A health insurer with ties to the Mennonite Church is the first to receive a federal reprimand through Obamacare for an unacceptable hike in its insurance premiums.
Everence Insurance received a letter from the Department of Health and Human Services (HHS), scolding it for a 12 percent rate increase that took effect Oct. 1 for its small business clients, according to the Pittsburgh Post-Gazette
The rebuke marks the first time HHS has taken an insurer to task for high premiums since Obamacare passed. The new rules require rate hikes of 10 percent or more to be reviewed by state or federal officials, with the findings to be made public, said HHS Secretary Kathleen Sebelius.
“This action sends a message to insurers around the country that the days of unfair double-digit rates increases are over,” she said.
Everence is based in Goshen, Ind., but has numerous offices in Pennsylvania’s counties, where it insures about 5,000 customers, the newspaper reported.
Sebelius said that the company used national data, rather than Pennsylvania data, to set its rate, causing Pennsylvania customers to pay too much.
HHS is calling on the insurance company, said Sebelius, “to immediately withdraw this rate and provide refunds or credits to any beneficiaries who have already paid the unreasonable amount.”
Everence said the increase was based on claims made over a two-year period, but the HHS calculations were over a one-year period. The insurers said the company's average rate increase is 12.6 percent, which gradually goes down to an 11 percent increase on July 1.
HHS can’t force the company to reduce its rates, but Everence will have to explain to customers, through its website, within 10 days if the rates aren’t dropped.
Sebelius said insurers’ rate information will be online at www.ratereview.healthcare.gov
, so the public can obtain the data or see basic profile information on their insurance company.
Meanwhile, the action against Everence, Sebelius said, “is the first of many we will be issuing over the coming months and years.”
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