021 and the rate increase for the small group health insurance market will be 4.2 percent. These are both of the lowest rates that the state has ever approved for these markets.

For the 1.2 million enrollees on the individual and small group health insurance markets, the state estimated that this cut in the proposed rate saved residents more than $221 million on the individual health insurance market and over $565 million for small businesses.

In the press release, Superintendent of Financial Services Linda A. Lacewell cited the coronavirus-related economic hardships that enrollees currently face as a major motivator for keeping rates low.

“New York stepped up and flattened the curve, but consumers are still feeling the economic effects of the pandemic,” said Lacewell. “Our number one job is consumer protection and ensuring that quality, affordable health care is available to everyone in the state.”

Payers have come under fire for seeing immense profits during the pandemic while consumers struggle to make ends meet.

In response, payers have noted the likelihood that claims will spike as patients start receiving nonurgent care again, potentially offsetting their current profits. This uncertainty is part of what has made rate setting for 2021 such a unique challenge for payers.

The state of New York recognized this in its announcement, but only at the end of a paragraph emphasizing payer responsibility to return profits to consumers.

“Any excess premiums that insurers collected must be returned to policyholders under the ACA,” the press release stated. “Later in 2021, CMS will determine any rebates that may be owed to consumers based on a review of all 2020 claims.”

Not all payers saw a decrease from their proposed rate, but some received approval for a rate nowhere near their recommendation.

Oscar Health, which had requested the highest premium increases on both the individual and small group health insurance markets, saw a decrease of 14.2 percent on the individual market and 19.7 percent on the small group market. Meanwhile, Capital District Physicians' Health Plan’s (CDPHP) recommended rate remained virtually untouched on both markets.

New York’s 2021 premium rate reveal comes on the heels of a CMS announcement regarding rates.

The agency will be using premium credits to temporarily lower the individual and small group exchange premiums.

“CMS is providing this additional flexibility to allow health insurance issuers in the individual and small group markets to temporarily offer premium credits for 2020 coverage to support continuity of coverage for individuals, families and small employers,” the agency stated.

Payers on the individual and small group health insurance markets can request permission from state insurance regulators to offer premium credits for this year by October 1, 2020.

According to the guidance, the credits must be offered by the end of 2020 and must last for at least a full month. Premium credits also have to be the same for all members across all markets, whether inside or outside of the exchange.

“In light of the urgent need to help individuals and small employers experiencing economic hardship maintain continuous coverage through the COVID-19 public health emergency, CMS will adopt a policy to allow issuers, on a temporary basis, to offer premium credits for 2020 coverage,” the guidance read. “CMS encourages states to adopt a similar approach.”