Can my health insurance company increase my premium multiple times in1 year?

I am self-employed and insured as an individual in OR. My insurance company claims they need to keep raising premiums as a result of changes in federal law that force them to change or add coverage. Halfway through the year they cancelled all policies and forced us to sign up for a new policy. The new policies offered were significantly more expensive (50% to 100% more) with less coverage, more hidden fees like “co-insurance” and higher deductibles. Now they have increased my premium again, which makes this the third increase this year.

Asked on September 15, 2011 under Insurance Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

The short answer is, this is most likely illegal.

It is true that a change in the law can make a contact void: if what a contract was about or called for becomes illegal, then the contract is invalidated. Similarly, if a change in law puts in place new mandates for performance, that could require a change to, or again, voiding of, a contract.

However, that said, nothing has occurred this year, to the best of my knowledge, which would require existing contracts to be cancelled, or which would justify unilateral increases in costs or premium by the insurer--and I'm not just an attorney, but I'm also a self-employed small business person with probably the same or similar coverage as you. I did not experience what you describe (though my last annual increase was steeper than previous ones; the insurer is starting to price in anticipated cost increases).

It's impossible to say definitively in your case, without examing the policy and the provisions which the insurer claims are requiring the change. To investigate further, you should do some or all of the following:

1) Ask the insurer to identify the specific policy terms or conditions (in the old policy) which they claim required them to cancel the policy due to the law.

2) Speak with your state's dept. of insurance--call them, ask the question, and possibly report this as a potential violation

3) Contact other insurers and insurance brokers and ask them to quote you a policy--and in the process, ask about whether a policy currently in effect this year would have to be changed due to legal changes

4) Consult with a private attorney--you may have a cause of action for breach of contract and/or consumer fraud.

Good luck.


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